-- GAAP net income of $181 million, or $1.01
per diluted share --
-- Adjusted diluted net operating income of
$1.17 per diluted share --
-- Provision for losses of $(83.8) million in
the first quarter of 2022 favorably impacted by positive
development on prior period defaults --
-- Return on equity of 17.2% and adjusted net
operating return on equity of 19.9% --
-- PMIERs excess Available Assets of $1.6
billion (or 44% over the Minimum Required Assets) --
--Total holding company liquidity grows to $1.3
billion --
Radian Group Inc. (NYSE: RDN) today reported net income for the
quarter ended March 31, 2022, of $181.1 million, or $1.01 per
diluted share. This compares with net income for the quarter ended
March 31, 2021, of $125.6 million, or $0.64 per diluted share.
Key Financial Highlights
(dollars in millions, except per-share amounts)
Quarter ended
March 31, 2022
December 31, 2021
March 31, 2021
Net income (1)
$181.1
$193.4
$125.6
Diluted net income per share
$1.01
$1.07
$0.64
Consolidated pretax income
$234.1
$246.5
$161.2
Adjusted pretax operating income
(2)
$264.9
$245.1
$167.3
Adjusted diluted net operating
income per share (2)(3)
$1.17
$1.07
$0.68
Return on equity (1)(4)
17.2 %
18.2 %
11.8 %
Adjusted net operating return on
equity (2)(3)
19.9 %
18.2 %
12.4 %
New Insurance Written (NIW) -
mortgage insurance
$18,655
$23,710
$20,161
Net premiums earned - mortgage
insurance
$245.2
$249.7
$264.7
New defaults (5)
9,393
9,342
11,851
Provision for losses - mortgage
insurance
($84.2)
($46.6)
$45.9
homegenius revenues
$33.9
$44.7
$25.8
Book value per share
$23.75
$24.28
$22.14
Accumulated other comprehensive
income
(loss) value per share (6)
($0.74)
$0.68
$0.61
PMIERs Available Assets (7)
$5,102
$5,406
$4,909
PMIERs excess Available Assets
(8)
$1,560
$2,077
$1,451
Total Holding Company Liquidity
(9)
$1,282
$880
$1,292
Total investments
$6,335
$6,514
$6,672
Primary mortgage insurance in
force
$248,951
$245,972
$238,921
Percentage of primary loans in
default (10)
2.6 %
2.9 %
4.9 %
Mortgage insurance loss
reserves
$722
$823
$883
(1)
Net income for the first quarter of 2022
includes a pretax net loss on investments and other financial
instruments of $29.5 million, compared with a $3.0 million pretax
net gain on investments and other financial instruments in the
fourth quarter of 2021 and a pretax net loss on investments and
other financial instruments of $5.2 million for the first quarter
of 2021.
(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 percent.
(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)
Represents the number of new defaults
reported during the period on loans related to primary mortgage
insurance policies.
(6)
Included in book value per share for each
period presented.
(7)
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.
(8)
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.
(9)
Represents Radian Group's total liquidity,
including available capacity under its unsecured revolving credit
facility.
(10)
Represents the number of primary loans in
default as a percentage of the total number of insured primary
loans.
Adjusted pretax operating income for the quarter ended March 31,
2022, was $264.9 million, or $1.17 per diluted share. This compares
with adjusted pretax operating income for the quarter ended March
31, 2021, of $167.3 million, or $0.68 per diluted share.
Book value per share at March 31, 2022, was $23.75, compared to
$24.28 at December 31, 2021 and $22.14 at March 31, 2021. This
represents a 7.3 percent growth in book value per share at March
31, 2022 as compared to March 31, 2021, and includes accumulated
other comprehensive income (loss) of $(0.74) per share as of March
31, 2022 and $0.61 per share as of March 31, 2021, which, if
excluded as of both dates, would represent 13.7 percent growth for
the period. Changes in accumulated other comprehensive income
(loss) for the period are primarily from net unrealized losses on
investments as a result of an increase in market interest rates
during the period. We do not expect to realize these losses given
that we have the ability and the expectation to hold these
securities to maturity.
“We had a strong start to our 45th year in business, growing net
income year-over-year to $181 million, return on equity to 17.2
percent and book value per share to $23.75. Over the same period
our primary mortgage insurance in force, which is the main driver
of future earnings for our company, grew more than 4 percent and
the total number of defaulted loans in our mortgage insurance
portfolio declined by 49 percent,” said Radian’s Chief Executive
Officer Rick Thornberry. “We continue to strategically manage
capital by maintaining strong holding company liquidity and PMIERs
cushion, repurchasing shares opportunistically and returning $116
million in dividends to stockholders over the past year.”
Thornberry continued, “We are proud of our history of ensuring
affordable, sustainable and equitable homeownership for so many
years and are even more excited about the promise of our
future.”
FIRST QUARTER HIGHLIGHTS
- NIW was $18.7 billion in the first quarter of 2022, compared to
$23.7 billion in the fourth quarter of 2021, and $20.2 billion in
the first quarter of 2021.
- Purchase NIW decreased 21.0 percent in the first quarter of
2022 compared to the fourth quarter of 2021 and increased 43.1
percent compared to the first quarter of 2021.
- Refinances accounted for 8.6 percent of total NIW in the first
quarter of 2022, compared to 8.9 percent in the fourth quarter of
2021, and 40.9 percent in the first quarter of 2021.
- Of the $18.7 billion in NIW in the first quarter of 2022, 94.5
percent was written with monthly and other recurring premiums,
compared to 93.5 percent in the fourth quarter of 2021, and 90.2
percent in the first quarter of 2021.
- Total primary mortgage insurance in force as of March 31, 2022,
increased to $249.0 billion, an increase of 1.2 percent compared to
$246.0 billion as of December 31, 2021, and an increase of 4.2
percent compared to $238.9 billion as of March 31, 2021. The
year-over-year change reflects a 10.3 percent increase in monthly
premium policy insurance in force and a 19.1 percent 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 68.0 percent for
the twelve months ended March 31, 2022, compared to 64.3 percent
for the twelve months ended December 31, 2021, and 57.2 percent for
the twelve months ended March 31, 2021.
- Annualized persistency for the three months ended March 31,
2022, was 76.9 percent, compared to 71.7 percent for the three
months ended December 31, 2021, and 62.5 percent for the three
months ended March 31, 2021.
- Net mortgage insurance premiums earned were $245.2 million for
the quarter ended March 31, 2022, compared to $249.7 million for
the quarter ended December 31, 2021, and $264.7 million for the
quarter ended March 31, 2021.
- Mortgage insurance in force portfolio premium yield was 39.6
basis points in the first quarter of 2022. This compares to 41.0
basis points in the fourth quarter of 2021, and 42.7 basis points
in the first quarter of 2021.
- The impact of single premium policy cancellations before
consideration of reinsurance represented 2.4 basis points of direct
premium yield in the first quarter of 2022, 3.4 basis points in the
fourth quarter of 2021, and 6.4 basis points in the first quarter
of 2021.
- Total net mortgage insurance premium yield, which includes the
impact of ceded premiums and accrued profit commission, was 39.6
basis points in the first quarter of 2022. This compares to 41.0
basis points in the fourth quarter of 2021, and 43.7 basis points
in the first quarter of 2021.
- Additional details regarding premiums earned may be found in
Exhibit D.
- The mortgage insurance provision for losses was a benefit of
$84.2 million in the first quarter of 2022, and $46.6 million in
the fourth quarter of 2021, compared to a provision of $45.9
million in the first quarter of 2021.
