— GAAP net income of $198 million, or $1.20 per diluted share —
— Adjusted diluted net operating income of $1.31 per diluted share —
— Return on equity of 20.7% and adjusted net operating return on equity of 22.5% —
— Purchased 19.5 million shares, or 11.1% of total shares outstanding of Radian Group common stock year-to-date through October 31st —
— Primary mortgage insurance in force increases 7.3% year-over-year to $259 billion —
WAYNE, Pa.--(BUSINESS WIRE)--November 2, 2022--Radian Group Inc. (NYSE: RDN) today reported net income for the quarter ended September 30, 2022, of $198.3 million, or $1.20 per diluted share. This compares with net income for the quarter ended September 30, 2021, of $126.4 million, or $0.67 per diluted share.
Key Financial Highlights |
|
Quarter ended |
||||
($ in millions, except per-share amounts) |
|
September 30, 2022 |
|
June 30, 2022 |
|
September 30, 2021 |
Net income (1) |
|
$198.3 |
|
$201.2 |
|
$126.4 |
Diluted net income per share |
|
$1.20 |
|
$1.15 |
|
$0.67 |
Consolidated pretax income |
|
$255.5 |
|
$259.9 |
|
$161.6 |
Adjusted pretax operating income (2) |
|
$272.7 |
|
$302.0 |
|
$160.6 |
Adjusted diluted net operating income per share (2)(3) |
|
$1.31 |
|
$1.36 |
|
$0.67 |
Return on equity (1)(4) |
|
20.7 % |
|
19.9 % |
|
11.8 % |
Adjusted net operating return on equity (2)(3) |
|
22.5 % |
|
23.6 % |
|
11.8 % |
New Insurance Written (NIW) - mortgage insurance |
|
$17,616 |
|
$18,935 |
|
$26,558 |
Net premiums earned - mortgage insurance |
|
$235.2 |
|
$246.9 |
|
$236.9 |
New defaults (5) |
|
9,601 |
|
8,009 |
|
8,132 |
Provision for losses - mortgage insurance |
|
($97.5) |
|
($114.2) |
|
$16.8 |
homegenius revenues |
|
$25.1 |
|
$32.3 |
|
$45.1 |
Book value per share |
|
$23.80 |
|
$23.63 |
|
$23.48 |
Accumulated other comprehensive income (loss) value per share (6) |
|
($3.20) |
|
($1.98) |
|
$0.84 |
PMIERs Available Assets (7) |
|
$5,358 |
|
$5,175 |
|
$5,262 |
PMIERs excess Available Assets (8) |
|
$1,628 |
|
$1,424 |
|
$1,741 |
Total Holding Company Liquidity (9) |
|
$848 |
|
$1,048 |
|
$1,036 |
Total investments |
|
$5,592 |
|
$5,906 |
|
$6,658 |
Primary mortgage insurance in force |
|
$259,121 |
|
$254,226 |
|
$241,575 |
Percentage of primary loans in default (10) |
|
2.1 % |
|
2.2 % |
|
3.4 % |
Mortgage insurance loss reserves |
|
$478 |
|
$589 |
|
$888 |
(1) |
Net income for the third quarter of 2022 includes a pretax net loss on investments and other financial instruments of $16.3 million, compared with a $41.9 million pretax net loss on investments and other financial instruments in the second quarter of 2022 and a pretax net gain on investments and other financial instruments of $2.1 million for the third 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%. |
|
(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 September 30, 2022, was $272.7 million, or $1.31 per diluted share. This compares with adjusted pretax operating income for the quarter ended September 30, 2021, of $160.6 million, or $0.67 per diluted share.
Book value per share at September 30, 2022, was $23.80, compared to $23.63 at June 30, 2022, and $23.48 at September 30, 2021. This represents a 1.4% growth in book value per share at September 30, 2022, as compared to September 30, 2021, and includes accumulated other comprehensive income (loss) of $(3.20) per share as of September 30, 2022 and $0.84 per share as of September 30, 2021, which, if excluded as of both dates, would represent 19.3% 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 until recovery.
“Despite a challenging macroeconomic environment and cooling of the mortgage and real estate markets, we are pleased to report on another excellent quarter for Radian with net income of $198 million, return on equity of 20.7% and total holding company liquidity of $848 million. Our primary mortgage insurance in force portfolio, which is the main driver of future earnings for our company, grew more than 7% year-over-year to $259 billion and credit performance remained strong,” said Radian’s Chief Executive Officer Rick Thornberry. “We are managing our expense structure to align to today’s operating environment and strategically managing our capital. We believe we are well positioned to continue our mission of ensuring affordable, sustainable and equitable homeownership.”
THIRD QUARTER HIGHLIGHTS
CAPITAL AND LIQUIDITY UPDATE
Radian Group
Radian Guaranty
CONFERENCE CALL
Radian will discuss third quarter 2022 financial results in a conference call tomorrow, Thursday, November 3, 2022, 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.
Please note that there is a new process to access the call via telephone. 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 reportable 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.
