— Fourth quarter GAAP net income of $162
million, or $1.01 per diluted share, and full year GAAP net income
of $743 million, or $4.35 per diluted share —
— Full year return on equity of 18.2% and full
year adjusted net operating return on equity of 20.3% —
— Primary mortgage insurance in force increases
6.1% year-over-year to $261 billion —
— Purchased $400 million, or 11.1% of total
shares outstanding of Radian Group common stock in 2022 —
— Paid $135 million of dividends to
stockholders during the year —
— Completed a series of capital actions in the
fourth quarter that resulted in a $382 million distribution from
Radian Guaranty to Radian Group and positioned Radian Guaranty to
resume paying recurring ordinary dividends to Radian Group starting
in the first quarter of 2023 —
Radian Group Inc. (NYSE: RDN) today reported net income for the
quarter ended December 31, 2022, of $162.3 million, or $1.01 per
diluted share. This compares with net income for the quarter ended
December 31, 2021, of $193.4 million, or $1.07 per diluted
share.
Net income for the full year 2022 was $742.9 million, or $4.35
per diluted share. This compares with net income for the full year
2021 of $600.7 million, or $3.16 per diluted share.
Key Financial Highlights
Quarter ended
Year ended
($ in millions, except per-share
amounts)
December 31,
2022
September 30,
2022
December 31,
2021
December 31,
2022
December 31,
2021
Net income (1)
$162.3
$198.3
$193.4
$742.9
$600.7
Diluted net income per share
$1.01
$1.20
$1.07
$4.35
$3.16
Consolidated pretax income
$203.3
$255.5
$246.5
$952.8
$764.8
Adjusted pretax operating income
(2)
$213.0
$272.7
$245.1
$1,052.7
$757.7
Adjusted diluted net operating
income per share (2)(3)
$1.05
$1.31
$1.07
$4.87
$3.15
Return on equity (1)(4)
17.0%
20.7%
18.2%
18.2%
14.1%
Adjusted net operating return on
equity (2)(3)
17.6%
22.5%
18.2%
20.3%
14.0%
New Insurance Written (NIW) -
mortgage insurance
$12,859
$17,616
$23,710
$67,954
$91,830
Net premiums earned - mortgage
insurance
$229.9
$235.2
$249.7
$957.2
$998.3
New defaults (5)
10,735
9,601
9,342
37,738
37,470
Provision for losses - mortgage
insurance
($43.5)
($97.5)
($46.6)
($339.4)
$19.4
homegenius revenues
$18.6
$25.1
$44.7
$110.0
$149.1
Quarter ended
($ in millions, except per-share
amounts)
December 31,
2022
September 30,
2022
December 31,
2021
Book value per share
$24.95
$23.80
$24.28
Accumulated other comprehensive
income (loss) value per share (6)
($2.91)
($3.20)
$0.68
PMIERs Available Assets (7)
$5,553
$5,358
$5,406
PMIERs excess Available Assets
(8)
$1,727
$1,628
$2,077
Total Holding Company Liquidity
(9)
$1,178
$848
$880
Total investments
$5,693
$5,592
$6,514
Primary mortgage insurance in
force
$260,994
$259,121
$245,972
Percentage of primary loans in
default (5)(10)
2.2%
2.1%
2.9%
Mortgage insurance loss
reserves
$421
$478
$823
(1)
Net income for the fourth quarter
of 2022 includes a pretax net gain of $6.8 million on investments
and other financial instruments. Net income for the third quarter
and full year of 2022 includes a pretax net loss on investments and
other financial instruments of $16.3 million and $80.7 million,
respectively. This compares with a pretax net gain on investments
and other financial instruments of $3.0 million and $15.6 million
for the fourth quarter and full year of 2021, respectively.
(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)
Defaults for the fourth quarter
of 2022 were impacted by two items: (i) approximately 300
incremental new defaults from areas impacted by Hurricane Ian and
(ii) approximately 700 incremental total defaults (comprised of
approximately 500 incremental new defaults and 200 fewer cures) due
to a timing change in when Radian receives servicer default
reporting. Since these incremental defaults are expected to be
temporary in nature, there is no material impact expected to our
provision for losses, loss reserves or claims paid from either of
these items. See “Fourth Quarter Highlights” below for additional
information.
(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 $275 million
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 December
31, 2022, was $213.0 million, or $1.05 per diluted share. This
compares with adjusted pretax operating income for the quarter
ended December 31, 2021, of $245.1 million, or $1.07 per diluted
share.
Adjusted pretax operating income for the full year 2022 was $1.1
billion, or $4.87 per diluted share. This compares with adjusted
pretax operating income for the full year 2021, of $757.7 million,
or $3.15 per diluted share.
Book value per share at December 31, 2022, was $24.95, compared
to $23.80 at September 30, 2022, and $24.28 at December 31, 2021.
This represents a 2.8% growth in book value per share at December
31, 2022, as compared to December 31, 2021, and includes
accumulated other comprehensive income (loss) of $(2.91) per share
as of December 31, 2022, and $0.68 per share as of December 31,
2021, which, if excluded as of both dates, would represent 18.1%
growth for the period. Changes in accumulated other comprehensive
income (loss) for 2022 are primarily from net unrealized losses on
investments as a result of an increase in market interest rates
during 2022. We do not expect to realize these losses given that we
have the ability and the expectation to hold these securities until
recovery.
“We reported another solid quarter for Radian, capping off an
excellent year for our company. For the full year 2022, despite
headwinds in the macroeconomic environment and continued cooling of
the mortgage and real estate markets, we reported net income of
$743 million and return on equity of 18.2%, while maintaining total
holding company liquidity of $1.2 billion as of year end. Our
primary mortgage in force portfolio grew more than 6%
year-over-year to $261 billion and credit performance remained
strong,” said Radian’s Chief Executive Officer Rick Thornberry.
“And we returned significant capital to our stockholders during the
year, paying $135 million of dividends and purchasing $400 million,
or 11.1% of total shares outstanding, of Radian Group common
stock.”
Thornberry added, “We are pleased to start the new year in a
strong position, following the transformative year-end transactions
that further enhance our capital strength and financial
flexibility. We believe we are well positioned to serve our
customers, provide value to our stockholders and continue our
mission of ensuring affordable, sustainable and equitable
homeownership.”
FOURTH QUARTER AND FULL YEAR HIGHLIGHTS
- NIW was $12.9 billion in the fourth quarter of 2022, compared
to $17.6 billion in the third quarter of 2022, and $23.7 billion in
the fourth quarter of 2021. NIW was $68.0 billion for the full year
2022, compared to $91.8 billion for the prior year.
- Purchase NIW decreased 27.1% in the fourth quarter of 2022
compared to the third quarter of 2022 and decreased 41.4% compared
to the fourth quarter of 2021.
- Refinances accounted for 1.7% of total NIW in the fourth
quarter of 2022, compared to 1.6% in the third quarter of 2022, and
8.9% in the fourth quarter of 2021.
- Of the $12.9 billion in NIW in the fourth quarter of 2022,
94.8% was written with monthly and other recurring premiums,
compared to 95.5% in the third quarter of 2022, and 93.5% in the
fourth quarter of 2021.
- Total primary mortgage insurance in force as of December 31,
2022, increased to $261.0 billion, an increase of 0.7% compared to
$259.1 billion as of September 30, 2022, and an increase of 6.1%
compared to $246.0 billion as of December 31, 2021. The
year-over-year change reflects a 10.0% increase in monthly premium
policy insurance in force and a 12.6% 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 79.6% for the
twelve months ended December 31, 2022, compared to 75.9% for the
twelve months ended September 30, 2022, and 64.3% for the twelve
months ended December 31, 2021.
- Annualized persistency for the three months ended December 31,
2022, was 84.1%, compared to 81.6% for the three months ended
September 30, 2022, and 71.7% for the three months ended December
31, 2021.
- Net mortgage insurance premiums earned were $229.9 million for
the quarter ended December 31, 2022, compared to $235.2 million for
the quarter ended September 30, 2022, and $249.7 million for the
quarter ended December 31, 2021. Net mortgage insurance premiums
earned were $957.2 million for the year ended December 31, 2022,
compared to $998.3 million for the year ended December 31, 2021.
- Mortgage insurance in force portfolio premium yield was 38.1
basis points in the fourth quarter of 2022. This compares to 39.2
basis points in the third quarter of 2022, and 41.0 basis points in
the fourth quarter of 2021.
- The impact of single premium policy cancellations before
consideration of reinsurance represented 0.9 basis points of direct
premium yield in the fourth quarter of 2022, 1.0 basis points in
the third quarter of 2022, and 3.4 basis points in the fourth
quarter of 2021.
- Total net mortgage insurance premium yield, which includes the
impact of ceded premiums and accrued profit commission, was 35.4
basis points in the fourth quarter of 2022. This compares to 36.7
basis points in the third quarter of 2022, and 41.0 basis points in
the fourth quarter of 2021.
- Details regarding premiums earned may be found in Exhibit
D.