- The decrease in the first quarter of 2022 compared to both the
fourth quarter of 2021 and the first quarter of 2021 was primarily
related to more favorable development on prior period reserves, as
compared to the fourth quarter of 2021 and first quarter of 2021.
All periods were impacted by more favorable trends in cures than
originally estimated.
- The number of primary delinquent loans was 25,510 as of March
31, 2022, compared to 29,061 as of December 31, 2021, and 50,106 as
of March 31, 2021.
- The loss ratio in the first quarter of 2022 was (34.3) percent,
compared to (18.6) percent in the fourth quarter of 2021, and 17.3
percent in the first quarter of 2021.
- Total mortgage insurance claims paid were $4.7 million in the
first quarter of 2022, compared to $10.4 million in the fourth
quarter of 2021, and $10.5 million in the first quarter of 2021.
Excluding the impact of commutations and settlements, claims paid
were $4.7 million in the first quarter of 2022, compared to $3.8
million in the fourth quarter of 2021, and $6.5 million in the
first quarter of 2021.
- Radian's homegenius segment offers an array of title, real
estate and technology products and services to consumers, mortgage
lenders, mortgage and real estate investors, GSEs, real estate
brokers and agents.
- Total homegenius segment revenues for the first quarter of 2022
were $33.9 million, compared to $44.7 million for the fourth
quarter of 2021, and $25.8 million for the first quarter of
2021.
- The 31.5 percent increase in revenues for the first quarter of
2022 compared to the first quarter of 2021 was primarily driven by
a 100.4 percent increase in our real estate services businesses.
homegenius Performance Metrics
- Adjusted pretax operating loss, our primary segment measure of
profitability for the homegenius segment, for the quarter ended
March 31, 2022 was $13.5 million, compared to $2.1 million for the
quarter ended December 31, 2021, and $10.5 million for the quarter
ended March 31, 2021.
- Adjusted pretax operating loss before allocated corporate
operating expenses for the homegenius segment for the quarter ended
March 31, 2022 was $8.2 million, compared to income of $2.7 million
for the quarter ended December 31, 2021, and a loss of $6.5 million
for the quarter ended March 31, 2021.
- Adjusted gross profit for the homegenius segment for the
quarter ended March 31, 2022 was $12.1 million, compared to $19.7
million for the quarter ended December 31, 2021, and $8.5 million
for the quarter ended March 31, 2021.
- Additional details regarding these and other related non-GAAP
measures may be found in Exhibits F and G.
- Other operating expenses were $89.5 million in the first
quarter of 2022, compared to $80.5 million in the fourth quarter of
2021, and $70.3 million in the first quarter of 2021.
- The increase for the first quarter of 2022 compared to the
first quarter of 2021 was driven primarily by an increase in
variable incentive compensation expense and a decrease in ceding
commissions. Additional details regarding other operating expenses
by segment may be found in Exhibit E.
CAPITAL AND LIQUIDITY UPDATE
Radian Group
- As of March 31, 2022, Radian Group maintained $1.0 billion of
available liquidity. Total liquidity, which includes the company’s
$275.0 million unsecured revolving credit facility, was $1.3
billion as of March 31, 2022.
- During the first quarter of 2022, the company repurchased 0.9
million shares of Radian Group common stock at a total cost of
$21.3 million, including commissions.
- In addition, in April 2022 the Company purchased an additional
1.8 million shares, or approximately $39.3 million of Radian Group
common stock, including commissions. After the repurchases in
April, purchase authority of up to approximately $339.4 million
remained available under the existing program.
- On February 9, 2022, Radian Group’s board of directors
authorized a regular quarterly dividend on its common stock in the
amount of $0.20 per share and the dividend was paid on March 3,
2022.
Radian Guaranty
- At March 31, 2022, Radian Guaranty’s Available Assets under
PMIERs totaled approximately $5.1 billion, resulting in excess
available resources or a “cushion” of $1.6 billion, or 44 percent,
over its Minimum Required Assets.
- As of March 31, 2022, 67 percent of Radian Guaranty's primary
mortgage insurance risk in force is subject to some form of risk
distribution, providing a $1.2 billion reduction of Minimum
Required Assets under PMIERs.
CONFERENCE CALL
Radian will discuss first quarter 2022 financial results in a
conference call tomorrow, Wednesday, May 4, 2022, at 10:00 a.m.
Eastern time. The conference call will be broadcast live over the
Internet at https://radian.com/who-we-are/for-investors/webcasts or
at www.radian.com. The call may also be accessed by dialing
877.742.9092 inside the U.S., or 270.833.1298 for international
callers, using passcode 7364078 by referencing Radian.
A digital replay of the webcast will be available on the Radian
website approximately two hours after the live broadcast ends for a
period of two weeks at
https://radian.com/who-we-are/for-investors/webcasts using passcode
7364078.
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 attributable to our reportable
segments; (ii) loss on extinguishment of debt; (iii) amortization
and impairment of goodwill and other acquired intangible assets;
and (iv) impairment of other long-lived assets and other
non-operating items, such as impairment of internal-use software,
gains (losses) from the sale of lines of business and
acquisition-related income and expenses. Adjusted diluted net
operating income (loss) per share is calculated by dividing (i)
adjusted pretax operating income (loss) attributable to common
stockholders, net of taxes computed using the Company’s statutory
tax rate, by (ii) the sum of the weighted average number of common
shares outstanding and all dilutive potential common shares
outstanding. Adjusted net operating return on equity is calculated
by dividing annualized adjusted pretax operating income (loss), net
of taxes computed using the Company’s statutory tax rate, by
average stockholders’ equity, based on the average of the beginning
and ending balances for each period presented.
In addition to the above non-GAAP measures for the consolidated
company, we also have presented as supplemental information
non-GAAP measures for our homegenius segment of adjusted pretax
operating income (loss) before allocated corporate operating
expenses and adjusted gross profit. Adjusted pretax operating
income (loss) before allocated corporate operating expenses is
calculated as adjusted pretax operating income (loss) as described
above (which is the segment's ASC 280 GAAP measure of operating
performance), adjusted to remove the impact of corporate
allocations of other operating expenses for the homegenius segment.
Adjusted gross profit is further adjusted to remove other operating
expenses. In addition, homegenius adjusted pretax operating margin
before allocated corporate operating expenses and adjusted gross
profit margin are calculated by dividing homegenius adjusted pretax
operating margin before allocated corporate operating expenses and
adjusted gross profit, respectively, by GAAP total revenue for the
homegenius segment. For the homegenius segment, adjusted pretax
operating income (loss) before allocated corporate operating
expenses, adjusted gross profit, and the related profit margins are
used to facilitate comparisons with other services companies, since
they are widely accepted measures of performance in the services
industry and are used internally as supplemental measures to
evaluate the performance of our homegenius segment.
See Exhibit F or Radian’s website for a description of these
items, as well as Exhibit G for reconciliations to the most
comparable consolidated GAAP measures.
ABOUT RADIAN
Radian Group Inc. (NYSE: RDN) is ensuring the American dream of
homeownership responsibly and sustainably through products and
services that include industry-leading mortgage insurance and a
comprehensive suite of mortgage, risk, title, real estate and
technology products and 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 to learn more about
how Radian is shaping the future of mortgage and real estate
services.