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 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|||||||||
Net premiums earned |
|
$ |
240,222 |
|
|
$ |
253,892 |
|
|
$ |
254,190 |
|
|
$ |
261,437 |
|
|
$ |
249,118 |
Services revenue |
|
|
20,146 |
|
|
|
27,281 |
|
|
|
29,348 |
|
|
|
35,693 |
|
|
|
37,773 |
Net investment income |
|
|
51,414 |
|
|
|
46,957 |
|
|
|
38,196 |
|
|
|
37,407 |
|
|
|
35,960 |
Net gains (losses) on investments and other financial instruments |
|
|
(16,252 |
) |
|
|
(41,869 |
) |
|
|
(29,457 |
) |
|
|
3,025 |
|
|
|
2,098 |
Other income |
|
|
659 |
|
|
|
572 |
|
|
|
703 |
|
|
|
805 |
|
|
|
809 |
Total revenues |
|
|
296,189 |
|
|
|
286,833 |
|
|
|
292,980 |
|
|
|
338,367 |
|
|
|
325,758 |
Expenses |
|
|
|
|
|
|
|
|
|
|
|||||||||
Provision for losses |
|
|
(96,964 |
) |
|
|
(113,922 |
) |
|
|
(83,754 |
) |
|
|
(46,219 |
) |
|
|
17,305 |
Policy acquisition costs |
|
|
5,442 |
|
|
|
5,940 |
|
|
|
6,605 |
|
|
|
7,271 |
|
|
|
7,924 |
Cost of services |
|
|
18,717 |
|
|
|
22,760 |
|
|
|
24,753 |
|
|
|
28,333 |
|
|
|
30,520 |
Other operating expenses |
|
|
91,327 |
|
|
|
90,495 |
|
|
|
89,541 |
|
|
|
80,476 |
|
|
|
86,479 |
Interest expense |
|
|
21,183 |
|
|
|
20,831 |
|
|
|
20,846 |
|
|
|
21,137 |
|
|
|
21,027 |
Amortization of other acquired intangible assets |
|
|
1,023 |
|
|
|
849 |
|
|
|
849 |
|
|
|
863 |
|
|
|
862 |
Total expenses |
|
|
40,728 |
|
|
|
26,953 |
|
|
|
58,840 |
|
|
|
91,861 |
|
|
|
164,117 |
Pretax income |
|
|
255,461 |
|
|
|
259,880 |
|
|
|
234,140 |
|
|
|
246,506 |
|
|
|
161,641 |
Income tax provision |
|
|
57,181 |
|
|
|
58,687 |
|
|
|
53,009 |
|
|
|
53,061 |
|
|
|
35,229 |
Net income |
|
$ |
198,280 |
|
|
$ |
201,193 |
|
|
$ |
181,131 |
|
|
$ |
193,445 |
|
|
$ |
126,412 |
Diluted net income per share |
|
$ |
1.20 |
|
|
$ |
1.15 |
|
|
$ |
1.01 |
|
|
$ |
1.07 |
|
|
$ |
0.67 |
Selected Mortgage Key Ratios |
|||||||||||||||
|
|
2022 |
|
2021 |
|||||||||||
|
|
Qtr 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|||||
Loss ratio (1) |
|
(41.5 |
)% |
|
(46.2 |
)% |
|
(34.3 |
)% |
|
(18.6 |
)% |
|
7.1 |
% |
Expense ratio (2) |
|
26.1 |
% |
|
26.2 |
% |
|
27.2 |
% |
|
25.6 |
% |
|
28.6 |
% |
(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 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|||||
Net income—basic and diluted |
|
$ |
198,280 |
|
$ |
201,193 |
$ |
181,131 |
$ |
193,445 |
$ |
126,412 |
|||
Average common shares outstanding—basic |
|
|
162,506 |
|
|
173,705 |
|
176,816 |
|
179,500 |
|
186,741 |
|||
Dilutive effect of stock-based compensation arrangements (1) |
|
|
2,232 |
|
|
1,714 |
|
|
2,263 |
|
|
1,628 |
|
|
1,301 |
Adjusted average common shares outstanding—diluted |
|
|
164,738 |
|
|
175,419 |
|
|
179,079 |
|
|
181,128 |
|
|
188,042 |
Basic net income per share |
|
$ |
1.22 |
|
$ |
1.16 |
|
$ |
1.02 |
|
$ |
1.08 |
|
$ |
0.68 |
Diluted net income per share |
|
$ |
1.20 |
|
$ |
1.15 |
$ |
1.01 |
$ |
1.07 |
$ |
0.67 |
(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 would be anti-dilutive. |
|
|
2022 |
|
2021 |
||||||||
(In thousands) |
|
Qtr 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
||
Shares of common stock equivalents |
|
— |
|
189 |
|
— |
|
35 |
|
— |
Radian Group Inc. and Subsidiaries |
||||||||||||||||||||
Condensed Consolidated Balance Sheets |
||||||||||||||||||||
Exhibit C |
||||||||||||||||||||
|
|
September 30, |
|
June 30 |
|
March 31, |
|
December 31, |
|
September 30, |
||||||||||
(In thousands, except per-share amounts) |
|
2022 |
|
2022 |
|
2022 |
|
2021 |
|
2021 |
||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments |
|
$ |
5,591,881 |
|
|
$ |
5,906,147 |
|
|
$ |
6,334,950 |
|
|
$ |
6,513,542 |
|
|
$ |
6,658,487 |
|
Cash |
|
|
54,701 |
|
|
|
135,262 |
|
|
|
131,853 |
|
|
|
151,145 |
|
|
|
154,709 |
|
Restricted cash |
|
|
1,107 |
|
|
|
561 |
|
|
|
1,651 |
|
|
|
1,475 |
|
|
|
1,866 |
|
Accrued investment income |
|
|
38,596 |
|
|
|
35,774 |
|
|
|
35,531 |
|
|
|
32,812 |
|
|
|
33,258 |
|
Accounts and notes receivable |
|