- The mortgage insurance provision for losses was a benefit of
$43.5 million in the fourth quarter of 2022, compared to benefits
of $97.5 million and $46.6 million in the third quarter of 2022 and
fourth quarter of 2021, respectively. The mortgage insurance
provision for losses was a benefit of $339.4 million for the year
ended December 31, 2022, compared to a loss of $19.4 million for
the year ended December 31, 2021.
- All periods benefited from significant favorable reserve
development on prior period defaults, particularly in 2022, due to
more favorable trends in cures than originally estimated. The
decreased benefit in the fourth quarter of 2022 compared to the
third quarter of 2022 was primarily related to less favorable
development on prior period reserves, as the remaining loss reserve
balance continues to decline.
- The number of primary delinquent loans was 21,913 as of
December 31, 2022, compared to 21,077 as of September 30, 2022, and
29,061 as of December 31, 2021. As noted above, defaults for the
fourth quarter of 2022 included the impact of a timing change in
when Radian receives servicer default reporting, which realigned
certain servicers that had previously reported near the end of each
month to the mid-month reporting convention that is standard for
the industry and for the rest of the servicers for our insured
portfolio. As a result, cure activity occurring toward the end of
the month associated with those servicers will now be captured in
the subsequent month, with no material impact expected to our
provision for losses, loss reserves or claims paid as a result of
this operational change.
- The loss ratio in the fourth quarter of 2022 was (18.9)%
compared to (41.5)% in the third quarter of 2022, and (18.6)% in
the fourth quarter of 2021.
- Total mortgage insurance claims paid were $8.4 million in the
fourth quarter of 2022, compared to $4.5 million in the third
quarter of 2022, and $10.4 million in the fourth quarter of 2021.
Excluding the impact of commutations and settlements in each
period, claims paid were $3.8 million in the fourth quarter of
2022, compared to $3.2 million in the third quarter of 2022, and
$3.8 million in the fourth quarter of 2021. For the full year 2022,
total net claims paid, which includes the impact of settlements and
commutations, were $20.9 million, compared to $35.3 million for the
full year 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 fourth quarter of
2022 were $18.6 million, compared to $25.1 million for the third
quarter of 2022, and $44.7 million for the fourth quarter of 2021.
Total homegenius segment revenues for the full year of 2022 were
$110.0 million, compared to $149.1 million for the full year of
2021.
- Adjusted pretax operating loss, our primary segment measure of
profitability for the homegenius segment, was $31.5 million for the
quarter ended December 31, 2022, compared to $25.5 million for the
quarter ended September 30, 2022, and $2.1 million for the quarter
ended December 31, 2021. Adjusted pretax operating loss for the
full year 2022 was $88.2 million, compared to $27.3 million for the
full year 2021.
- Other operating expenses were $109.8 million in the fourth
quarter of 2022, compared to $91.3 million in the third quarter of
2022, and $80.5 million in the fourth quarter of 2021. Other
operating expenses were $381.1 million for the full year 2022,
compared to $323.7 million for the full year 2021.
- Other operating expenses were elevated for the full year 2022
primarily due to: (i) $14.9 million in impairment of long-lived
assets and other non-operating items recognized in the fourth
quarter of 2022, primarily from impairments to our lease-related
assets and (ii) severance and related expenses totaling $16.4
million, including $11.7 million recognized in the fourth quarter
of 2022. Additional details regarding other operating expenses by
segment may be found in Exhibit E.
CAPITAL AND LIQUIDITY UPDATE
Radian Group
- As of December 31, 2022, Radian Group maintained $902.8 million
of available liquidity. Total Holding Company Liquidity, which
includes the company’s $275.0 million unsecured revolving credit
facility, was $1.2 billion as of December 31, 2022.
- As previously announced, in the fourth quarter of 2022 the
Company purchased an additional 49 thousand shares of Radian Group
common stock at a total cost of approximately $1.0 million,
including commissions. After these repurchases, no purchase
authority remained available under our February 2022 repurchase
authorization. For the full year 2022, the company repurchased 19.5
million shares of Radian Group common stock at a total cost of
$400.2 million, including commissions.
- As previously announced, in January 2023, Radian Group’s board
of directors has approved a new share repurchase program that
enables the company to repurchase its common stock. The shares may
be purchased in the open market or in privately negotiated
transactions. The new authorization provides Radian Group the
flexibility to repurchase shares opportunistically from time to
time and spend up to $300 million, based on market and business
conditions, stock price and other factors. Radian Group plans to
utilize a Rule 10b5-1 plan, which would permit the company to
purchase shares, at pre-determined price targets, when it may
otherwise be precluded from doing so. The authorization will expire
on January 31, 2025.
- On November 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 December 2,
2022.
Radian Guaranty
- As previously announced, as part of the company’s efforts to
enhance financial flexibility, the company completed a series of
capital actions during the fourth quarter of 2022 affecting the
company’s mortgage insurance subsidiaries.
- Effective December 1, 2022, the company novated the entire
insured portfolio of its Radian Reinsurance Inc. subsidiary to an
unrelated third-party insurer. Following the novation, the company
completed the merger of Radian Reinsurance into Radian Guaranty in
December 2022.
- Following completion of this merger, the Pennsylvania Insurance
Department approved a $282 million return of capital and a $100
million early repayment of an outstanding surplus note from Radian
Guaranty to Radian Group, both of which were paid on December 30,
2022.
- As a result of the favorable impact of these recent capital
actions, we expect Radian Guaranty to have the ability to pay
ordinary dividends to Radian Group, without the need for prior
regulatory approval, beginning in the first quarter of 2023.
- At December 31, 2022, Radian Guaranty’s Available Assets under
PMIERs totaled approximately $5.6 billion, resulting in excess
available resources or a “cushion” of $1.7 billion, or 45%, over
its Minimum Required Assets under PMIERs.
- As of December 31, 2022, 70% of Radian Guaranty's primary
mortgage insurance risk in force is subject to some form of risk
distribution, providing a $1.1 billion reduction of Minimum
Required Assets under PMIERs.
CONFERENCE CALL
Radian will discuss fourth quarter and year-end 2022 financial
results in a conference call tomorrow, Thursday, February 9, 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 attributable to our segments; (ii)
gains (losses) on extinguishment of debt; (iii) amortization and
impairment of goodwill and other acquired intangible assets; (iv)
and impairment of other long-lived assets and other non-operating
items, such as impairment of internal-use software, gains (losses)
from the sale of lines of business and acquisition-related income
and expenses. Adjusted diluted net operating income (loss) per
share is calculated by dividing (i) adjusted pretax operating
income (loss) attributable to common stockholders, net of taxes
computed using the company’s statutory tax rate, by (ii) the sum of
the weighted average number of common shares outstanding and all
dilutive potential common shares outstanding. Adjusted net
operating return on equity is calculated by dividing annualized
adjusted pretax operating income (loss), net of taxes computed
using the company’s statutory tax rate, by average stockholders’
equity, based on the average of the beginning and ending balances
for each period presented.
In addition to the above non-GAAP measures for the consolidated
company, we also have presented as supplemental information
non-GAAP measures for our homegenius segment of adjusted pretax
operating income (loss) before allocated corporate operating
expenses and adjusted gross profit. Adjusted pretax operating
income (loss) before allocated corporate operating expenses is
calculated as adjusted pretax operating income (loss) as described
above (which is the segment's ASC 280 GAAP measure of operating
performance), adjusted to remove the impact of corporate
allocations of other operating expenses for the homegenius segment.
Adjusted gross profit is further adjusted to remove other operating
expenses. For the homegenius segment, adjusted pretax operating
income (loss) before allocated corporate operating expenses and
adjusted gross profit are used to facilitate comparisons with other
services companies, since they are widely accepted measures of
performance in the services industry and are used internally as
supplemental measures to evaluate the performance of our homegenius
segment.
See Exhibit F or Radian’s website for a description of these
items, as well as Exhibit G for reconciliations to the most
comparable consolidated GAAP measures.
ABOUT RADIAN
Radian Group Inc. (NYSE: RDN) is ensuring the American dream of
homeownership responsibly and sustainably through products and
services that include industry-leading mortgage insurance and a
comprehensive suite of mortgage, risk, title, 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 (page 1 of 2)
2022
2021
(In thousands, except per-share
amounts)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Revenues
Net premiums earned
$
232,827
$
240,222
$
253,892
$
254,190
$
261,437
Services revenue
15,441
20,146
27,281
29,348
35,693
Net investment income
59,091
51,414
46,957
38,196
37,407
Net gains (losses) on investments and
other financial instruments
6,845
(16,252
)
(41,869
)
(29,457
)
3,025
Other income
520
659
572
703
805
Total revenues
314,724
296,189
286,833
292,980
338,367
Expenses
Provision for losses
(43,599
)
(96,964
)
(113,922
)
(83,754
)
(46,219
)
Policy acquisition costs
5,931
5,442
5,940
6,605
7,271
Cost of services
16,128
18,717
22,760
24,753
28,333
Other operating expenses
109,785
91,327
90,495
89,541
80,476
Interest expense
21,594
21,183
20,831
20,846
21,137
Amortization of other acquired intangible
assets
1,587
1,023
849
849
863
Total expenses
111,426
40,728
26,953
58,840
91,861
Pretax income
203,298
255,461
259,880
234,140
246,506
Income tax provision
40,968
57,181
58,687
53,009
53,061
Net income
$
162,330
$
198,280
$
201,193
$
181,131
$
193,445
Diluted net income per share
$
1.01
$
1.20
$
1.15
$
1.01
$
1.07
Selected Mortgage Key
Ratios
2022
2021
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Loss ratio (1)
(18.9
)%
(41.5
)%
(46.2
)%
(34.3
)%
(18.6
)%
Expense ratio (2)
27.3
%
26.1
%
26.2
%
27.2
%
25.6
%
(1)
For our Mortgage segment,
calculated as provision for losses expressed as a percentage of net
premiums earned. See Exhibit E for additional information.