FINANCIAL RESULTS AND SUPPLEMENTAL INFORMATION CONTENTS
(Unaudited)
Exhibit A:
Condensed Consolidated Statements of
Operations Trend Schedule
Exhibit B:
Net Income Per Share Trend Schedule
Exhibit C:
Condensed Consolidated Balance Sheets
Exhibit D:
Net Premiums Earned
Exhibit E:
Segment Information
Exhibit F:
Definition of Consolidated Non-GAAP
Financial Measures
Exhibit G:
Consolidated Non-GAAP Financial Measure
Reconciliations
Exhibit H:
Mortgage Supplemental Information
New Insurance Written
Exhibit I:
Mortgage Supplemental Information
Primary Insurance in Force and Risk in
Force
Exhibit J:
Mortgage Supplemental Information
Claims and Reserves, Default
Statistics
Exhibit K:
Mortgage Supplemental Information
Reinsurance Programs
Radian Group Inc. and
Subsidiaries
Condensed Consolidated Statements of
Operations Trend Schedule
Exhibit A
2022
2021
(In thousands, except per-share
amounts)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Revenues:
Net premiums earned
$
254,190
$
261,437
$
249,118
$
254,756
$
271,872
Services revenue
29,348
35,693
37,773
29,464
22,895
Net investment income
38,196
37,407
35,960
36,291
38,251
Net gains (losses) on investments and
other financial instruments
(29,457
)
3,025
2,098
15,661
(5,181
)
Other income
703
805
809
822
976
Total revenues
292,980
338,367
325,758
336,994
328,813
Expenses:
Provision for losses
(83,754
)
(46,219
)
17,305
3,648
46,143
Policy acquisition costs
6,605
7,271
7,924
4,838
8,996
Cost of services
24,753
28,333
30,520
24,615
20,246
Other operating expenses
89,541
80,476
86,479
86,469
70,262
Interest expense
20,846
21,137
21,027
21,065
21,115
Amortization of other acquired
intangible assets
849
863
862
863
862
Total expenses
58,840
91,861
164,117
141,498
167,624
Pretax income
234,140
246,506
161,641
195,496
161,189
Income tax provision
53,009
53,061
35,229
40,290
35,581
Net income
$
181,131
$
193,445
$
126,412
$
155,206
$
125,608
Diluted net income per share
$
1.01
$
1.07
$
0.67
$
0.80
$
0.64
Selected Mortgage Key
Ratios
2022
2021
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Loss ratio (1)
(34.3)%
(18.6)%
7.1 %
1.3 %
17.3 %
Expense ratio (2)
27.2 %
25.6 %
28.6 %
25.4 %
21.9 %
(1)
Calculated as provision for losses on a
GAAP basis expressed as a percentage of net premiums earned.
(2)
Calculated as operating expenses (which
include policy acquisition costs and other operating expenses, as
well as allocated corporate operating expenses) on a GAAP basis
expressed as a percentage of net premiums earned.
Radian Group Inc. and
Subsidiaries
Net Income Per Share Trend
Schedule
Exhibit B
The calculation of basic and diluted
net income per share was as follows:
2022
2021
(In thousands, except per-share
amounts)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Net income —basic and diluted
$
181,131
$
193,445
$
126,412
$
155,206
$
125,608
Average common shares
outstanding—basic
176,816
179,500
186,741
193,436
193,439
Dilutive effect of stock-based
compensation arrangements (1)
2,263
1,628
1,301
1,202
1,764
Adjusted average common shares
outstanding—diluted
179,079
181,128
188,042
194,638
195,203
Basic net income per share
$
1.02
$
1.08
$
0.68
$
0.80
$
0.65
Diluted net income per share
$
1.01
$
1.07
$
0.67
$
0.80
$
0.64
(1)
The following number of shares of
our common stock equivalents issued under our share-based
compensation arrangements were not included in the calculation of
diluted net income (loss) per share because they were
anti-dilutive:
2022
2021
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Shares of common stock equivalents
—
35
—
—
—
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)
2022
2021
2021
2021
2021
Assets:
Investments
$
6,334,950
$
6,513,542
$
6,658,487
$
6,681,659
$
6,671,874
Cash
131,853
151,145
154,709
134,939
102,776
Restricted cash
1,651
1,475
1,866
2,968
20,987
Accrued investment income
35,531
32,812
33,258
32,223
34,841
Accounts and notes receivable
142,579
124,016
166,730
153,128
134,075
Reinsurance recoverables
55,015
67,896
76,048
75,411
76,664
Deferred policy acquisition
costs
16,383
16,317
16,823
17,873
15,652
Property and equipment, net
75,275
75,086
74,170
74,288
78,309
Goodwill and other acquired intangible
assets, net
18,744
19,593
20,456
21,318
22,181
Other assets
803,765
837,303
839,061
815,261
763,502
Total assets
$
7,615,746
$
7,839,185
$
8,041,608
$
8,009,068
$
7,920,861
Liabilities and stockholders’
equity:
Unearned premiums
$
312,013
$
329,090
$
348,322
$
373,031
$
406,689
Reserve for losses and loss adjustment
expense
727,247
828,642
893,155
885,498
887,355
Senior notes
1,410,458
1,409,473
1,408,502
1,407,545
1,406,603
FHLB advances
148,983
150,983
172,649
153,983
138,833
Reinsurance funds withheld
225,363
228,078
290,502
285,406
282,345
Net deferred tax liability
324,004
337,509
286,957
266,330
210,571
Other liabilities
320,114
296,614
383,585
303,442
353,173
Total liabilities
3,468,182
3,580,389
3,783,672
3,675,235
3,685,569
Common stock
193
194
200
207
210
Treasury stock
(920,958
)
(920,798
)
(920,355
)
(920,225
)
(910,347
)
Additional paid-in capital
1,871,763
1,878,372
2,012,870
2,161,857
2,242,950
Retained earnings
3,326,119
3,180,935
3,012,997
2,913,138
2,785,744
Accumulated other comprehensive income
(loss)
(129,553
)
120,093
152,224
178,856
116,735
Total stockholders’ equity
4,147,564
4,258,796
4,257,936
4,333,833
4,235,292
Total liabilities and stockholders’
equity
$
7,615,746
$
7,839,185
$
8,041,608
$
8,009,068
$
7,920,861
Shares outstanding
174,648
175,421
181,336
188,290
191,311
Book value per share
$
23.75
$
24.28
$
23.48
$
23.02
$
22.14
Debt to capital ratio (1)
25.4 %
24.9 %
24.9 %
24.5 %
24.9 %
Risk to capital ratio-Radian Guaranty
only
12.1:1
11.1:1
11.4:1
11.4:1
11.9 :1
(1) Calculated as senior notes divided by
senior notes and stockholders' equity.
Radian Group Inc. and
Subsidiaries
Net Premiums Earned
Exhibit D
2022
2021
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Premiums earned:
Direct - Mortgage:
Premiums earned, excluding revenue from
cancellations
$
243,599
$
248,704
$
239,786
$
243,077
$
256,905
Single Premium Policy
cancellations
14,696
20,530
25,592
31,592
38,510
Total direct - Mortgage
258,295
269,234
265,378
274,669
295,415
Assumed - Mortgage: (1)
1,332
1,470
1,683
1,615
2,298
Ceded - Mortgage:
Premiums earned, excluding revenue from
cancellations
(27,339
)
(28,333
)
(27,662
)
(27,324
)
(25,373
)
Single Premium Policy cancellations
(2)
(4,192
)
(5,905
)
(7,338
)
(9,036
)
(11,109
)
Profit commission - other (3)
17,078
13,199
4,806
7,162
3,433
Total ceded premiums - Mortgage
(4)
(14,453
)
(21,039
)
(30,194
)
(29,198
)
(33,049
)
Net premiums earned - Mortgage
245,174
249,665
236,867
247,086
264,664
Net premiums earned -
homegenius
9,016
11,772
12,251
7,670
7,208
Net premiums earned
$
254,190
$
261,437
$
249,118
$
254,756
$
271,872
(1)
Relates primarily to premiums earned from
our participation in certain credit risk transfer programs.