|
174,041 |
|
|
|
166,380 |
|
|
|
142,579 |
|
|
|
124,016 |
|
|
|
166,730 |
|
Reinsurance recoverables |
|
|
30,569 |
|
|
|
39,876 |
|
|
|
55,015 |
|
|
|
67,896 |
|
|
|
76,048 |
|
Deferred policy acquisition costs |
|
|
17,920 |
|
|
|
16,983 |
|
|
|
16,383 |
|
|
|
16,317 |
|
|
|
16,823 |
|
Property and equipment, net |
|
|
75,740 |
|
|
|
74,874 |
|
|
|
75,275 |
|
|
|
75,086 |
|
|
|
74,170 |
|
Goodwill and other acquired intangible assets, net |
|
|
16,873 |
|
|
|
17,895 |
|
|
|
18,744 |
|
|
|
19,593 |
|
|
|
20,456 |
|
Prepaid federal income taxes |
|
|
526,123 |
|
|
|
466,123 |
|
|
|
354,123 |
|
|
|
354,123 |
|
|
|
313,123 |
|
Other assets |
|
|
458,292 |
|
|
|
414,412 |
|
|
|
449,642 |
|
|
|
483,180 |
|
|
|
525,938 |
|
Total assets |
|
$ |
6,985,843 |
|
|
$ |
7,274,287 |
|
|
$ |
7,615,746 |
|
|
$ |
7,839,185 |
|
|
$ |
8,041,608 |
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
|
|
|
|
||||||||||
Unearned premiums |
|
$ |
285,290 |
|
|
$ |
298,991 |
|
|
$ |
312,013 |
|
|
$ |
329,090 |
|
|
$ |
348,322 |
|
Reserve for losses and loss adjustment expense |
|
|
483,664 |
|
|
|
594,808 |
|
|
|
727,247 |
|
|
|
828,642 |
|
|
|
893,155 |
|
Senior notes |
|
|
1,412,473 |
|
|
|
1,411,458 |
|
|
|
1,410,458 |
|
|
|
1,409,473 |
|
|
|
1,408,502 |
|
FHLB advances |
|
|
153,550 |
|
|
|
184,284 |
|
|
|
148,983 |
|
|
|
150,983 |
|
|
|
172,649 |
|
Reinsurance funds withheld |
|
|
218,777 |
|
|
|
223,649 |
|
|
|
225,363 |
|
|
|
228,078 |
|
|
|
290,502 |
|
Net deferred tax liability |
|
|
335,374 |
|
|
|
324,866 |
|
|
|
324,004 |
|
|
|
337,509 |
|
|
|
286,957 |
|
Other liabilities |
|
|
358,665 |
|
|
|
305,269 |
|
|
|
320,114 |
|
|
|
296,614 |
|
|
|
383,585 |
|
Total liabilities |
|
|
3,247,793 |
|
|
|
3,343,325 |
|
|
|
3,468,182 |
|
|
|
3,580,389 |
|
|
|
3,783,672 |
|
Common stock |
|
|
176 |
|
|
|
186 |
|
|
|
193 |
|
|
|
194 |
|
|
|
200 |
|
Treasury stock |
|
|
(930,396 |
) |
|
|
(930,284 |
) |
|
|
(920,958 |
) |
|
|
(920,798 |
) |
|
|
(920,355 |
) |
Additional paid-in capital |
|
|
1,513,615 |
|
|
|
1,698,490 |
|
|
|
1,871,763 |
|
|
|
1,878,372 |
|
|
|
2,012,870 |
|
Retained earnings |
|
|
3,656,870 |
|
|
|
3,491,675 |
|
|
|
3,326,119 |
|
|
|
3,180,935 |
|
|
|
3,012,997 |
|
Accumulated other comprehensive income (loss) |
|
|
(502,215 |
) |
|
|
(329,105 |
) |
|
|
(129,553 |
) |
|
|
120,093 |
|
|
|
152,224 |
|
Total stockholders’ equity |
|
|
3,738,050 |
|
|
|
3,930,962 |
|
|
|
4,147,564 |
|
|
|
4,258,796 |
|
|
|
4,257,936 |
|
Total liabilities and stockholders’ equity |
|
$ |
6,985,843 |
|
|
$ |
7,274,287 |
|
|
$ |
7,615,746 |
|
|
$ |
7,839,185 |
|
|
$ |
8,041,608 |
|
Shares outstanding |
|
|
157,058 |
|
|
|
166,388 |
|
|
|
174,648 |
|
|
|
175,421 |
|
|
|
181,336 |
|
Book value per share |
|
$ |
23.80 |
|
|
$ |
23.63 |
|
|
$ |
23.75 |
|
|
$ |
24.28 |
|
|
$ |
23.48 |
|
Debt to capital ratio (1) |
|
27.4 |
% |
|
26.4 |
% |
|
25.4 |
% |
|
24.9 |
% |
|
24.9 |
% |
Risk to capital ratio-Radian Guaranty only |
|
11.1:1 |
|
11.9:1 |
|
12.1:1 |
|
11.1:1 |
|
11.4:1 |
(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 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
||||||||||
Premiums earned |
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct - Mortgage |
|
|
|
|
|
|
|
|
|
|
||||||||||
Premiums earned, excluding revenue from cancellations |
|
$ |
250,140 |
|
|
$ |
249,936 |
|
|
$ |
243,600 |
|
|
$ |
248,704 |
|
|
$ |
239,786 |
|
Single Premium Policy cancellations |
|
|
6,705 |
|
|
|
6,894 |
|
|
|
14,696 |
|
|
|
20,530 |
|
|
|
25,592 |
|
Total direct - Mortgage |
|
|
256,845 |
|
|
|
256,830 |
|
|
|
258,296 |
|
|
|
269,234 |
|
|
|
265,378 |
|
Assumed - Mortgage (1) |
|
|
1,211 |
|
|
|
1,539 |
|
|
|
1,331 |
|
|
|
1,470 |
|
|
|
1,683 |
|
Ceded - Mortgage |
|
|
|
|
|
|
|
|
|
|
||||||||||
Premiums earned, excluding revenue from cancellations |
|
|
(38,879 |
) |
|
|
(28,565 |
) |
|
|
(27,339 |
) |
|
|
(28,333 |
) |
|
|
(27,662 |
) |
Single Premium Policy cancellations (2) |
|
|
(1,844 |
) |
|
|
(1,965 |
) |
|
|
(4,192 |
) |
|
|
(5,905 |
) |
|
|