(2)
For our Mortgage segment,
calculated as operating expenses, (which include policy acquisition
costs and other operating expenses, as well as allocated corporate
operating expenses), expressed as a percentage of net premiums
earned. See Exhibit E for additional information.
Radian Group Inc. and
Subsidiaries
Condensed Consolidated Statements of
Operations
Exhibit A (page 2 of 2)
Year Ended December
31,
(In thousands, except per-share
amounts)
2022
2021
Revenues:
Net premiums earned
$
981,131
$
1,037,183
Services revenue
92,216
125,825
Net investment income
195,658
147,909
Net gains (losses) on investments and
other financial instruments
(80,733
)
15,603
Other income
2,454
3,412
Total revenues
1,190,726
1,329,932
Expenses:
Provision for losses
(338,239
)
20,877
Policy acquisition costs
23,918
29,029
Cost of services
82,358
103,714
Other operating expenses
381,148
323,686
Interest expense
84,454
84,344
Amortization of other acquired intangible
assets
4,308
3,450
Total expenses
237,947
565,100
Pretax income
952,779
764,832
Income tax provision
209,845
164,161
Net income
$
742,934
$
600,671
Diluted net income per share
$
4.35
$
3.16
Selected Mortgage Key
Ratios
Year Ended December
31,
2022
2021
Loss ratio (1)
(35.5
)%
1.9
%
Expense ratio (2)
26.7
%
25.3
%
(1)
For our Mortgage segment,
calculated as provision for losses expressed as a percentage of net
premiums earned. See Exhibit E for additional information.
(2)
For our Mortgage segment,
calculated as operating expenses, (which include policy acquisition
costs and other operating expenses, as well as allocated corporate
operating expenses), expressed as a percentage of net premiums
earned. See Exhibit E for additional information.
Radian Group Inc. and
Subsidiaries
Net Income Per Share Trend
Schedule
Exhibit B
The calculation of basic and diluted net
income per share was as follows.
2022
2021
(In thousands, except per-share
amounts)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Net income—basic and diluted
$
162,330
$
198,280
.
$
201,193
.
$
181,131
.
$
193,445
Average common shares
outstanding—basic
158,357
162,506
.
173,705
.
176,816
.
179,500
Dilutive effect of stock-based
compensation arrangements (1)
2,450
2,232
1,714
2,263
1,628
Adjusted average common shares
outstanding—diluted
160,807
164,738
175,419
179,079
181,128
Basic net income per share
$
1.03
$
1.22
$
1.16
$
1.02
$
1.08
Diluted net income per share
$
1.01
$
1.20
.
$
1.15
.
$
1.01
.
$
1.07
(1)
The following number of shares of our common stock equivalents
issued under our share-based compensation arrangements were not
included in the calculation of diluted net income per share because
they would be anti-dilutive.
2022
2021
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Shares of common stock equivalents
—
—
189
—
35
Year Ended December
31,
(In thousands, except per-share
amounts)
2022
2021
Net income - basic and diluted
$
742,934
$
600,671
Average common shares
outstanding—basic
167,930
188,370
Dilutive effect of stock-based
compensation arrangements (1)
2,734
1,893
Adjusted average common shares
outstanding—diluted
170,664
190,263
Basic net income per share
$
4.42
$
3.19
Diluted net income per share
$
4.35
$
3.16
(1)
The following number of shares of our common stock equivalents
issued under our share-based compensation arrangements were not
included in the calculation of diluted net income per share because
they would be anti-dilutive:
Year Ended December
31,
(In thousands)
2022
2021
Shares of common stock equivalents
—
28
Radian Group Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
Exhibit C
December 31,
September 30,
June 30,
March 31,
December 31,
(In thousands, except per-share
amounts)
2022
2022
2022
2022
2021
Assets
Investments
$
5,693,491
$
5,591,881
$
5,906,147
$
6,334,950
$
6,513,542
Cash
56,183
54,701
135,262
131,853
151,145
Restricted cash
377
1,107
561
1,651
1,475
Accrued investment income
40,093
38,596
35,774
35,531
32,812
Accounts and notes receivable
119,834
174,041
166,380
142,579
124,016
Reinsurance recoverable
25,633
30,569
39,876
55,015
67,896
Deferred policy acquisition costs
18,460
17,920
16,983
16,383
16,317
Property and equipment, net
70,981
75,740
74,874
75,275
75,086
Goodwill and other acquired intangible
assets, net
15,285
16,873
17,895
18,744
19,593
Prepaid federal income taxes
596,368
526,123
466,123
354,123
354,123
Other assets
427,024
458,292
414,412
449,642
483,180
Total assets
$
7,063,729
$
6,985,843
$
7,274,287
$
7,615,746
$
7,839,185
Liabilities and stockholders’ equity
Unearned premiums
$
271,479
$
285,290
$
298,991
$
312,013
$
329,090
Reserve for losses and loss adjustment
expense
426,843
483,664
594,808
727,247
828,642
Senior notes
1,413,504
1,412,473
1,411,458
1,410,458
1,409,473
Other borrowings
155,822
153,550
184,284
148,983
150,983
Reinsurance funds withheld
152,067
218,777
223,649
225,363
228,078
Net deferred tax liability
391,083
335,374
324,866
324,004
337,509
Other liabilities
333,604
358,665
305,269
320,114
296,614
Total liabilities
3,144,402
3,247,793
3,343,325
3,468,182
3,580,389
Common stock
176
176
186
193
194
Treasury stock
(930,643
)
(930,396
)
(930,284
)
(920,958
)
(920,798
)
Additional paid-in capital
1,519,641
1,513,615
1,698,490
1,871,763
1,878,372
Retained earnings
3,786,952
3,656,870
3,491,675
3,326,119
3,180,935
Accumulated other comprehensive income
(loss)
(456,799
)
(502,215
)
(329,105
)
(129,553
)
120,093
Total stockholders’ equity
3,919,327
3,738,050
3,930,962
4,147,564
4,258,796
Total liabilities and stockholders’
equity
$
7,063,729
$
6,985,843
$
7,274,287
$
7,615,746
$
7,839,185
Shares outstanding
157,056
157,058
166,388
174,648
175,421
Book value per share
$
24.95
$
23.80
$
23.63
$
23.75
$
24.28
Debt to capital ratio (1)
26.5
%
27.4
%
26.4
%
25.4
%
24.9
%
Risk to capital ratio-Radian Guaranty
only
10.7:1
11.1:1
11.9:1
12.1:1
11.1:1
(1)
Calculated as senior notes divided by senior notes and
stockholders' equity.
Radian Group Inc. and
Subsidiaries
Net Premiums Earned
Exhibit D (page 1 of 2)
2022
2021
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Premiums earned
Direct - Mortgage
Premiums earned, excluding revenue from
cancellations
$
247,880
$
250,140
$
249,936
$
243,600
$
248,704
Single Premium Policy cancellations
5,756
6,705
6,894
14,696
20,530
Total direct - Mortgage
253,636
256,845
256,830
258,296
269,234
Assumed - Mortgage (1)
(56
)
1,211
1,539
1,331
1,470
Ceded - Mortgage
Premiums earned, excluding revenue from
cancellations
(35,773
)
(38,879
)
(28,565
)
(27,339
)
(28,333
)
Single Premium Policy cancellations
(2)
(1,676
)
(1,844
)
(1,965
)
(4,192
)
(5,905
)
Profit commission - other (3)
13,802
17,864
19,070
17,078
13,199
Total ceded premiums - Mortgage (4)
(23,647
)
(22,859
)
(11,460
)
(14,453
)
(21,039
)
Net premiums earned - Mortgage
229,933
235,197
246,909
245,174
249,665
Net premiums earned - homegenius
2,894
5,025
6,983
9,016
11,772
Net premiums earned
$
232,827
$
240,222
$
253,892
$
254,190
$
261,437
(1)
Represents premiums from our participation in certain credit risk
transfer programs. In the fourth quarter of 2022, we novated this
insured risk to an unrelated third-party reinsurer, which assumed
all rights, interests, liabilities and obligations related to our
participation in these programs on a prospective basis.
(2)
Includes the impact of related profit commissions.
(3)
The amounts represent the profit commission on the Single Premium
QSR Program and 2022 QSR Agreement, excluding the impact of Single
Premium Policy cancellations.
(4)
See Exhibit K for additional information on ceded premiums for our
various reinsurance programs.