(2)
Includes the impact of related profit
commissions.
(3)
The amounts represent the profit
commission on the Single Premium QSR Program, excluding the impact
of Single Premium Policy cancellations.
(4)
See Exhibit K for additional information
on ceded premiums for our various reinsurance programs.
Radian Group Inc. and Subsidiaries
Segment Information
Exhibit E (page 1 of 6)
Summarized financial information
concerning our operating segments as of and for the periods
indicated is as follows. For a definition of adjusted pretax
operating income (loss), homegenius adjusted pretax operating
income (loss) before allocated corporate operating expenses and
homegenius adjusted gross profit, along with reconciliations to
consolidated GAAP measures, see Exhibits F and G.
Three Months Ended March 31,
2022
(In thousands)
Mortgage
homegenius
All Other
Inter- segment (1)
Total
Net premiums written (2)
$
248,360
$
9,016
$
—
$
—
$
257,376
Increase in unearned premiums
(3,186
)
—
—
—
(3,186
)
Net premiums earned
245,174
9,016
—
—
254,190
Services revenue
4,552
24,878
—
(82
)
29,348
Net investment income
34,017
18
4,161
—
38,196
Other income
703
—
—
—
703
Total
284,446
33,912
4,161
(82
)
322,437
Provision for losses
(84,193
)
481
—
(42
)
(83,754
)
Policy acquisition costs
6,605
—
—
—
6,605
Cost of services
3,383
21,370
—
—
24,753
Other operating expenses before
allocated corporate operating expenses (3)
23,755
20,287
3,142
(40
)
47,144
Interest expense (4)
20,846
—
—
—
20,846
Total
(29,604
)
42,138
3,142
(82
)
15,594
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
314,050
(8,226
)
1,019
—
306,843
Allocation of corporate operating
expenses
36,209
5,280
406
—
41,895
Adjusted pretax operating income
(loss)
$
277,841
$
(13,506
)
$
613
$
—
$
264,948
Three Months Ended March 31,
2021
(In thousands)
Mortgage
homegenius
All Other
Inter- segment (1)
Total
Net premiums written (2)
$
246,874
$
7,208
$
—
$
—
$
254,082
Decrease in unearned premiums
17,790
—
—
—
17,790
Net premiums earned
264,664
7,208
—
—
271,872
Services revenue
4,351
18,550
53
(59
)
22,895
Net investment income
34,013
37
4,201
—
38,251
Other income
769
—
207
—
976
Total
303,797
25,795
4,461
(59
)
333,994
Provision for losses
45,869
296
—
(22
)
46,143
Policy acquisition costs
8,996
—
—
—
8,996
Cost of services
3,192
17,028
28
(2
)
20,246
Other operating expenses before
allocated corporate operating expenses (3)
21,340
14,928
2,065
(35
)
38,298
Interest expense (4)
21,115
—
—
—
21,115
Total
100,512
32,252
2,093
(59
)
134,798
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
203,285
(6,457
)
2,368
—
199,196
Allocation of corporate operating
expenses
27,576
3,996
308
—
31,880
Adjusted pretax operating income
(loss)
$
175,709
$
(10,453
)
$
2,060
$
—
$
167,316
Radian Group Inc. and Subsidiaries Segment
Information Exhibit E (page 2 of 6)
(1)
Includes immaterial inter-segment
services revenue for our homegenius segment and immaterial
inter-segment provision for losses, cost of services and other
operating expenses for our Mortgage segment.
(2)
Net of ceded premiums written
under the QSR Programs and the Excess-of-Loss Program. See Exhibit
K for additional information.
(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)
Relates to interest on our
borrowing and financing activities including our Senior Notes
issued by our holding company and FHLB borrowings made by our
mortgage insurance subsidiaries.
Radian Group Inc. and
Subsidiaries
Segment Information
Exhibit E (page 3 of 6)
Mortgage
2022
2021
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Net premiums written (1)
$
248,360
$
238,529
$
228,116
$
231,027
$
246,874
(Increase) decrease in unearned
premiums
(3,186
)
11,136
8,751
16,059
17,790
Net premiums earned
245,174
249,665
236,867
247,086
264,664
Services revenue
4,552
4,560
5,027
3,732
4,351
Net investment income
34,017
33,916
32,158
32,842
34,013
Other income
703
661
607
641
769
Total
284,446
288,802
274,659
284,301
303,797
Provision for losses (2)
(84,193
)
(46,560
)
16,794
3,334
45,869
Policy acquisition costs
6,605
7,271
7,924
4,838
8,996
Cost of services (2)
3,383
3,710
3,865
3,161
3,192
Other operating expenses before
allocated corporate operating expenses (2) (3)
23,755
23,365
25,866
25,222
21,340
Interest expense (4)
20,846
21,137
21,027
21,065
21,115
Total (2)
(29,604
)
8,923
75,476
57,620
100,512
Adjusted pretax operating income before
allocated corporate operating expenses
314,050
279,879
199,183
226,681
203,285
Allocation of corporate operating
expenses
36,209
33,305
33,963
32,638
27,576
Adjusted pretax operating
income
$
277,841
$
246,574
$
165,220
$
194,043
$
175,709
homegenius
2022
2021
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Net premiums earned
$
9,016
$
11,772
$
12,251
$
7,670
$
7,208
Services revenue (2)
24,878
31,177
32,805
25,750
18,550
Net investment income
18
255
35
31
37
Net gains (losses) on
investments
—
1,509
—
—
—
Total (2)
33,912
44,713
45,091
33,451
25,795
Provision for losses
481
369
540
335
296
Cost of services
21,370
24,615
26,646
21,433
17,028
Other operating expenses before
allocated corporate operating expenses (3)
20,287
16,998
18,544
16,160
14,928
Total
42,138
41,982
45,730
37,928
32,252
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
(8,226
)
2,731
(639
)
(4,477
)
(6,457
)
Allocation of corporate operating
expenses
5,280
4,847
4,918
4,721
3,996
Adjusted pretax operating income
(loss)
$
(13,506
)
$
(2,116
)
$
(5,557
)
$
(9,198
)
$
(10,453
)
Radian Group Inc. and
Subsidiaries
Segment Information
Exhibit E (page 4 of 6)
All Other (5)
2022
2021
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Services revenue
$
—
$
30
$
27
$
44
$
53
Net investment income
4,161
3,236
3,767
3,418
4,201
Other income
—
144
202
181
207
Total
4,161
3,410
3,996
3,643
4,461
Cost of services
—
8
9
19
28
Other operating expenses before
allocated corporate operating expenses (3)
3,142
2,422
2,623
3,387
2,065
Total
3,142
2,430
2,632
3,406
2,093
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
1,019
980
1,364
237
2,368
Allocation of corporate operating
expenses
406
373
378
363
308
Adjusted pretax operating income
(loss)
$
613
$
607
$
986
$
(126
)
$
2,060
(1)
Net of ceded premiums written under the
QSR Programs and the Excess-of-Loss Program. See Exhibit K for
additional information.
(2)
Includes immaterial inter-segment services
revenue for our homegenius segment and immaterial inter-segment
provision for losses, cost of services and other operating expenses
for our Mortgage segment.
(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)
Relates to interest on our borrowing and
financing activities including our Senior Notes issued by our
holding company and FHLB borrowings made by our mortgage insurance
subsidiaries.
(5)
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; (iii) for all periods presented, the
income and expenses related to our traditional appraisal services,
which we wound down beginning in the fourth quarter of 2020; and
(iv) certain other immaterial activities, including investments in
new business opportunities.