(7,338 |
) |
Profit commission - other (3) |
|
|
17,864 |
|
|
|
19,070 |
|
|
|
17,078 |
|
|
|
13,199 |
|
|
|
4,806 |
|
Total ceded premiums - Mortgage (4) |
|
|
(22,859 |
) |
|
|
(11,460 |
) |
|
|
(14,453 |
) |
|
|
(21,039 |
) |
|
|
(30,194 |
) |
Net premiums earned - Mortgage |
|
|
235,197 |
|
|
|
246,909 |
|
|
|
245,174 |
|
|
|
249,665 |
|
|
|
236,867 |
|
Net premiums earned - homegenius |
|
|
5,025 |
|
|
|
6,983 |
|
|
|
9,016 |
|
|
|
11,772 |
|
|
|
12,251 |
|
Net premiums earned |
|
$ |
240,222 |
|
|
$ |
253,892 |
|
|
$ |
254,190 |
|
|
$ |
261,437 |
|
|
$ |
249,118 |
|
(1) |
Represents premiums 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 and 2022 QSR Agreement, excluding the impact of Single Premium Policy cancellations. |
|
(4) |
See Exhibit K for additional information on ceded premiums for our various reinsurance programs. |
Radian Group Inc. and Subsidiaries |
|||||||||||||||||||
Segment Information |
|||||||||||||||||||
Exhibit E (page 1 of 6) |
|||||||||||||||||||
Summarized financial information concerning our operating segments as of and for the periods indicated is as follows. For a definition of adjusted pretax operating income (loss), homegenius adjusted pretax operating income (loss) before allocated corporate operating expenses and homegenius adjusted gross profit, along with reconciliations to consolidated GAAP measures, see Exhibits F and G. |
|||||||||||||||||||
|
|
Three Months Ended September 30, 2022 |
|||||||||||||||||
(In thousands) |
|
Mortgage |
|
homegenius |
|
All Other (1) |
|
Inter- |
|
Total |
|||||||||
Net premiums written (3) |
|
$ |
235,076 |
|
|
$ |
5,025 |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
240,101 |
|
Decrease in unearned premiums |
|
|
121 |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
121 |
|
Net premiums earned |
|
|
235,197 |
|
|
|
5,025 |
|
|
|
— |
|
|
— |
|
|
|
240,222 |
|
Services revenue |
|
|
405 |
|
|
|
19,812 |
|
|
|
— |
|
|
(71 |
) |
|
|
20,146 |
|
Net investment income |
|
|
44,842 |
|
|
|
246 |
|
|
|
6,326 |
|
|
— |
|
|
|
51,414 |
|
Other income |
|
|
589 |
|
|
|
— |
|
|
|
70 |
|
|
— |
|
|
|
659 |
|
Total |
|
|
281,033 |
|
|
|
25,083 |
|
|
|
6,396 |
|
|
(71 |
) |
|
|
312,441 |
|
Provision for losses |
|
|
(97,493 |
) |
|
|
435 |
|
|
|
— |
|
|
94 |
|
|
|
(96,964 |
) |
Policy acquisition costs |
|
|
5,442 |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
5,442 |
|
Cost of services |
|
|
373 |
|
|
|
18,344 |
|
|
|
— |
|
|
— |
|
|
|
18,717 |
|
Other operating expenses before allocated corporate operating expenses (4) |
|
|
23,396 |
|
|
|
26,285 |
|
|
|
3,444 |
|
|
(165 |
) |
|
|
52,960 |
|
Interest expense (5) |
|
|
21,183 |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
21,183 |
|
Total |
|
|
(47,099 |
) |
|
|
45,064 |
|
|
|
3,444 |
|
|
(71 |
) |
|
|
1,338 |
|
Adjusted pretax operating income (loss) before allocated corporate operating expenses |
|
|
328,132 |
|
|
|
(19,981 |
) |
|
|
2,952 |
|
|
— |
|
|
|
311,103 |
|
Allocation of corporate operating expenses |
|
|
32,457 |
|
|
|
5,555 |
|
|
|
371 |
|
|
— |
|
|
|
38,383 |
|
Adjusted pretax operating income (loss) |
|
$ |
295,675 |
|
|
$ |
(25,536 |
) |
|
$ |
2,581 |
|
$ |
— |
|
|
$ |
272,720 |
|
|
|
Three Months Ended September 30, 2021 |
|||||||||||||||
(In thousands) |
|
Mortgage |
|
homegenius |
|
All Other (1) |
|
Inter- |
|
Total |
|||||||
Net premiums written (3) |
|
$ |
228,116 |
|
$ |
12,251 |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
240,367 |
Decrease in unearned premiums |
|
|
8,751 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
8,751 |
Net premiums earned |
|
|
236,867 |
|
|
12,251 |
|
|
|
— |
|
|
— |
|
|
|
249,118 |
Services revenue |
|
|
5,027 |
|
|
32,805 |
|
|
|
27 |
|
|
(86 |
) |
|
|
37,773 |
Net investment income |
|
|
32,158 |
|
|
35 |
|
|
|
3,767 |
|
|
— |
|
|
|
35,960 |
Other income |
|
|
607 |
|
|
— |
|
|
|
202 |
|
|
— |
|
|
|
809 |
Total |
|
|
274,659 |
|
|
45,091 |
|
|
|
3,996 |
|
|
(86 |
) |
|
|
323,660 |
Provision for losses |
|
|
16,794 |
|
|