Radian Group Inc. and
Subsidiaries
Net Premiums Earned
Exhibit D (page 2 of 2)
Year Ended December
31,
(In thousands)
2022
2021
Premiums earned
Direct - Mortgage
Premiums earned, excluding revenue from
cancellations
$
991,556
$
988,472
Single Premium Policy cancellations
34,051
116,224
Total direct - Mortgage
1,025,607
1,104,696
Assumed - Mortgage (1)
4,025
7,066
Ceded - Mortgage
Premiums earned, excluding revenue from
cancellations
(130,556
)
(108,692
)
Single Premium Policy cancellations
(2)
(9,677
)
(33,388
)
Profit commission - other (3)
67,814
28,600
Total ceded premiums - Mortgage (4)
(72,419
)
(113,480
)
Net premiums earned - Mortgage
957,213
998,282
Net premiums earned - homegenius
23,918
38,901
Net premiums earned
$
981,131
$
1,037,183
(1)
Represents premiums from our participation in certain credit risk
transfer programs. In the fourth quarter of 2022, we novated this
insured risk to an unrelated third-party reinsurer, which assumed
all rights, interests, liabilities and obligations related to our
participation in these programs on a prospective basis.
(2)
Includes the impact of related profit commissions.
(3)
The amounts represent the profit commission on the Single Premium
QSR Program and 2022 QSR Agreement, excluding the impact of Single
Premium Policy cancellations.
(4)
See Exhibit K for additional information on ceded premiums for our
various reinsurance programs.
Radian Group Inc. and
Subsidiaries
Segment Information
Exhibit E (page 1 of 8)
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 December
31, 2022
(In thousands)
Mortgage
homegenius
All Other (1)
Inter-segment (2)
Total
Net premiums written (3)
$
227,791
$
2,894
$
—
$
—
$
230,685
Decrease in unearned premiums
2,142
—
—
—
2,142
Net premiums earned
229,933
2,894
—
—
232,827
Services revenue
328
15,207
—
(94
)
15,441
Net investment income
52,165
366
6,560
—
59,091
Net gains (losses) on investments and
other financial instruments
—
—
47
—
47
Other income
512
170
8
(170
)
520
Total
282,938
18,637
6,615
(264
)
307,926
Provision for losses
(43,509
)
(90
)
—
—
(43,599
)
Policy acquisition costs
5,931
—
—
—
5,931
Cost of services
235
15,893
—
—
16,128
Other operating expenses before allocated
corporate operating expenses (4)
20,131
27,998
3,606
(264
)
51,471
Interest expense
21,580
—
14
—
21,594
Total
4,368
43,801
3,620
(264
)
51,525
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
278,570
(25,164
)
2,995
—
256,401
Allocation of corporate operating
expenses
36,663
6,302
420
—
43,385
Adjusted pretax operating income
(loss)
$
241,907
$
(31,466
)
$
2,575
$
—
$
213,016
Radian Group Inc. and Subsidiaries
Segment Information Exhibit E (page 2 of 8)
Three Months Ended December
31, 2021
(In thousands)
Mortgage
homegenius
All Other (1)
Inter-segment (2)
Total
Net premiums written (3)
$
238,529
$
11,772
$
—
$
—
$
250,301
Decrease in unearned premiums
11,136
—
—
—
11,136
Net premiums earned
249,665
11,772
—
—
261,437
Services revenue
4,560
31,177
30
(74
)
35,693
Net investment income
33,916
255
3,236
—
37,407
Net gains (losses) on investments and
other financial instruments
—
1,509
—
—
1,509
Other income
661
—
144
—
805
Total
288,802
44,713
3,410
(74
)
336,851
Provision for losses
(46,560
)
369
—
(28
)
(46,219
)
Policy acquisition costs
7,271
—
—
—
7,271
Cost of services
3,710
24,615
8
—
28,333
Other operating expenses before allocated
corporate operating expenses (4)
23,365
16,998
2,422
(46
)
42,739
Interest expense
21,137
—
—
—
21,137
Total
8,923
41,982
2,430
(74
)
53,261
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
279,879
2,731
980
—
283,590
Allocation of corporate operating
expenses
33,305
4,847
373
—
38,525
Adjusted pretax operating income
(loss)
$
246,574
$
(2,116
)
$
607
$
—
$
245,065
Year Ended December 31,
2022
(In thousands)
Mortgage
homegenius
All Other (1)
Inter-segment (2)
Total
Net premiums written (3)
$
959,872
$
23,918
$
—
$
—
$
983,790
Decrease in unearned premiums
(2,659
)
—
—
—
(2,659
)
Net premiums earned
957,213
23,918
—
—
981,131
Services revenue
7,390
85,158
—
(332
)
92,216
Net investment income
171,221
729
23,708
—
195,658
Net gains (losses) on investments and
other financial instruments
—
—
47
—
47
Other income
2,376
170
78
(170
)
2,454
Total
1,138,200
109,975
23,833
(502
)
1,271,506
Provision for losses
(339,374
)
1,135
—
—
(338,239
)
Policy acquisition costs
23,918
—
—
—
23,918
Cost of services
5,951
76,407
—
—
82,358
Other operating expenses before allocated
corporate operating expenses (4)
92,756
97,775
13,269
(502
)
203,298
Interest expense
84,440
—
14
—
84,454
Total
(132,309
)
175,317
13,283
(502
)
55,789
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
1,270,509
(65,342
)
10,550
—
1,215,717
Allocation of corporate operating
expenses
138,566
22,856
1,578
—
163,000
Adjusted pretax operating income
(loss)
$
1,131,943
$
(88,198
)
$
8,972
$
—
$
1,052,717
Radian Group Inc. and SubsidiariesSegment InformationExhibit E
(page 3 of 8)
Year Ended December 31,
2021
(In thousands)
Mortgage
homegenius
All Other (1)
Inter-segment (2)
Total
Net premiums written (3)
$
944,546
$
38,901
$
—
$
—
$
983,447
Decrease in unearned premiums
53,736
—
—
—
53,736
Net premiums earned
998,282
38,901
—
—
1,037,183
Services revenue
17,670
108,282
154
(281
)
125,825
Net investment income
132,929
358
14,622
—
147,909
Net gains (losses) on investments and
other financial instruments
—
1,509
—
—
1,509
Other income
2,678
—
734
—
3,412
Total
1,151,559
149,050
15,510
(281
)
1,315,838
Provision for losses
19,437
1,540
—
(100
)
20,877
Policy acquisition costs
29,029
—
—
—
29,029
Cost of services
13,928
89,722
64
—
103,714
Other operating expenses before allocated
corporate operating expenses (4)
95,793
66,630
10,497
(181
)
172,739
Interest expense
84,344
—
—
—
84,344
Total
242,531
157,892
10,561
(281
)
410,703
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
909,028
(8,842
)
4,949
—
905,135
Allocation of corporate operating
expenses
127,482
18,482
1,422
—
147,386
Adjusted pretax operating income
(loss)
$
781,546
$
(27,324
)
$
3,527
$
—
$
757,749
(1)
All Other activities include: (i)
income (losses) from assets held by our holding company; (ii)
related general corporate operating expenses not attributable or
allocated to our reportable segments; and (iii) certain investments
in new business opportunities, including activities and investments
associated with Radian Mortgage Capital, and other immaterial
activities.
(2)
Includes immaterial inter-segment
revenue for our homegenius segment and immaterial inter-segment
expenses for our Mortgage segment and All Other activities.
(3)
Net of ceded premiums written
under our quota share and excess-of-loss reinsurance agreements.
See Exhibit K for additional information.
(4)
Does not include impairment of
long-lived assets and other non-operating items, which are not
considered components of adjusted pretax operating income
(loss).