Radian Group Inc. and
Subsidiaries
Segment Information
Exhibit E (page 5 of 6)
Supplemental Other Operating
Expense Information by Segment
Mortgage
2022
2021
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Other operating expenses by
type
Salaries and other base employee
expenses
$
22,189
$
23,610
$
22,685
$
22,542
$
23,320
Variable and share-based incentive
compensation
16,697
12,649
17,143
15,236
8,947
Other general operating
expenses
25,027
25,290
25,639
26,583
24,338
Ceding commissions
(3,949
)
(4,879
)
(5,638
)
(6,501
)
(7,689
)
Total
$
59,964
$
56,670
$
59,829
$
57,860
$
48,916
homegenius
2022
2021
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Other operating expenses by
type
Salaries and other base employee
expenses
$
10,375
$
7,993
$
6,975
$
6,701
$
8,290
Variable and share-based incentive
compensation
5,522
4,678
6,238
5,896
2,974
Other general operating
expenses
8,571
7,851
7,982
6,525
6,253
Title agent commissions
1,099
1,323
2,267
1,759
1,407
Total
$
25,567
$
21,845
$
23,462
$
20,881
$
18,924
All Other
2022
2021
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Other operating expenses by
type
Salaries and other base employee
expenses
$
1,613
$
1,001
$
1,158
$
1,187
$
997
Variable and share-based incentive
compensation
953
874
1,144
958
399
Other general operating
expenses
982
920
699
1,605
977
Total
$
3,548
$
2,795
$
3,001
$
3,750
$
2,373
Radian Group Inc. and
Subsidiaries
Segment Information
Exhibit E (page 6 of 6)
Inter-segment
2022
2021
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Other operating expenses by
type
Other general operating
expenses
$
(40
)
$
(46
)
$
(57
)
$
(43
)
$
(35
)
Total
$
(40
)
$
(46
)
$
(57
)
$
(43
)
$
(35
)
Total
2022
2021
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Other operating expenses by
type
Salaries and other base employee
expenses
$
34,177
$
32,604
$
30,818
$
30,430
$
32,607
Variable and share-based incentive
compensation
23,172
18,201
24,525
22,090
12,320
Other general operating
expenses
34,540
34,015
34,263
34,670
31,533
Ceding commissions
(3,949
)
(4,879
)
(5,638
)
(6,501
)
(7,689
)
Title agent commissions
1,099
1,323
2,267
1,759
1,407
Total
$
89,039
$
81,264
$
86,235
$
82,448
$
70,178
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 the Company’s business
performance is evaluated by both management and the 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 the Company’s 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
attributable to our reportable segments; (ii) loss on
extinguishment of debt; (iii) amortization and impairment of
goodwill and other acquired intangible assets; and (iv) impairment
of other long-lived assets and other non-operating items, such as
impairment of internal-use software, gains (losses) from the sale
of lines of business and acquisition-related income and expenses.
Adjusted diluted net operating income (loss) per share is
calculated by dividing (i) adjusted pretax operating income (loss)
attributable to common stockholders, net of taxes computed using
the Company’s statutory tax rate, by (ii) the sum of the weighted
average number of common shares outstanding and all dilutive
potential common shares outstanding. Adjusted net operating return
on equity is calculated by dividing annualized adjusted pretax
operating income (loss), net of taxes computed using the Company’s
statutory tax rate, by average stockholders’ equity, based on the
average of the beginning and ending balances for each period
presented.
Although adjusted pretax
operating income (loss) excludes certain items that have occurred
in the past and are expected to occur in the future, the excluded
items represent those that are: (i) not viewed as part of the
operating performance of our primary activities or (ii) not
expected to result in an economic impact equal to the amount
reflected in pretax income (loss). These adjustments, along with
the reasons for their treatment, are described below.
(1)
Net gains (losses) on
investments and other financial instruments. The recognition of
realized investment gains or losses can vary significantly across
periods as the activity is highly discretionary based on the timing
of individual securities sales due to such factors as market
opportunities, our tax and capital profile and overall market
cycles. Unrealized gains and losses arise primarily from changes in
the market value of our investments that are classified as trading
or equity securities. These valuation adjustments may not
necessarily result in realized economic gains or losses.
Trends in the profitability of
our fundamental operating activities can be more clearly identified
without the fluctuations of these realized and unrealized gains or
losses and changes in fair value of other financial instruments.
Except for certain investments attributable to our reportable
segments, we do not view them to be indicative of our fundamental
operating activities.
(2)
Loss on extinguishment of
debt. Gains or losses on early extinguishment of debt and
losses incurred to purchase our debt prior to maturity are
discretionary activities that are undertaken in order to take
advantage of market opportunities to strengthen our financial and
capital positions; therefore, we do not view these activities as
part of our operating performance. Such transactions do not reflect
expected future operations and do not provide meaningful insight
regarding our current or past operating trends.
(3)
Amortization and impairment of
goodwill and other acquired intangible assets. Amortization of
acquired intangible assets represents the periodic expense required
to amortize the cost of acquired intangible assets over their
estimated useful lives. Acquired intangible assets are also
periodically reviewed for potential impairment, and impairment
adjustments are made whenever appropriate. We do not view these
charges as part of the operating performance of our primary
activities.
(4)
Impairment of other long-lived
assets and other non-operating items. Includes activities that
we do not view to be indicative of our fundamental operating
activities, such as: (i) impairment of internal-use software and
other long-lived assets; (ii) gains (losses) from the sale of lines
of business: and (iii) acquisition-related income and expenses.
Radian Group Inc. and
Subsidiaries
Definition of Consolidated Non-GAAP
Financial Measures
Exhibit F (page 2 of 2)
In addition to the above non-GAAP measures
for the consolidated company, we also have presented as
supplemental information non-GAAP measures for our homegenius
segment of adjusted pretax operating income (loss) before allocated
corporate operating expenses and adjusted gross profit. Adjusted
pretax operating income (loss) before allocated corporate operating
expenses is calculated as adjusted pretax operating income (loss)
as described above (which is the segment's ASC 280 GAAP measure of
operating performance), adjusted to remove the impact of corporate
allocations of other operating expenses for the homegenius segment.
Adjusted gross profit is further adjusted to remove other operating
expenses. In addition, homegenius adjusted pretax operating margin
before allocated corporate operating expenses and adjusted gross
profit margin are calculated by dividing homegenius adjusted pretax
operating margin before allocated corporate operating expenses and
adjusted gross profit, respectively, by GAAP total revenue for the
homegenius segment. For the homegenius segment, adjusted pretax
operating income (loss) before allocated corporate operating
expenses, adjusted gross profit, and the related profit margins are
used to facilitate comparisons with other services companies, since
they are widely accepted measures of performance in the services
industry and are used internally as supplemental measures to
evaluate the performance of our homegenius segment.
See Exhibit G for the reconciliation of
the most comparable GAAP measures, consolidated pretax income
(loss), diluted net income (loss) per share and return on equity to
our non-GAAP financial measures for the consolidated company,
adjusted pretax operating income (loss), adjusted diluted net
operating income (loss) per share and adjusted net operating return
on equity, respectively. Exhibit G also contains the reconciliation
of adjusted pretax operating income (loss) to adjusted pretax
operating income (loss) before allocated corporate operating
expenses and adjusted gross profit for the homegenius segment.