540 |
|
|
|
— |
|
|
(29 |
) |
|
|
17,305 |
Policy acquisition costs |
|
|
7,924 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
7,924 |
Cost of services |
|
|
3,865 |
|
|
26,646 |
|
|
|
9 |
|
|
— |
|
|
|
30,520 |
Other operating expenses before allocated corporate operating expenses (4) |
|
|
25,866 |
|
|
18,544 |
|
|
|
2,623 |
|
|
(57 |
) |
|
|
46,976 |
Interest expense (5) |
|
|
21,027 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
21,027 |
Total |
|
|
75,476 |
|
|
45,730 |
|
|
|
2,632 |
|
|
(86 |
) |
|
|
123,752 |
Adjusted pretax operating income (loss) before allocated corporate operating expenses |
|
|
199,183 |
|
|
(639 |
) |
|
|
1,364 |
|
|
— |
|
|
|
199,908 |
Allocation of corporate operating expenses |
|
|
33,963 |
|
|
4,918 |
|
|
|
378 |
|
|
— |
|
|
|
39,259 |
Adjusted pretax operating income (loss) |
|
$ |
165,220 |
|
$ |
(5,557 |
) |
|
$ |
986 |
|
$ |
— |
|
|
$ |
160,649 |
Radian Group Inc. and Subsidiaries |
||
Segment Information |
||
Exhibit E (page 2 of 6) |
||
(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 services revenue for our homegenius segment and immaterial inter-segment provision for losses and other operating expenses for our Mortgage segment. |
|
(3) |
Net of ceded premiums written under under our quota share and excess-of-loss reinsurance agreements. See Exhibit K for additional information. |
|
(4) |
Does not include impairment of long-lived assets and other non-operating items, which are not considered components of adjusted pretax operating income (loss). |
|
(5) |
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 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|||||||||
Net premiums written (1) |
|
$ |
235,076 |
|
|
$ |
248,645 |
|
|
$ |
248,360 |
|
|
$ |
238,529 |
|
|
$ |
228,116 |
(Increase) decrease in unearned premiums |
|
|
121 |
|
|
|
(1,736 |
) |
|
|
(3,186 |
) |
|
|
11,136 |
|
|
|
8,751 |
Net premiums earned |
|
|
235,197 |
|
|
|
246,909 |
|
|
|
245,174 |
|
|
|
249,665 |
|
|
|
236,867 |
Services revenue |
|
|
405 |
|
|
|
2,105 |
|
|
|
4,552 |
|
|
|
4,560 |
|
|
|
5,027 |
Net investment income |
|
|
44,842 |
|
|
|
40,197 |
|
|
|
34,017 |
|
|
|
33,916 |
|
|
|
32,158 |
Other income |
|
|
589 |
|
|
|
572 |
|
|
|
703 |
|
|
|
661 |
|
|
|
607 |
Total |
|
|
281,033 |
|
|
|
289,783 |
|
|
|
284,446 |
|
|
|
288,802 |
|
|
|
274,659 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Provision for losses (2) |
|
|
(97,493 |
) |
|
|
(114,179 |
) |
|
|
(84,193 |
) |
|
|
(46,560 |
) |
|
|
16,794 |
Policy acquisition costs |
|
|
5,442 |
|
|
|
5,940 |
|
|
|
6,605 |
|
|
|
7,271 |
|
|
|
7,924 |
Cost of services |
|
|
373 |
|
|
|
1,960 |
|
|
|
3,383 |
|
|
|
3,710 |
|
|
|
3,865 |
Other operating expenses before allocated corporate operating expenses (2) (3) |
|
|
23,396 |
|
|
|
25,474 |
|
|
|
23,755 |
|
|
|
23,365 |
|
|
|
25,866 |
Interest expense (4) |
|
|
21,183 |
|
|
|
20,831 |
|
|
|
20,846 |
|
|
|
21,137 |
|
|
|
21,027 |
Total (2) |
|
|
(47,099 |
) |
|
|
(59,974 |
) |
|
|
(29,604 |
) |
|
|
8,923 |
|
|
|
75,476 |
Adjusted pretax operating income before allocated corporate operating expenses |
|
|
328,132 |
|
|
|
349,757 |
|
|
|
314,050 |
|
|
|
279,879 |
|
|
|
199,183 |
Allocation of corporate operating expenses |
|
|
32,457 |
|
|
|
33,237 |
|
|
|
36,209 |
|
|
|
33,305 |
|
|
|
33,963 |
Adjusted pretax operating income |
|
$ |
295,675 |
|
|
$ |
316,520 |
|
|
$ |
277,841 |
|
|
$ |
246,574 |
|
|
$ |
165,220 |
|
|
homegenius |
||||||||||||||||||
|
|
2022 |
|
2021 |
||||||||||||||||
(In thousands) |
|
Qtr 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
||||||||||
Net premiums earned |
|
$ |
5,025 |
|
|
$ |
6,983 |
|
|
$ |
9,016 |
|
|
$ |
11,772 |
|
|
$ |
12,251 |
|
Services revenue (2) |
|
|
19,812 |
|
|
|
25,261 |
|
|
|
24,878 |
|
|
|
31,177 |
|
|
|
32,805 |
|
Net investment income |
|
|
246 |
|
|
|
99 |
|
|
|
18 |
|
|
|
255 |
|
|
|
35 |
|
Net gains (losses) on investments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,509 |
|
|
|
— |
|
Total (2) |
|
|
25,083 |
|
|
|
32,343 |