Radian Group Inc. and
Subsidiaries
Segment Information
Exhibit E (page 4 of 8)
Mortgage
2022
2021
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Net premiums written (1)
$
227,791
$
235,076
$
248,645
$
248,360
$
238,529
(Increase) decrease in unearned
premiums
2,142
121
(1,736
)
(3,186
)
11,136
Net premiums earned
229,933
235,197
246,909
245,174
249,665
Services revenue
328
405
2,105
4,552
4,560
Net investment income
52,165
44,842
40,197
34,017
33,916
Other income
512
589
572
703
661
Total
282,938
281,033
289,783
284,446
288,802
Provision for losses (2)
(43,509
)
(97,493
)
(114,179
)
(84,193
)
(46,560
)
Policy acquisition costs
5,931
5,442
5,940
6,605
7,271
Cost of services
235
373
1,960
3,383
3,710
Other operating expenses before allocated
corporate operating expenses (2) (3)
20,131
23,396
25,474
23,755
23,365
Interest expense
21,580
21,183
20,831
20,846
21,137
Total (2)
4,368
(47,099
)
(59,974
)
(29,604
)
8,923
Adjusted pretax operating income before
allocated corporate operating expenses
278,570
328,132
349,757
314,050
279,879
Allocation of corporate operating
expenses
36,663
32,457
33,237
36,209
33,305
Adjusted pretax operating income
$
241,907
$
295,675
$
316,520
$
277,841
$
246,574
homegenius
2022
2021
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Net premiums earned
$
2,894
$
5,025
$
6,983
$
9,016
$
11,772
Services revenue (2)
15,207
19,812
25,261
24,878
31,177
Net investment income
366
246
99
18
255
Net gains (losses) on investments and
other financial instruments
—
—
—
—
1,509
Other income (2)
170
—
—
—
—
Total (2)
18,637
25,083
32,343
33,912
44,713
Provision for losses
(90
)
435
309
481
369
Cost of services
15,893
18,344
20,800
21,370
24,615
Other operating expenses before allocated
corporate operating expenses (3)
27,998
26,285
23,205
20,287
16,998
Total
43,801
45,064
44,314
42,138
41,982
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
(25,164
)
(19,981
)
(11,971
)
(8,226
)
2,731
Allocation of corporate operating
expenses
6,302
5,555
5,719
5,280
4,847
Adjusted pretax operating income
(loss)
$
(31,466
)
$
(25,536
)
$
(17,690
)
$
(13,506
)
$
(2,116
)
Radian Group Inc. and
Subsidiaries
Segment Information
Exhibit E (page 5 of 8)
All Other (4)
2022
2021
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Services revenue
$
—
$
—
$
—
$
—
$
30
Net investment income
6,560
6,326
6,661
4,161
3,236
Net gains (losses) on investments and
other financial instruments
47
—
—
—
—
Other income
8
70
—
—
144
Total
6,615
6,396
6,661
4,161
3,410
Cost of services
—
—
—
—
8
Other operating expenses before allocated
corporate operating expenses (2) (3)
3,606
3,444
3,077
3,142
2,422
Interest expense
14
—
—
—
—
Total (2)
3,620
3,444
3,077
3,142
2,430
Adjusted pretax operating income before
allocated corporate operating expenses
2,995
2,952
3,584
1,019
980
Allocation of corporate operating
expenses
420
371
381
406
373
Adjusted pretax operating income
(loss)
$
2,575
$
2,581
$
3,203
$
613
$
607
(1)
Net of ceded premiums written under our quota share and
excess-of-loss reinsurance agreements. See Exhibit K for additional
information.
(2)
Includes immaterial inter-segment revenue for our homegenius
segment and immaterial inter-segment expenses for our Mortgage
segment and All Other activities.
(3)
Does not include impairment of long-lived assets and other
non-operating items, which are not considered components of
adjusted pretax operating income (loss).
(4)
All Other activities include: (i) income (losses) from assets held
by our holding company; (ii) related general corporate operating
expenses not attributable or allocated to our reportable segments;
and (iii) certain investments in new business opportunities,
including activities and investments associated with Radian
Mortgage Capital, and other immaterial activities.
Radian Group Inc. and
Subsidiaries
Segment Information
Exhibit E (page 6 of 8)
Supplemental Other Operating
Expense Information by Segment
Mortgage
2022
2021
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Other operating expenses by type
Salaries and other base employee
expenses
$
28,059
$
23,824
$
24,420
$
22,189
$
23,610
Variable and share-based incentive
compensation
10,419
10,186
11,524
16,697
12,649
Other general operating expenses
23,414
26,116
25,611
25,027
25,290
Ceding commissions
(5,098
)
(4,273
)
(2,844
)
(3,949
)
(4,879
)
Total
$
56,794
$
55,853
$
58,711
$
59,964
$
56,670
homegenius
2022
2021
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Other operating expenses by type
Salaries and other base employee
expenses
$
17,403
$
13,403
$
12,187
$
10,375
$
7,993
Variable and share-based incentive
compensation
4,148
4,429
4,776
5,522
4,678
Other general operating expenses
11,670
12,158
10,162
8,571
7,851
Title agent commissions
1,079
1,850
1,799
1,099
1,323
Total
$
34,300
$
31,840
$
28,924
$
25,567
$
21,845
All Other
2022
2021
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Other operating expenses by type
Salaries and other base employee
expenses
$
1,529
$
1,429
$
1,726
$
1,613
$
1,001
Variable and share-based incentive
compensation
755
751
709
953
874
Other general operating expenses
1,742
1,635
1,023
982
920
Total
$
4,026
$
3,815
$
3,458
$
3,548
$
2,795
Radian Group Inc. and
Subsidiaries
Segment Information
Exhibit E (page 7 of 8)
Inter-segment
2022
2021
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Other operating expenses by type
Other general operating expenses
$
(264
)
$
(165
)
$
(33
)
$
(40
)
$
(46
)
Total
$
(264
)
$
(165
)
$
(33
)
$
(40
)
$
(46
)
Total
2022
2021
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Other operating expenses by type
Salaries and other base employee
expenses
$
46,991
$
38,656
$
38,333
$
34,177
$
32,604
Variable and share-based incentive
compensation
15,322
15,366
17,009
23,172
18,201
Other general operating expenses
36,562
39,744
36,763
34,540
34,015
Ceding commissions
(5,098
)
(4,273
)
(2,844
)
(3,949
)
(4,879
)
Title agent commissions
1,079
1,850
1,799
1,099
1,323
Total
$
94,856
(1
)
$
91,343
$
91,060
$
89,039
$
81,264
(1)
Includes $11.7 million of severance and related expenses, including
$10.4 million of severance expense in salaries and other base
employee expenses, $0.6 million of related share-based compensation
in variable and share-based incentive compensation, and $0.7
million of outplacement costs in other general operating expenses.
Mortgage
Year Ended December
31,
(In thousands)
2022
2021
Other operating expenses by type
Salaries and other base employee
expenses
$
98,492
$
92,157
Variable and share-based incentive
compensation
48,826
53,975
Other general operating expenses
100,168
101,850
Ceding commissions
(16,164
)
(24,707
)
Total
$
231,322
$
223,275
homegenius
Year Ended December
31,
(In thousands)
2022
2021
Other operating expenses by type
Salaries and other base employee
expenses
$
53,368
$
29,959
Variable and share-based incentive
compensation
18,875
19,786
Other general operating expenses
42,561
28,611
Title agent commissions
5,827
6,756
Total
$
120,631
$
85,112
Radian Group Inc. and
Subsidiaries
Segment Information
Exhibit E (page 8 of 8)
All Other
Year Ended December
31,
(In thousands)
2022
2021
Other operating expenses by type
Salaries and other base employee
expenses
$
6,297
$
4,343
Variable and share-based incentive
compensation
3,168
3,375
Other general operating expenses
5,382
4,201
Total
$
14,847
$
11,919
Inter-segment
Year Ended December
31,
(In thousands)
2022
2021
Other operating expenses by type
Other general operating expenses
$
(502
)
$
(181
)
Total
$
(502
)
$
(181
)
Total
Year Ended December
31,
(In thousands)
2022
2021
Other operating expenses by type
Salaries and other base employee
expenses
$
158,157
$
126,459
Variable and share-based incentive
compensation
70,869
77,136
Other general operating expenses
147,609
134,481
Ceding commissions
(16,164
)
(24,707
)
Title agent commissions
5,827
6,756
Total
$
366,298
(1
)
$
320,125
(1)
Includes $16.4 million of severance and related expenses, including
$14.7 million of severance expense in salaries and other base
employee expenses, $0.6 million of related share-based compensation
in variable and share-based incentive compensation, and $1.1
million of outplacement costs in other general operating expenses.
Radian Group Inc. and Subsidiaries Definition of
Consolidated Non-GAAP Financial Measures Exhibit F (page 1
of 2) Use of Non-GAAP Financial Measures
In addition to the traditional GAAP financial measures, we have
presented “adjusted pretax operating income (loss),” “adjusted
diluted net operating income (loss) per share” and “adjusted net
operating return on equity,” which are non-GAAP financial measures
for the consolidated company, among our key performance indicators
to evaluate our fundamental financial performance. These non-GAAP
financial measures align with the way our business performance is
evaluated by both management and by our board of directors. These
measures have been established in order to increase transparency
for the purposes of evaluating our operating trends and enabling
more meaningful comparisons with our peers. Although on a
consolidated basis adjusted pretax operating income (loss),
adjusted diluted net operating income (loss) per share and adjusted
net operating return on equity are non-GAAP financial measures, we
believe these measures aid in understanding the underlying
performance of our operations. Our senior management, including our
Chief Executive Officer (Radian’s chief operating decision maker),
uses adjusted pretax operating income (loss) as our primary measure
to evaluate the fundamental financial performance of our business
segments and to allocate resources to the segments.
Adjusted pretax operating income (loss) is defined as GAAP
consolidated pretax income (loss) excluding the effects of: (i) net
gains (losses) on investments and other financial instruments,
except for certain investments attributable to our segments; (ii)
gains (losses) on extinguishment of debt; (iii) amortization and
impairment of goodwill and other acquired intangible assets; and
(iv) impairment of other long-lived assets and other non-operating
items, such as impairment of internal-use software, gains (losses)
from the sale of lines of business and acquisition-related income
and expenses. Adjusted diluted net operating income (loss) per
share is calculated by dividing (i) adjusted pretax operating
income (loss) attributable to common stockholders, net of taxes
computed using the company’s statutory tax rate, by (ii) the sum of
the weighted average number of common shares outstanding and all
dilutive potential common shares outstanding. Adjusted net
operating return on equity is calculated by dividing annualized
adjusted pretax operating income (loss), net of taxes computed
using the company’s statutory tax rate, by average stockholders’
equity, based on the average of the beginning and ending balances
for each period presented.