Total adjusted pretax operating income
(loss), adjusted diluted net operating income (loss) per share,
adjusted net operating return on equity, homegenius adjusted pretax
operating income (loss) before allocated corporate operating
expenses and homegenius adjusted gross profit should not be
considered in isolation or viewed as substitutes for GAAP pretax
income (loss), diluted net income (loss) per share, return on
equity or net income (loss), or in the case of the homegenius
non-GAAP measures, for homegenius adjusted pretax operating income
(loss). Our definitions of adjusted pretax operating income (loss),
adjusted diluted net operating income (loss) per share, adjusted
net operating return on equity and homegenius adjusted pretax
operating income (loss) before allocated corporate operating
expenses, homegenius adjusted gross profit, homegenius adjusted
pretax operating margin before allocated corporate operating
expenses or homegenius adjusted gross profit margin may not be
comparable to similarly-named measures reported by other
companies.
Radian Group Inc. and
Subsidiaries
Consolidated Non-GAAP Financial Measure
Reconciliations
Exhibit G (page 1 of 3)
Reconciliation of Consolidated
Pretax Income to Adjusted Pretax Operating Income
2022
2021
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Consolidated pretax income
$
234,140
$
246,506
$
161,641
$
195,496
$
161,189
Less reconciling income (expense)
items:
Net gains (losses) on investments and
other financial instruments (1)
(29,457
)
1,516
2,098
15,661
(5,181
)
Amortization of other acquired
intangible assets
(849
)
(863
)
(862
)
(863
)
(862
)
Impairment of other long-lived assets
and other non-operating items (2)
(502
)
788
(244
)
(4,021
)
(84
)
Total adjusted pretax operating income
(3)
$
264,948
$
245,065
$
160,649
$
184,719
$
167,316
(1)
For the fourth quarter of 2021, excludes
$1.5 million in net gains on investments attributable to our
homegenius segment and included in adjusted pretax operating income
(loss) for that reportable segment.
(2)
The amounts for all the periods presented
are included in other operating expenses on the Condensed
Consolidated Statement of Operations in Exhibit A and primarily
relate to impairments of other long-lived assets.
(3)
Total adjusted pretax operating income
(loss) consists of adjusted pretax operating income (loss) for each
reportable segment and All Other activities as follows:
2022
2021
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Adjusted pretax operating income
(loss):
Mortgage segment
$
277,841
$
246,574
$
165,220
$
194,043
$
175,709
homegenius segment
(13,506
)
(2,116
)
(5,557
)
(9,198
)
(10,453
)
All Other activities
613
607
986
(126
)
2,060
Total adjusted pretax operating
income
$
264,948
$
245,065
$
160,649
$
184,719
$
167,316
Radian Group Inc. and
Subsidiaries
Consolidated Non-GAAP Financial Measure
Reconciliations
Exhibit G (page 2 of 3)
Reconciliation of Diluted Net
Income Per Share to Adjusted Diluted Net Operating Income Per
Share
2022
2021
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Diluted net income per share
$
1.01
$
1.07
$
0.67
$
0.80
$
0.64
Less per-share impact of reconciling
income (expense) items:
Net gains (losses) on investments and
other financial instruments
(0.16
)
0.01
0.01
0.08
(0.03
)
Amortization of other acquired
intangible assets
(0.01
)
—
—
—
—
Impairment of other long-lived assets
and other non-operating items
—
—
—
(0.02
)
—
Income tax (provision) benefit on
reconciling income (expense) items (1)
0.03
—
—
(0.01
)
0.01
Difference between statutory and
effective tax rate
(0.02
)
(0.01
)
(0.01
)
—
(0.02
)
Per-share impact of reconciling income
(expense) items
(0.16
)
—
—
0.05
(0.04
)
Adjusted diluted net operating income
per share (1)
$
1.17
$
1.07
$
0.67
$
0.75
$
0.68
(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)
2022
2021
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Return on equity (1)
17.2
%
18.2
%
11.8
%
14.5
%
11.8
%
Less impact of reconciling income
(expense) items: (2)
Net gains (losses) on investments and
other financial instruments
(2.8
)
0.1
0.2
1.5
(0.5
)
Amortization of other acquired
intangible assets
(0.1
)
(0.1
)
(0.1
)
(0.1
)
(0.1
)
Impairment of other long-lived assets
and other non-operating items
—
0.1
—
(0.4
)
—
Income tax (provision) benefit on
reconciling income (expense) items (3)
0.6
—
—
(0.2
)
0.1
Difference between statutory and
effective tax rate
(0.4
)
(0.1
)
(0.1
)
0.1
(0.1
)
Impact of reconciling income (expense)
items
(2.7
)
—
0.0
0.9
(0.6
)
Adjusted net operating return on equity
(3)
19.9
%
18.2
%
11.8
%
13.6
%
12.4
%
(1)
Calculated by dividing annualized net
income (loss) by average stockholders’ equity, based on the average
of the beginning and ending balances for each period presented.
(2)
Annualized, as a percentage of average
stockholders’ equity.
(3)
Calculated using the company’s federal
statutory tax rate of 21%. Any permanent tax adjustments and state
income taxes on these items have been deemed immaterial and are not
included.
Radian Group Inc. and
Subsidiaries
Consolidated Non-GAAP Financial Measure
Reconciliations
Exhibit G (page 3 of 3)
Reconciliation of homegenius
Adjusted Pretax Operating Income (Loss) to homegenius Adjusted
Gross Profit
2022
2021
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
homegenius adjusted pretax operating
income (loss)
$
(13,506
)
$
(2,116
)
$
(5,557
)
$
(9,198
)
$
(10,453
)
Less reconciling income (expense)
items:
Allocation of corporate operating
expenses
(5,280
)
(4,847
)
(4,918
)
(4,721
)
(3,996
)
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
(8,226
)
2,731
(639
)
(4,477
)
(6,457
)
Less reconciling income (expense)
items:
Other operating expenses before
allocated corporate operating expenses
(20,287
)
(16,998
)
(18,544
)
(16,160
)
(14,928
)
homegenius adjusted gross
profit
$
12,061
$
19,729
$
17,905
$
11,683
$
8,471
On a consolidated basis, “adjusted pretax
operating income (loss),” “adjusted diluted net operating income
(loss) per share” and “adjusted net operating return on equity” are
measures not determined in accordance with GAAP. In addition,
“homegenius adjusted pretax operating income (loss) before
allocated corporate operating expenses", "homegenius adjusted gross
profit," “homegenius adjusted pretax operating margin before
allocated corporate operating expenses” and “homegenius adjusted
pretax operating margin" are also non-GAAP measures. These measures
should not be considered in isolation or viewed as substitutes for
GAAP pretax income (loss), diluted net income (loss) per share,
return on equity or net income (loss), or in the case of the
homegenius non-GAAP measures, for homegenius adjusted pretax
operating income (loss).