|
|
|
33,912 |
|
|
|
44,713 |
|
|
|
45,091 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Provision for losses |
|
|
435 |
|
|
|
309 |
|
|
|
481 |
|
|
|
369 |
|
|
|
540 |
|
Cost of services |
|
|
18,344 |
|
|
|
20,800 |
|
|
|
21,370 |
|
|
|
24,615 |
|
|
|
26,646 |
|
Other operating expenses before allocated corporate operating expenses (3) |
|
|
26,285 |
|
|
|
23,205 |
|
|
|
20,287 |
|
|
|
16,998 |
|
|
|
18,544 |
|
Total |
|
|
45,064 |
|
|
|
44,314 |
|
|
|
42,138 |
|
|
|
41,982 |
|
|
|
45,730 |
|
Adjusted pretax operating income (loss) before allocated corporate operating expenses |
|
|
(19,981 |
) |
|
|
(11,971 |
) |
|
|
(8,226 |
) |
|
|
2,731 |
|
|
|
(639 |
) |
Allocation of corporate operating expenses |
|
|
5,555 |
|
|
|
5,719 |
|
|
|
5,280 |
|
|
|
4,847 |
|
|
|
4,918 |
|
Adjusted pretax operating income (loss) |
|
$ |
(25,536 |
) |
|
$ |
(17,690 |
) |
|
$ |
(13,506 |
) |
|
$ |
(2,116 |
) |
|
$ |
(5,557 |
) |
Radian Group Inc. and Subsidiaries |
|||||||||||||||
Segment Information |
|||||||||||||||
Exhibit E (page 4 of 6) |
|||||||||||||||
|
|
All Other (5) |
|||||||||||||
|
|
2022 |
|
2021 |
|||||||||||
(In thousands) |
|
Qtr 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|||||
Services revenue |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
30 |
|
$ |
27 |
Net investment income |
|
|
6,326 |
|
|
6,661 |
|
|
4,161 |
|
|
3,236 |
|
|
3,767 |
Other income |
|
|
70 |
|
|
— |
|
|
— |
|
|
144 |
|
|
202 |
Total |
|
|
6,396 |
|
|
6,661 |
|
|
4,161 |
|
|
3,410 |
|
|
3,996 |
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of services |
|
|
— |
|
|
— |
|
|
— |
|
|
8 |
|
|
9 |
Other operating expenses before allocated corporate operating expenses (3) |
|
|
3,444 |
|
|
3,077 |
|
|
3,142 |
|
|
2,422 |
|
|
2,623 |
Total |
|
|
3,444 |
|
|
3,077 |
|
|
3,142 |
|
|
2,430 |
|
|
2,632 |
Adjusted pretax operating income before allocated corporate operating expenses |
|
|
2,952 |
|
|
3,584 |
|
|
1,019 |
|
|
980 |
|
|
1,364 |
Allocation of corporate operating expenses |
|
|
371 |
|
|
381 |
|
|
406 |
|
|
373 |
|
|
378 |
Adjusted pretax operating income (loss) |
|
$ |
2,581 |
|
$ |
3,203 |
|
$ |
613 |
|
$ |
607 |
|
$ |
986 |
(1) |
Net of ceded premiums written under under our quota share and excess-of-loss reinsurance agreements. See Exhibit K for additional information. |
|
(2) |
Includes immaterial inter-segment services revenue for our homegenius segment and immaterial inter-segment provision for losses 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; 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 5 of 6) |
||||||||||||||||||||
Supplemental Other Operating Expense Information by Segment |
||||||||||||||||||||
|
|
Mortgage |
||||||||||||||||||
|
|
2022 |
|
2021 |
||||||||||||||||
(In thousands) |
|
Qtr 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
||||||||||
Other operating expenses by type |
|
|
|
|
|
|
|
|
|
|
||||||||||
Salaries and other base employee expenses |
|
$ |
23,824 |
|
|
$ |
24,420 |
|
|
$ |
22,189 |
|
|
$ |
23,610 |
|
|
$ |
22,685 |
|
Variable and share-based incentive compensation |
|
|
10,186 |
|
|
|
11,524 |
|
|
|
16,697 |
|
|
|
12,649 |
|
|
|
17,143 |
|
Other general operating expenses |
|
|
26,116 |
|
|
|
25,611 |
|
|
|
25,027 |
|
|
|
25,290 |
|
|
|
25,639 |
|
Ceding commissions |
|
|
(4,273 |
) |
|
|
(2,844 |
) |
|
|
(3,949 |
) |
|
|
(4,879 |
) |
|
|
(5,638 |
) |
Total |
|
$ |
55,853 |
|
|
$ |
58,711 |
|
|
$ |
59,964 |
|
|
$ |
56,670 |
|
|
$ |
59,829 |
|
|
|
homegenius |
|||||||||||||
|
|
2022 |
|
2021 |
|||||||||||
(In thousands) |
|
Qtr 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|||||
Other operating expenses by type |
|
|
|
|
|
|
|
|
|
|
|||||
Salaries and other base employee expenses |
|
$ |
14,079 |
|
$ |
12,187 |
|
$ |
10,375 |
|
$ |
7,993 |
|
$ |
6,975 |
Variable and share-based incentive compensation |
|
|
3,753 |
|
|
4,776 |
|
|
5,522 |
|
|
4,678 |
|
|
6,238 |
Other general operating expenses |
|
|
12,158 |
|
|
10,162 |
|
|
8,571 |
|
|
7,851 |
|
|
7,982 |