Although adjusted pretax operating income (loss) excludes
certain items that have occurred in the past and are expected to
occur in the future, the excluded items represent those that are:
(i) not viewed as part of the operating performance of our primary
activities or (ii) not expected to result in an economic impact
equal to the amount reflected in pretax income (loss). These
adjustments, along with the reasons for their treatment, are
described below.
(1)
Net gains (losses) on investments and other financial
instruments. The recognition of realized investment gains or
losses can vary significantly across periods as the activity is
highly discretionary based on the timing of individual securities
sales due to such factors as market opportunities, our tax and
capital profile and overall market cycles. Unrealized gains and
losses arise primarily from changes in the market value of our
investments that are classified as trading or equity securities.
These valuation adjustments may not necessarily result in realized
economic gains or losses. Trends in the profitability of our
fundamental operating activities can be more clearly identified
without the fluctuations of these realized and unrealized gains or
losses and changes in fair value of other financial instruments.
Except for certain investments attributable to our 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. For the homegenius segment, adjusted pretax operating
income (loss) before allocated corporate operating expenses and
adjusted gross profit are used to facilitate comparisons with other
services companies, since they are widely accepted measures of
performance in the services industry and are used internally as
supplemental measures to evaluate the performance of our homegenius
segment.
See Exhibit G for the reconciliation of the most comparable GAAP
measures, consolidated pretax income (loss), diluted net income
(loss) per share and return on equity to our non-GAAP financial
measures for the consolidated company, adjusted pretax operating
income (loss), adjusted diluted net operating income (loss) per
share and adjusted net operating return on equity, respectively.
Exhibit G also contains the reconciliation of adjusted pretax
operating income (loss) to adjusted pretax operating income (loss)
before allocated corporate operating expenses and adjusted gross
profit for the homegenius segment.
Total adjusted pretax operating income (loss), adjusted diluted
net operating income (loss) per share, adjusted net operating
return on equity, homegenius adjusted pretax operating income
(loss) before allocated corporate operating expenses and homegenius
adjusted gross profit should not be considered in isolation or
viewed as substitutes for GAAP pretax income (loss), diluted net
income (loss) per share, return on equity or net income (loss), or
in the case of the homegenius non-GAAP measures, for homegenius
adjusted pretax operating income (loss). Our definitions of
adjusted pretax operating income (loss), adjusted diluted net
operating income (loss) per share, adjusted net operating return on
equity, homegenius adjusted pretax operating income (loss) before
allocated corporate operating expenses and homegenius adjusted
gross profit may not be comparable to similarly-named measures
reported by other companies.
Radian Group Inc. and
Subsidiaries
Consolidated Non-GAAP Financial Measure
Reconciliations
Exhibit G (page 1 of 5)
Reconciliation of Consolidated
Pretax Income to Adjusted Pretax Operating Income
2022
2021
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Consolidated pretax income
$
203,298
$
255,461
$
259,880
$
234,140
$
246,506
Less reconciling income (expense)
items
Net gains (losses) on investments and
other financial instruments (1)
6,798
(16,252
)
(41,869
)
(29,457
)
1,516
Amortization of other acquired intangible
assets
(1,587
)
(1,023
)
(849
)
(849
)
(863
)
Impairment of other long-lived assets and
other non-operating items (2)
(14,929
)
16
565
(502
)
788
Total adjusted pretax operating income
(3)
$
213,016
$
272,720
$
302,033
$
264,948
$
245,065
(1)
Excludes certain net gains (losses) on investments that are
attributable to specific operating segments and therefore included
in adjusted pretax operating income (loss).
(2)
The amounts for all the periods presented are included in other
operating expenses on the Condensed Consolidated Statement of
Operations in Exhibit A and primarily relate to impairments of
other long-lived assets.
(3)
Total adjusted pretax operating income consists of adjusted pretax
operating income (loss) for each reportable segment and All Other
activities as follows.
2022
2021
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Adjusted pretax operating income
(loss)
Mortgage segment
$
241,907
$
295,675
$
316,520
$
277,841
$
246,574
homegenius segment
(31,466
)
(25,536
)
(17,690
)
(13,506
)
(2,116
)
All Other activities
2,575
2,581
3,203
613
607
Total adjusted pretax operating income
$
213,016
$
272,720
$
302,033
$
264,948
$
245,065
Radian Group Inc. and
Subsidiaries
Consolidated Non-GAAP Financial Measure
Reconciliations
Exhibit G (page 2 of 5)
Reconciliation of Diluted Net
Income Per Share to Adjusted Diluted Net Operating Income Per
Share
2022
2021
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Diluted net income per share
$
1.01
$
1.20
$
1.15
$
1.01
$
1.07
Less per-share impact of reconciling
income (expense) items
Net gains (losses) on investments and
other financial instruments
0.04
(0.10
)
(0.24
)
(0.16
)
0.01
Amortization of other acquired intangible
assets
(0.01
)
(0.01
)
—
(0.01
)
—
Impairment of other long-lived assets and
other non-operating items
(0.09
)
—
—
—
—
Income tax (provision) benefit on
reconciling income (expense) items (1)
0.01
0.02
0.05
0.03
—
Difference between statutory and effective
tax rates
0.01
(0.02
)
(0.02
)
(0.02
)
(0.01
)
Per-share impact of reconciling income
(expense) items
(0.04
)
(0.11
)
(0.21
)
(0.16
)
—
Adjusted diluted net operating income per
share (1)
$
1.05
$
1.31
$
1.36
$
1.17
$
1.07
(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 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Return on equity (1)
17.0
%
20.7
%
19.9
%
17.2
%
18.2
%
Less impact of reconciling income
(expense) items (2)
Net gains (losses) on investments and
other financial instruments
0.7
(1.7
)
(4.1
)
(2.8
)
0.1
Amortization of other acquired intangible
assets
(0.2
)
(0.1
)
(0.1
)
(0.1
)
(0.1
)
Impairment of other long-lived assets and
other non-operating items
(1.6
)
—
0.1
—
0.1
Income tax (provision) benefit on
reconciling income (expense) items (3)
0.2
0.4
0.9
0.6
—
Difference between statutory and effective
tax rates
0.3
(0.4
)
(0.5
)
(0.4
)
(0.1
)
Impact of reconciling income (expense)
items
(0.6
)
(1.8
)
(3.7
)
(2.7
)
—
Adjusted net operating return on equity
(3)
17.6
%
22.5
%
23.6
%
19.9
%
18.2
%
(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 5)
Reconciliation of homegenius
Adjusted Pretax Operating Income (Loss) to homegenius Adjusted
Gross Profit
2022
2021
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
homegenius adjusted pretax operating
income (loss)
$
(31,466
)
$
(25,536
)
$
(17,690
)
$
(13,506
)
$
(2,116
)
Less reconciling income (expense)
items
Allocation of corporate operating
expenses
(6,302
)
(5,555
)
(5,719
)
(5,280
)
(4,847
)
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
(25,164
)
(19,981
)
(11,971
)
(8,226
)
2,731
Less reconciling income (expense)
items
Other operating expenses before allocated
corporate operating expenses
(27,998
)
(26,285
)
(23,205
)
(20,287
)
(16,998
)
homegenius adjusted gross profit
$
2,834
$
6,304
$
11,234
$
12,061
$
19,729
Reconciliation of Consolidated
Pretax Income to Adjusted Pretax Operating Income
Year Ended December
31,
(In thousands)
2022
2021
Consolidated pretax income
$
952,779
$
764,832
Less reconciling income (expense)
items:
Net gains (losses) on investments and
other financial instruments (1)
(80,780
)
14,094
Amortization of other acquired intangible
assets
(4,308
)
(3,450
)
Impairment of other long-lived assets and
other non-operating items (2)
(14,850
)
(3,561
)
Total adjusted pretax operating income
(3)
$
1,052,717
$
757,749
(1)
Excludes certain net gains (losses) on investments that are
attributable to specific operating segments and therefore included
in adjusted pretax operating income (loss).
(2)
The amounts for both periods are included in other operating
expenses on the Condensed Consolidated Statement of Operations in
Exhibit A and primarily relate to impairments of other long-lived
assets.