Our definitions of adjusted pretax
operating income (loss), adjusted diluted net operating income
(loss) per share, adjusted net operating return on equity,
homegenius adjusted pretax operating income (loss) before allocated
corporate operating expenses, homegenius adjusted gross profit,
homegenius adjusted pretax operating margin before allocated
corporate operating expenses or homegenius adjusted gross profit
margin 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
2022
2021
($ in millions)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
New insurance written ("NIW")
$
18,655
$
23,710
$
26,558
$
21,662
$
20,161
Percentage of
NIW
Borrower-paid
99.2
%
99.4
%
99.2
%
99.1
%
99.2
%
Percentage by
premium type
Direct monthly and other recurring
premiums
94.5
%
93.5
%
93.8
%
93.1
%
90.2
%
Borrower-paid (1) (2)
5.3
6.3
6.0
6.6
9.4
Lender-paid (1)
0.2
0.2
0.2
0.3
0.4
Direct single premiums (1)
5.5
6.5
6.2
6.9
9.8
Total NIW
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
NIW for purchases
91.4
%
91.1
%
89.8
%
77.1
%
59.1
%
NIW for refinances
8.6
%
8.9
%
10.2
%
22.9
%
40.9
%
Percentage of NIW
by FICO score (3)
>=740
57.1
%
53.8
%
56.0
%
61.4
%
64.3
%
680-739
35.7
36.9
34.9
33.1
31.5
620-679
7.2
9.3
9.1
5.5
4.2
Total NIW
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Percentage by
LTV
95.01% and above
14.6
%
16.3
%
12.1
%
10.9
%
8.0
%
90.01% to 95.00%
42.0
41.9
46.7
40.4
31.6
85.01% to 90.00%
29.4
28.4
26.5
27.6
31.3
85.00% and below
14.0
13.4
14.7
21.1
29.1
Total NIW
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
(1)
Percentages exclude the impact of
reinsurance.
(2)
Borrower-paid Single Premium Policies have
lower Minimum Required Assets under PMIERs as compared to
lender-paid Single Premium Policies.
(3)
For loans with multiple borrowers, the
percentage of NIW by FICO score represents the lowest of the
borrowers’ FICO scores.
Radian Group Inc. and
Subsidiaries
Mortgage Supplemental Information -
Primary Insurance in Force and Risk in Force
Exhibit I
March 31,
December 31,
September 30,
June 30,
March 31,
($ in millions)
2022
2021
2021
2021
2021
Primary insurance
in force (1)
$
248,951
$
245,972
$
241,575
$
237,302
$
238,921
Primary risk in
force (1) (2)
$
62,036
$
60,913
$
59,421
$
58,040
$
58,508
Percentage of
primary risk in force
Direct monthly and other recurring
premiums
84.9
%
83.9
%
82.7
%
81.2
%
80.0
%
Direct single premiums
15.1
%
16.1
%
17.3
%
18.8
%
20.0
%
Percentage of
primary risk in force by FICO score (3)
>=740
56.9
%
56.9
%
57.3
%
57.5
%
57.2
%
680-739
35.1
35.0
34.8
34.8
34.9
620-679
7.5
7.6
7.4
7.2
7.3
<=619
0.5
0.5
0.5
0.5
0.6
Total Primary
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Percentage of primary risk in force by LTV
95.01% and above
15.5
%
15.1
%
14.6
%
14.5
%
14.4
%
90.01% to 95.00%
48.9
48.9
48.9
48.5
48.6
85.01% to 90.00%
27.6
27.7
27.8
28.1
28.2
85.00% and below
8.0
8.3
8.7
8.9
8.8
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Percentage of primary risk in force by policy
year
2008 and prior
4.3
%
4.7
%
5.2
%
5.7
%
6.1
%
2009 - 2016
9.3
10.8
12.5
14.7
16.7
2017
4.3
4.9
5.7
6.8
8.0
2018
4.6
5.2
6.1
7.3
8.7
2019
8.6
9.7
11.4
13.6
15.6
2020
27.2
29.2
32.1
35.4
37.2
2021
34.0
35.5
27.0
16.5
7.7
2022
7.7
—
—
—
—
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Persistency Rate (12 months
ended)
68.0
%
64.3
%
60.8
%
57.7
%
(4)
57.2
%
(4)
Persistency Rate (quarterly,
annualized) (5)
76.9
%
(4)
71.7
%
67.5
%
66.3
%
62.5
%
(1)
Excludes the impact of premiums ceded
under our reinsurance agreements.
(2)
Does not include pool risk in force or
other risk in force, which combined represent approximately 1% of
our total risk in force for all periods presented.
(3)
For loans with multiple borrowers, the
percentage of primary risk in force by FICO score represents the
lowest of the borrowers’ FICO scores.
(4)
The Persistency Rate was reduced by an
increase in cancellations of Single Premium Policies due to
increased cancellations identified by our ongoing servicer
monitoring process for Single Premium Policies.
(5)
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.
Radian Group Inc. and
Subsidiaries
Mortgage Supplemental Information -
Claims and Reserves, Default Statistics
Exhibit J
2022
2021
($ in thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Net claims paid: (1)
Total primary claims paid
$
5,153
$
4,300
$
5,330
$
4,870
$
6,611
Total pool and other
(415
)
(462
)
991
(649
)
(138
)
Subtotal
4,738
3,838
6,321
4,221
6,473
Impact of commutations and settlements
(2)
—
6,549
3,915
—
4,000
Total net claims paid
$
4,738
$
10,387
$
10,236
$
4,221
$
10,473
Total average net primary claims paid
(1) (3)
$
41.6
$
47.8
$
42.0
$
46.8
$
43.8
Average direct primary claims paid (3)
(4)
$
42.1
$
49.1
$
43.2
$
48.4
$
45.5
(1)
Includes the impact of reinsurance
recoveries and LAE.
(2)
Includes payments to commute mortgage
insurance coverage on certain performing and non-performing loans.
For the first quarter of 2021, primarily includes payments made to
settle certain previously disclosed legal proceedings.
(3)
Calculated without giving effect to the
impact of commutations and settlements.
(4)
Before reinsurance recoveries.
March 31,
December 31,
September 30,
June 30,
March 31,
($ in thousands, except per default
amounts)
2022
2021
2021
2021
2021
Reserve for losses by category
(1)
Mortgage reserves
Primary case reserves
$
691,090
$
790,380
$
851,151
$
840,764
$
841,555
IBNR and other
2,539
2,886
3,788
5,464
6,626
LAE
17,367
19,859
21,400
21,180
21,212
Total primary reserves
710,996
813,125
876,339
867,408
869,393
Total pool reserves
10,330
9,826
11,413
13,085
13,175
Total 1st lien reserves
721,326
822,951
887,752
880,493
882,568
Other
184
185
269
270
270
Total Mortgage reserves
721,510
823,136
888,021
880,763
882,838
homegenius reserves
5,737
5,506
5,134
4,735
4,517
Total reserves
$
727,247
$
828,642
$
893,155
$
885,498
$
887,355
Primary reserve per primary default
excluding IBNR and other
$
27,776
$
27,884
$
25,822
$
21,304
$
17,219
(1)
Includes ceded losses on reinsurance
transactions, which are expected to be recovered and are included
in the reinsurance recoverables reported in our condensed
consolidated balance sheets.