Title agent commissions |
|
|
1,850 |
|
|
1,799 |
|
|
1,099 |
|
|
1,323 |
|
|
2,267 |
Total |
|
$ |
31,840 |
|
$ |
28,924 |
|
$ |
25,567 |
|
$ |
21,845 |
|
$ |
23,462 |
|
|
All Other |
|||||||||||||
|
|
2022 |
|
2021 |
|||||||||||
(In thousands) |
|
Qtr 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|||||
Other operating expenses by type |
|
|
|
|
|
|
|
|
|
|
|||||
Salaries and other base employee expenses |
|
$ |
753 |
|
$ |
1,726 |
|
$ |
1,613 |
|
$ |
1,001 |
|
$ |
1,158 |
Variable and share-based incentive compensation |
|
|
1,427 |
|
|
709 |
|
|
953 |
|
|
874 |
|
|
1,144 |
Other general operating expenses |
|
|
1,635 |
|
|
1,023 |
|
|
982 |
|
|
920 |
|
|
699 |
Total |
|
$ |
3,815 |
|
$ |
3,458 |
|
$ |
3,548 |
|
$ |
2,795 |
|
$ |
3,001 |
Radian Group Inc. and Subsidiaries |
||||||||||||||||||||
Segment Information |
||||||||||||||||||||
Exhibit E (page 6 of 6) |
||||||||||||||||||||
|
|
Inter-segment |
||||||||||||||||||
|
|
2022 |
|
2021 |
||||||||||||||||
(In thousands) |
|
Qtr 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
||||||||||
Other operating expenses by type |
|
|
|
|
|
|
|
|
|
|
||||||||||
Other general operating expenses |
|
$ |
(165 |
) |
|
$ |
(33 |
) |
|
$ |
(40 |
) |
|
$ |
(46 |
) |
|
$ |
(57 |
) |
Total |
|
$ |
(165 |
) |
|
$ |
(33 |
) |
|
$ |
(40 |
) |
|
$ |
(46 |
) |
|
$ |
(57 |
) |
|
|
Total |
||||||||||||||||||
|
|
2022 |
|
2021 |
||||||||||||||||
(In thousands) |
|
Qtr 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
||||||||||
Other operating expenses by type |
|
|
|
|
|
|
|
|
|
|
||||||||||
Salaries and other base employee expenses |
|
$ |
38,656 |
|
|
$ |
38,333 |
|
|
$ |
34,177 |
|
|
$ |
32,604 |
|
|
$ |
30,818 |
|
Variable and share-based incentive compensation |
|
|
15,366 |
|
|
|
17,009 |
|
|
|
23,172 |
|
|
|
18,201 |
|
|
|
24,525 |
|
Other general operating expenses |
|
|
39,744 |
|
|
|
36,763 |
|
|
|
34,540 |
|
|
|
34,015 |
|
|
|
34,263 |
|
Ceding commissions |
|
|
(4,273 |
) |
|
|
(2,844 |
) |
|
|
(3,949 |
) |
|
|
(4,879 |
) |
|
|
(5,638 |
) |
Title agent commissions |
|
|
1,850 |
|
|
|
1,799 |
|
|
|
1,099 |
|
|
|
1,323 |
|
|
|
2,267 |
|
Total |
|
$ |
91,343 |
|
|
$ |
91,060 |
|
|
$ |
89,039 |
|
|
$ |
81,264 |
|
|
$ |
86,235 |
|
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) 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 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 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
||||||||||
Consolidated pretax income |
|
$ |
255,461 |
|
|
$ |
259,880 |
|
|
$ |
234,140 |
|
|
$ |
246,506 |
|
|
$ |
161,641 |
|
Less reconciling income (expense) items |
|
|
|
|
|
|
|
|
|
|
||||||||||
Net gains (losses) on investments and other financial instruments (1) |
|
|
(16,252 |
) |
|
|
(41,869 |
) |
|
|
(29,457 |
) |
|
|
1,516 |
|
|
|
2,098 |
|
Amortization of other acquired intangible assets |
|
|
(1,023 |
) |
|
|
(849 |
) |
|
|
(849 |
) |
|
|
(863 |
) |
|
|
(862 |
) |
Impairment of other long-lived assets and other non-operating items (2) |
|
|
16 |
|
|
|
565 |
|
|
|
(502 |
) |
|
|
788 |
|
|
|
(244 |
) |
Total adjusted pretax operating income (3) |
|
$ |
272,720 |
|
|
$ |
302,033 |
|
|
$ |
264,948 |
|
|
$ |
245,065 |
|
|
$ |
160,649 |
|
(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 consists of adjusted pretax operating income (loss) for each reportable segment and All Other activities as follows. |
|
|
2022 |
|
2021 |
||||||||||||||||
(In thousands) |
|
Qtr 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
||||||||||
Adjusted pretax operating income (loss) |
|
|
|
|
|
|
|
|
|
|
||||||||||
Mortgage segment |
|
$ |
295,675 |
|
|
$ |
316,520 |
|
|
$ |
277,841 |
|
|
$ |
246,574 |
|
|
$ |
165,220 |
|
homegenius segment |
|
|
(25,536 |
) |
|
|
(17,690 |
) |
|
|
(13,506 |
) |
|
|
(2,116 |
) |
|
|
(5,557 |
) |
All Other activities |
|
|
2,581 |
|
|
|
3,203 |
|
|
|
613 |
|
|
|
607 |
|
|
|
986 |
|
Total adjusted pretax operating income |
|
$ |
272,720 |
|
|
$ |
302,033 |
|
|
$ |
264,948 |
|
|
$ |
245,065 |
|
|
$ |
160,649 |
|