(3)
Total adjusted pretax operating income consists of adjusted pretax
operating income (loss) for each reportable segment and All Other
activities as follows:
Year Ended December
31,
(In thousands)
2022
2021
Adjusted pretax operating income
(loss):
Mortgage segment
$
1,131,943
$
781,546
homegenius segment
(88,198
)
(27,324
)
All Other activities
8,972
3,527
Total adjusted pretax operating income
$
1,052,717
$
757,749
Radian Group Inc. and
Subsidiaries
Consolidated Non-GAAP Financial Measure
Reconciliations
Exhibit G (page 4 of 5)
Reconciliation of Diluted Net
Income Per Share to Adjusted Diluted Net Operating Income Per
Share
Year Ended December
31,
2022
2021
Diluted net income per share
$
4.35
$
3.16
Less per-share impact of reconciling
income (expense) items:
Net gains (losses) on investments and
other financial instruments
(0.47
)
0.08
Amortization of other acquired intangible
assets
(0.03
)
(0.02
)
Impairment of other long-lived assets and
other non-operating items
(0.09
)
(0.02
)
Income tax (provision) benefit on
reconciling income (expense) items (1)
0.12
(0.01
)
Difference between statutory and effective
tax rates
(0.05
)
(0.02
)
Per-share impact of reconciling income
(expense) items
(0.52
)
0.01
Adjusted diluted net operating income per
share (1)
$
4.87
$
3.15
(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)
Year Ended December
31,
2022
2021
Return on equity (1)
18.2
%
14.1
%
Less impact of reconciling income
(expense) items: (2)
Net gains (losses) on investments and
other financial instruments
(2.0
)
0.4
Amortization of other acquired intangible
assets
(0.1
)
(0.1
)
Impairment of other long-lived assets and
other non-operating items
(0.4
)
(0.1
)
Income tax (provision) benefit on
reconciling income (expense) items (3)
0.5
—
Difference between statutory and effective
tax rates
(0.1
)
(0.1
)
Impact of reconciling income (expense)
items
(2.1
)
0.1
Adjusted net operating return on equity
(3)
20.3
%
14.0
%
(1)
Calculated by dividing net income by average stockholders’ equity.
(2)
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 5 of 5)
Reconciliation of homegenius
Adjusted Pretax Operating Income (Loss) to homegenius Adjusted
Gross Profit
Year Ended December
31,
(In thousands)
2022
2021
homegenius adjusted pretax operating
income (loss)
$
(88,198
)
$
(27,324
)
Less reconciling income (expense)
items:
Allocation of corporate operating
expenses
(22,856
)
(18,482
)
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
(65,342
)
(8,842
)
Less reconciling income (expense)
items:
Other operating expenses before allocated
corporate operating expenses
(97,775
)
(66,630
)
homegenius adjusted gross profit
$
32,433
$
57,788
On a consolidated basis, “adjusted pretax operating income
(loss),” “adjusted diluted net operating income (loss) per share”
and “adjusted net operating return on equity” are measures not
determined in accordance with GAAP. In addition, “homegenius
adjusted pretax operating income (loss) before allocated corporate
operating expenses" and "homegenius adjusted gross profit" are also
non-GAAP measures. These measures should not be considered in
isolation or viewed as substitutes for GAAP pretax income (loss),
diluted net income (loss) per share, return on equity or net income
(loss), or in the case of the homegenius non-GAAP measures, for
homegenius adjusted pretax operating income (loss).
Our definitions of adjusted pretax operating income (loss),
adjusted diluted net operating income (loss) per share, adjusted
net operating return on equity, homegenius adjusted pretax
operating income (loss) before allocated corporate operating
expenses and homegenius adjusted gross profit may not be comparable
to similarly-named measures reported by other companies. See
Exhibit F for additional information on our consolidated non-GAAP
financial measures.
Radian Group Inc. and
Subsidiaries
Mortgage Supplemental Information - New
Insurance Written
Exhibit H
2022
2021
($ in millions)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
New insurance written (“NIW”)
$
12,859
$
17,616
$
18,935
$
18,655
$
23,710
Total borrower-paid NIW
99.3
%
99.1
%
99.2
%
99.2
%
99.4
%
NIW by premium type
Direct monthly and other recurring
premiums
94.8
%
95.5
%
95.4
%
94.5
%
93.5
%
Direct single premiums (1)
5.2
4.5
4.6
5.5
6.5
Total NIW
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
NIW for purchases
98.3
%
98.4
%
97.1
%
91.4
%
91.1
%
NIW for refinances
1.7
%
1.6
%
2.9
%
8.6
%
8.9
%
NIW by FICO score (2)
>=740
59.4
%
63.3
%
59.6
%
57.1
%
53.8
%
680-739
33.1
28.5
32.3
35.7
36.9
620-679
7.5
8.2
8.1
7.2
9.3
Total NIW
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
NIW by LTV
95.01% and above
15.5
%
18.3
%
17.7
%
14.6
%
16.3
%
90.01% to 95.00%
40.8
37.1
39.9
42.0
41.9
85.01% to 90.00%
29.7
28.0
26.7
29.4
28.4
85.00% and below
14.0
16.6
15.7
14.0
13.4
Total NIW
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
(1)
Borrower-paid Single Premium Policies were 4.9%, 4.3%, 4.4%, 5.3%
and 6.3% of NIW for the periods indicated, respectively.
(2)
For loans with multiple borrowers, the percentage of NIW by FICO
score represents the lowest of the borrowers’ FICO scores.
Radian Group Inc. and
Subsidiaries
Mortgage Supplemental Information -
Primary Insurance in Force and Risk in Force
Exhibit I
December 31,
September 30,
June 30,
March 31,
December 31,
($ in millions)
2022
2022
2022
2022
2021
Primary insurance in force
$
260,994
$
259,121
$
254,226
$
248,951
$
245,972
Primary risk in force (“RIF”)
$
66,094
$
65,288
$
63,770
$
62,036
$
60,913
Primary RIF by premium type
Direct monthly and other recurring
premiums
87.1
%
86.4
%
85.6
%
84.9
%
83.9
%
Direct single premiums (1)
12.9
%
13.6
%
14.4
%
15.1
%
16.1
%
Primary RIF by FICO score (2)
>=740
57.4
%
57.5
%
57.2
%
56.9
%
56.9
%
680-739
34.6
34.5
34.9
35.1
35.0
620-679
7.6
7.6
7.5
7.5
7.6
<=619
0.4
0.4
0.4
0.5
0.5
Total Primary
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Primary RIF by LTV
95.01% and above
17.1
%
16.8
%
16.1
%
15.5
%
15.1
%
90.01% to 95.00%
48.4
48.4
48.7
48.9
48.9
85.01% to 90.00%
27.2
27.2
27.4
27.6
27.7
85.00% and below
7.3
7.6
7.8
8.0
8.3
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Primary RIF by policy year
2008 and prior
3.5
%
3.7
%
4.0
%
4.3
%
4.7
%
2009 - 2016
6.7
7.4
8.3
9.3
10.8
2017
3.3
3.5
3.9
4.3
4.9
2018
3.5
3.7
4.1
4.6
5.2
2019
6.7
7.1
7.7
8.6
9.7
2020
21.6
23.0
25.0
27.2
29.2
2021
29.5
30.6
32.1
34.0
35.5
2022
25.2
21.0
14.9
7.7
—
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Persistency Rate (12 months ended)
79.6
%
75.9
%
71.7
%
68.0
%
64.3
%
Persistency Rate (quarterly, annualized)
(3)
84.1
%
(4
)
81.6
%
(4
)
79.8
%
76.9
%
(4
)
71.7
%
(1)
Borrower-paid Single Premium Policies were 7.7%, 7.9%, 8.1%, 8.4%
and 8.5% of primary RIF for the periods indicated, respectively.
(2)
For loans with multiple borrowers, the percentage of primary RIF by
FICO score represents the lowest of the borrowers’ FICO scores.
(3)
The Persistency Rate on a quarterly, annualized basis is calculated
based on loan-level detail for the quarter ending as of the date
shown. It may be impacted by seasonality or other factors,
including the level of refinance activity during the applicable
periods and may not be indicative of full-year trends.
(4)
The Persistency Rate was reduced by an increase in cancellations of
Single Premium Policies due to increased cancellations identified
by our ongoing servicer monitoring process for Single Premium
Policies.
Radian Group Inc. and
Subsidiaries
Mortgage Supplemental Information -
Claims and Reserves, Default Statistics
Exhibit J
2022
2021
($ in thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Net claims paid (1)
Primary claims paid
$
3,821
$
3,606
$
3,659
$
5,153
$
4,300
Pool and other
(49
)
(420
)
(396
)
(415
)
(462
)
Subtotal
3,772
3,186
3,263
4,738
3,838
Impact of commutations and settlements
(2)
4,582
1,317
—
—
6,549
Total net claims paid
$
8,354
$
4,503
$
3,263
$
4,738
$
10,387
Total average net primary claims paid (1)
(3)
$
51.6
$
45.1
$
41.6
$
41.6
$
47.8
Average direct primary claims paid (3)
(4)
$
52.7
$
45.2
$
41.9
$
42.1
$
49.1
(1)
Includes the impact of reinsurance recoveries and LAE.
(2)
Includes payments to commute mortgage insurance coverage on certain
performing and non-performing loans.
(3)
Calculated without giving effect to the impact of commutations and
settlements.
(4)
Before reinsurance recoveries.