March 31,
December 31,
September 30,
June 30,
March 31,
2022
2021
2021
2021
2021
Default
Statistics
Primary Insurance:
Number of insured loans
994,721
999,203
998,408
1,000,549
1,021,364
Number of loans in default
25,510
29,061
33,795
40,464
50,106
Percentage of loans in default
2.56
%
2.91
%
3.38
%
4.04
%
4.91
%
Radian Group Inc. and
Subsidiaries
Mortgage Supplemental Information -
Reinsurance Programs
Exhibit K
2022
2021
($ in thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Quota Share
Reinsurance (“QSR”) and Single Premium QSR Programs
Ceded premiums written (1)
$
(22,079
)
$
(7,670
)
$
(1,304
)
$
(7,032
)
$
(2,852
)
% of premiums written
(8.8
)%
(2.9
)%
(0.5
)%
(2.8
)%
(1.1
)%
Ceded premiums earned
$
(3,240
)
$
3,116
$
13,506
$
13,491
$
20,788
% of premiums earned
(1.2
)%
1.1
%
4.8
%
4.8
%
6.8
%
Ceding commissions written
$
(9,153
)
$
(8,232
)
$
(7,861
)
$
(2,362
)
$
(2,949
)
Ceding commissions earned (2)
$
5,123
$
6,288
$
7,087
$
7,920
$
10,407
Profit commission
$
22,075
$
20,290
$
13,630
$
17,935
$
16,350
Ceded losses
$
(12,588
)
$
(7,940
)
$
883
$
(1,007
)
$
3,661
Excess-of-Loss
Program
Ceded premiums written
$
16,164
$
20,508
$
15,434
$
18,524
$
11,482
% of premiums written
6.4
%
7.9
%
6.1
%
7.4
%
4.4
%
Ceded premiums earned
$
17,588
$
17,817
$
16,581
$
15,601
$
12,154
% of premiums earned
6.5
%
6.3
%
5.9
%
5.5
%
4.0
%
Ceded RIF
(3)
Single Premium QSR Program
$
4,855,228
$
5,228,037
$
5,439,056
$
5,728,142
$
6,147,808
Excess-of-Loss Program
2,199,919
2,295,954
1,873,426
1,952,900
1,525,100
QSR Program
186,930
207,106
232,539
268,337
317,827
Total Ceded RIF
$
7,242,077
$
7,731,097
$
7,545,021
$
7,949,379
$
7,990,735
PMIERs impact -
reduction in Minimum Required Assets
Excess-of-Loss Program
$
881,917
$
995,171
$
659,151
$
907,112
$
673,957
Single Premium QSR Program
286,706
314,183
328,339
355,115
388,536
QSR Program
11,214
12,541
14,116
16,545
19,378
Total PMIERs impact
$
1,179,837
$
1,321,895
$
1,001,606
$
1,278,772
$
1,081,871
(1)
Net of profit commission.
(2)
Includes amounts reported in policy
acquisition costs and other operating expenses. See Exhibit E for
details.
(3)
Included in primary RIF.
FORWARD-LOOKING STATEMENTS
All statements in this press release that address events,
developments or results that we expect or anticipate may occur in
the future are “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, Section 21E of the
Securities Exchange Act of 1934 and the U.S. Private Securities
Litigation Reform Act of 1995. In most cases, forward-looking
statements may be identified by words such as “anticipate,” “may,”
“will,” “could,” “should,” “would,” “expect,” “intend,” “plan,”
“goal,” “contemplate,” “believe,” “estimate,” “predict,” “project,”
“potential,” “continue,” “seek,” “strategy,” “future,” “likely” or
the negative or other variations on these words and other similar
expressions. These statements, which may include, without
limitation, projections regarding our future performance and
financial condition, are made on the basis of management’s current
views and assumptions with respect to future events. These
statements speak only as of the date they were made, and we
undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. We operate in a changing environment where new risks
emerge from time to time and it is not possible for us to predict
all risks that may affect us. The forward-looking statements are
not guarantees of future performance, and the forward-looking
statements, as well as our prospects as a whole, are subject to
risks and uncertainties that could cause actual results to differ
materially from those set forth in the forward-looking statements.
These risks and uncertainties include, without limitation:
- the COVID-19 pandemic, which could continue to subject us to
certain risks, including those discussed in “Item 1A. Risk
Factors—The COVID-19 pandemic adversely impacted us and, in the
future, could again adversely affect our business, results of
operations or financial condition;” and other risk factors in our
Annual Report on Form 10-K for the year ended December 31, 2021 and
in our subsequent reports and registration statements filed from
time to time with the U.S. Securities and Exchange Commission;
- 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 as a
result of inflationary pressures and a rising interest rate
environment, as well as other macroeconomic stresses such as those
that may arise from the ongoing Russia-Ukraine conflict;
- 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”) and other applicable requirements
imposed by the Federal Housing Finance Agency (the "FHFA") and by
Fannie Mae and Freddie Mac (collectively, the “GSEs”) to insure
loans purchased by the GSEs;
- our ability to maintain an adequate level of capital in our
insurance subsidiaries to satisfy existing and future regulatory
requirements;
- changes in the charters or business practices of, or rules or
regulations imposed by or applicable to, the GSEs or loans
purchased by the GSEs, which may include further changes in
response to the COVID-19 pandemic, changes in furtherance of
housing policy objectives such as the accessibility and
affordability of homeownership for low-and-moderate income
borrowers and underrepresented communities, or changes in the
requirements for Radian Guaranty to remain an approved insurer to
the GSEs such as changes in the PMIERs or the GSEs’ interpretation
and application of the PMIERs;
- the effects of the Enterprise Regulatory Capital Framework
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;
- 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, are subject
to complex compliance requirements that we may be unable to
satisfy, or may expose us to new risks including those that could
impact our capital and liquidity positions;
- uncertainty from the discontinuance of LIBOR and transition to
one or more alternative benchmarks that could cause interest rate
volatility and, among other things, impact our investment
portfolio, cost of debt and cost of reinsurance through mortgage
insurance-linked notes transactions;
- any disruption in the servicing of mortgages covered by our
insurance policies, as well as poor servicer performance, which
could be impacted by the burdens placed on many servicers due to
the COVID-19 pandemic;
- 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 increasing 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
GSE-sponsored alternatives to traditional mortgage insurance;
- legislative and regulatory activity (or inactivity), including
the adoption of (or failure to adopt) new laws and regulations, or
changes in existing laws and regulations, or the way they are
interpreted or applied;
- legal and regulatory claims, assertions, actions, reviews,
audits, inquiries and investigations that could result in adverse
judgments, settlements, fines, injunctions, restitutions or other
relief that could require significant expenditures, new or
increased reserves or have other effects on our business;
- the amount and timing of potential payments or adjustments
associated with federal or other tax examinations;
- the possibility that we may fail to estimate accurately,
especially in the event of an extended economic downturn or a
period of extreme market volatility and economic uncertainty, the
likelihood, magnitude and timing of losses in establishing loss
reserves for our mortgage insurance business or to accurately
calculate and/or project our Available Assets and Minimum Required
Assets under the PMIERs, which will be impacted by, among other
things, the size and mix of our insurance in force, the level of
defaults in our portfolio, the reported status of defaults in our
portfolio, including whether they are subject to mortgage
forbearance, a repayment plan or a loan modification trial period
granted in response to a financial hardship related to COVID-19,
the level of cash flow generated by our insurance operations and
our risk distribution strategies;
- volatility in our financial results caused by changes in the
fair value of our assets and liabilities, including with respect to
our use of derivatives and within our investment portfolio;
- changes in “GAAP” (accounting principles generally accepted in
the U.S.) or “SAPP” (statutory accounting principles and practices
including those required or permitted, if applicable, by the
insurance departments of the respective states of domicile of our
insurance subsidiaries) rules and guidance, or their
interpretation;
- risks associated with investments to grow our existing
businesses, or to pursue new lines of business or new products and
services, including our ability and related costs to develop,
launch and implement new and innovative technologies and digital
products and services, and whether these products and services will
receive broad customer acceptance, risks resulting from potential
changes in our investment, financing and hedging strategies, as
well as liquidity risk, risks associated with the use of financial
leverage, and market risks, including risk resulting from changes
in the fair values of assets in which we invest;
- 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, cyber-attack,
natural disasters or other similar events;
- our ability to attract and retain key employees; and
- legal and other limitations on amounts we may receive from our
subsidiaries, including dividends or ordinary course distributions
under our internal tax- and expense-sharing arrangements.
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, 2021, 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/20220426006312/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
Radian (NYSE:RDN)
Graphique Historique de l'Action
De Juin 2024 à Juil 2024
Radian (NYSE:RDN)
Graphique Historique de l'Action
De Juil 2023 à Juil 2024