December 31,
September 30,
June 30,
March 31,
December 31,
($ in thousands, except per default
amounts)
2022
2022
2022
2022
2021
Reserve for losses by category (1)
Mortgage reserves
Primary case reserves
$
398,874
$
454,726
$
562,436
$
691,090
$
790,380
LAE
10,041
11,443
14,147
17,367
19,859
IBNR
2,128
2,229
2,424
2,539
2,886
Total primary reserves
411,043
468,398
579,007
710,996
813,125
Total pool reserves
9,740
9,175
9,756
10,330
9,826
Total 1st lien reserves
420,783
477,573
588,763
721,326
822,951
Other
172
174
184
184
185
Total Mortgage reserves
420,955
477,747
588,947
721,510
823,136
homegenius reserves
5,888
5,917
5,861
5,737
5,506
Total reserves
$
426,843
$
483,664
$
594,808
$
727,247
$
828,642
Primary reserve per primary default
excluding IBNR and other
$
18,661
$
22,122
$
26,380
$
27,776
$
27,884
(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.
December 31,
September 30,
June 30,
March 31,
December 31,
2022
2022
2022
2022
2021
Default Statistics
Primary Insurance
Number of insured loans
1,003,183
1,004,305
998,520
994,721
999,203
Number of loans in default
21,913
21,077
21,861
25,510
29,061
Percentage of loans in default
2.18
%
2.10
%
2.19
%
2.56
%
2.91
%
Radian Group Inc. and
Subsidiaries
Mortgage Supplemental Information -
Reinsurance Programs
Exhibit K
2022
2021
($ in thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
2022 and 2012 QSR Agreements (1)
Ceded premiums written (2)
$
6,770
$
10,363
$
253
$
306
$
381
% of premiums written
2.8
%
4.2
%
0.1
%
0.1
%
0.1
%
Ceded premiums earned
$
5,570
$
4,036
$
360
$
491
$
584
% of premiums earned
2.2
%
1.5
%
0.1
%
0.2
%
0.2
%
Ceding commissions earned (3)
$
2,128
$
1,609
$
127
$
537
$
582
Profit commission
$
4,433
$
4,008
$
—
$
—
$
—
Ceded losses
$
736
$
(235
)
$
(917
)
$
(720
)
$
(358
)
Single Premium QSR Program
Ceded premiums written (2)
$
(11,523
)
$
(19,303
)
$
(21,806
)
$
(22,386
)
$
(8,051
)
% of premiums written
(4.8
)%
(7.7
)%
(8.6
)%
(8.9
)%
(3.1
)%
Ceded premiums earned
$
114
$
(3,465
)
$
(8,297
)
$
(3,731
)
$
2,532
% of premiums earned
—
%
(1.3
)%
(3.1
)%
(1.4
)%
0.9
%
Ceding commissions earned (3)
$
3,530
$
3,153
$
3,287
$
4,586
$
5,706
Profit commission
$
11,159
$
16,074
$
21,447
$
22,075
$
20,290
Ceded losses
$
(5,587
)
$
(9,049
)
$
(14,120
)
$
(11,868
)
$
(7,582
)
Excess-of-Loss Program
Ceded premiums written
$
16,691
$
18,114
$
18,151
$
16,164
$
20,508
% of premiums written
6.9
%
7.3
%
7.2
%
6.4
%
7.9
%
Ceded premiums earned
$
17,924
$
22,184
$
19,292
$
17,588
$
17,817
% of premiums earned
7.0
%
8.4
%
7.3
%
6.5
%
6.3
%
Ceded RIF (4)
Single Premium QSR Program
$
4,076,690
$
4,273,500
$
4,665,020
$
4,855,228
$
5,228,037
Excess-of-Loss Program
1,866,808
1,940,126
2,076,121
2,199,919
2,295,954
2022 QSR Agreement
3,307,429
2,710,247
—
—
—
2012 QSR Agreements
142,364
160,106
175,046
186,930
207,106
Total Ceded RIF
$
9,393,291
$
9,083,979
$
6,916,187
$
7,242,077
$
7,731,097
PMIERs impact - reduction in Minimum
Required Assets
Excess-of-Loss Program
$
665,617
$
732,895
$
785,705
$
881,917
$
995,171
Single Premium QSR Program
231,339
243,911
268,847
286,706
314,183
2022 QSR Agreement
233,532
189,408
—
—
—
2012 QSR Agreements
8,357
9,310
10,226
11,214
12,541
Total PMIERs impact
$
1,138,845
$
1,175,524
$
1,064,778
$
1,179,837
$
1,321,895
(1)
Beginning with the third quarter of 2022, includes the impact of
the 2022 QSR Agreement.
(2)
Net of profit commission.
(3)
Includes amounts reported in policy acquisition costs and other
operating expenses. See Exhibit E for details.
(4)
Included in primary RIF.
FORWARD-LOOKING STATEMENTS
All statements in this press release that address events,
developments or results that we expect or anticipate may occur in
the future are “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, Section 21E of the
Securities Exchange Act of 1934 and the U.S. Private Securities
Litigation Reform Act of 1995. In most cases, forward-looking
statements may be identified by words such as “anticipate,” “may,”
“will,” “could,” “should,” “would,” “expect,” “intend,” “plan,”
“goal,” “contemplate,” “believe,” “estimate,” “predict,” “project,”
“potential,” “continue,” “seek,” “strategy,” “future,” “likely” or
the negative or other variations on these words and other similar
expressions. These statements, which may include, without
limitation, projections regarding our future performance and
financial condition, are made on the basis of management’s current
views and assumptions with respect to future events. These
statements speak only as of the date they were made, and we
undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. We operate in a changing environment where new risks
emerge from time to time and it is not possible for us to predict
all risks that may affect us. The forward-looking statements are
not guarantees of future performance, and the forward-looking
statements, as well as our prospects as a whole, are subject to
risks and uncertainties that could cause actual results to differ
materially from those set forth in the forward-looking statements.
These risks and uncertainties include, without limitation:
- the health of the U.S. housing market generally and changes in
economic conditions that impact the size of the insurable mortgage
market, the credit performance of our insured mortgage portfolio
and our business prospects, including more recently, changes
resulting from inflationary pressures, the higher interest rate
environment and the risks of a recession and higher unemployment
rates, as well as other macroeconomic stresses such as those that
may arise from the Russia-Ukraine conflict or other geopolitical
events;
- changes in the way customers, investors, ratings agencies,
regulators or legislators perceive our performance, financial
strength and future prospects;
- Radian Guaranty Inc.’s (“Radian Guaranty”) ability to remain
eligible under the Private Mortgage Insurer Eligibility
Requirements (the “PMIERs”) to insure loans purchased by Fannie Mae
and Freddie Mac (collectively, the “GSEs”);
- our ability to maintain an adequate level of capital in our
insurance subsidiaries to satisfy current and future regulatory
requirements;
- changes in the charters or business practices of, or rules or
regulations imposed by or applicable to, the GSEs or loans
purchased by the GSEs, which may include changes in furtherance of
housing policy objectives such as the accessibility and
affordability of homeownership for low-and moderate-income
borrowers and underrepresented communities, or changes in the
requirements for Radian Guaranty to remain an approved insurer to
the GSEs, such as changes in the PMIERs or the GSEs’ interpretation
and application of the PMIERs or other applicable
requirements;
- the effects of the Enterprise Regulatory Capital Framework,
which establishes a new regulatory capital framework for the GSEs,
and which, as finalized, increases the capital requirements for the
GSEs, and among other things, could impact the GSEs' operations and
pricing as well as the size of the insurable mortgage market, and
which may form the basis for future changes to the PMIERs to 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;
- 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;
- 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 GSE-sponsored
alternatives to traditional mortgage insurance;
- U.S. political conditions and legislative and regulatory
activity (or inactivity), including the failure to take action to
increase the U.S.’s debt limit, adoption of (or failure to adopt)
new laws and regulations, or changes in existing laws and
regulations, or the way they are interpreted or applied;
- legal and regulatory claims, assertions, actions, reviews,
audits, inquiries and investigations that could result in adverse
judgments, settlements, fines, injunctions, restitutions or other
relief that could require significant expenditures, new or
increased reserves or have other effects on our business;
- the amount and timing of potential payments or adjustments
associated with federal or other tax examinations;
- the possibility that we may fail to estimate accurately,
especially in the event of an extended economic downturn or a
period of extreme market volatility and economic uncertainty, the
likelihood, magnitude and timing of losses in establishing loss
reserves for our mortgage insurance business or to accurately
calculate and/or project our Available Assets and Minimum Required
Assets under the PMIERs, which will be impacted by, among other
things, the size and mix of our insurance in force, the level of
defaults in our portfolio, the reported status of defaults in our
portfolio, (including whether they are subject to mortgage
forbearance, a repayment plan or a loan modification trial period),
the level of cash flow generated by our insurance operations and
our risk distribution strategies;
- volatility in our financial results caused by changes in the
fair value of our assets and liabilities, including with respect to
our use of derivatives and within our investment portfolio;
- changes in “GAAP” (accounting principles generally accepted in
the U.S.) or “SAPP” (statutory accounting principles and practices
including those required or permitted, if applicable, by the
insurance departments of the respective states of domicile of our
insurance subsidiaries) rules and guidance, or their
interpretation;
- risks associated with investments to grow our existing
businesses, or to pursue new lines of business or new products and
services, including our ability and related costs to develop,
launch and implement new and innovative technologies and digital
products and services, whether these products and services receive
broad customer acceptance or will 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, cyber-attack,
ransomware 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/20230203005419/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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