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 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
||||||||||
Diluted net income per share |
|
$ |
1.20 |
|
|
$ |
1.15 |
|
|
$ |
1.01 |
|
|
$ |
1.07 |
|
|
$ |
0.67 |
|
Less per-share impact of reconciling income (expense) items |
|
|
|
|
|
|
|
|
|
|
||||||||||
Net gains (losses) on investments and other financial instruments |
|
|
(0.10 |
) |
|
|
(0.24 |
) |
|
|
(0.16 |
) |
|
|
0.01 |
|
|
|
0.01 |
|
Amortization of other acquired intangible assets |
|
|
(0.01 |
) |
|
|
— |
|
|
|
(0.01 |
) |
|
|
— |
|
|
|
— |
|
Income tax (provision) benefit on reconciling income (expense) items (1) |
|
|
0.02 |
|
|
|
0.05 |
|
|
|
0.03 |
|
|
|
— |
|
|
|
— |
|
Difference between statutory and effective tax rates |
|
|
(0.02 |
) |
|
|
(0.02 |
) |
|
|
(0.02 |
) |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
Per-share impact of reconciling income (expense) items |
|
|
(0.11 |
) |
|
|
(0.21 |
) |
|
|
(0.16 |
) |
|
|
— |
|
|
|
— |
|
Adjusted diluted net operating income per share (1) |
|
$ |
1.31 |
|
|
$ |
1.36 |
|
|
$ |
1.17 |
|
|
$ |
1.07 |
|
|
$ |
0.67 |
|
(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 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|||||
Return on equity (1) |
|
20.7 |
% |
|
19.9 |
% |
|
17.2 |
% |
|
18.2 |
% |
|
11.8 |
% |
Less impact of reconciling income (expense) items (2) |
|
|
|
|
|
|
|
|
|
|
|||||
Net gains (losses) on investments and other financial instruments |
|
(1.7 |
) |
|
(4.1 |
) |
|
(2.8 |
) |
|
0.1 |
|
|
0.2 |
|
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 |
|
|
— |
|
|
0.1 |
|
|
— |
|
Income tax (provision) benefit on reconciling income (expense) items (3) |
|
0.4 |
|
|
0.9 |
|
|
0.6 |
|
|
— |
|
|
— |
|
Difference between statutory and effective tax rates |
|
(0.4 |
) |
|
(0.5 |
) |
|
(0.4 |
) |
|
(0.1 |
) |
|
(0.1 |
) |
Impact of reconciling income (expense) items |
|
(1.8 |
) |
|
(3.7 |
) |
|
(2.7 |
) |
|
— |
|
|
— |
|
Adjusted net operating return on equity (3) |
|
22.5 |
% |
|
23.6 |
% |
|
19.9 |
% |
|
18.2 |
% |
|
11.8 |
% |
(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 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
||||||||||
homegenius adjusted pretax operating income (loss) |
|
$ |
(25,536 |
) |
|
$ |
(17,690 |
) |
|
$ |
(13,506 |
) |
|
$ |
(2,116 |
) |
|
$ |
(5,557 |
) |
Less reconciling income (expense) items |
|
|
|
|
|
|
|
|
|
|
||||||||||
Allocation of corporate operating expenses |
|
|
(5,555 |
) |
|
|
(5,719 |
) |
|
|
(5,280 |
) |
|
|
(4,847 |
) |
|
|
(4,918 |
) |
Adjusted pretax operating income (loss) before allocated corporate operating expenses |
|
|
(19,981 |
) |
|
|
(11,971 |
) |
|
|
(8,226 |
) |
|
|
2,731 |
|
|
|
(639 |
) |
Less reconciling income (expense) items |
|
|
|
|
|
|
|
|
|
|
||||||||||
Other operating expenses before allocated corporate operating expenses |
|
|
(26,285 |
) |
|
|
(23,205 |
) |
|
|
(20,287 |
) |
|
|
(16,998 |
) |
|
|
(18,544 |
) |
homegenius adjusted gross profit |
|
$ |
6,304 |
|
|
$ |
11,234 |
|
|
$ |
12,061 |
|
|
$ |
19,729 |
|
|
$ |
17,905 |
|
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 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
||||||||||
New insurance written ("NIW") |
|
$ |
17,616 |
|
|
$ |
18,935 |
|
|
$ |
18,655 |
|
|
$ |
23,710 |
|
|
$ |
26,558 |
|
Total borrower-paid NIW |
|
|
99.1 |
% |
|
|
99.2 |
% |
|
|
99.2 |
% |
|
|
99.4 |
% |
|
|
99.2 |
% |
NIW by premium type |
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct monthly and other recurring premiums |
|
|
95.5 |
% |
|
|
95.4 |
% |
|
|
94.5 |
% |
|
|
93.5 |
% |
|
|
93.8 |
% |
Borrower-paid |
|
|
4.3 |
|
|
|
4.4 |
|
|
|
5.3 |
|
|
|
6.3 |
|
|
|
6.0 |
|
Lender-paid |
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.2 |
|
Direct single premiums |
|
|
4.5 |
|
|
|
4.6 |
|
|
|
5.5 |
|
|
|
6.5 |
|
|
|
6.2 |
|
Total NIW |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
NIW for purchases |
|
|
98.4 |
% |
|
|
97.1 |
% |
|
|
91.4 |
% |
|
|
91.1 |
% |
|
|
89.8 |
% |
NIW for refinances |
|
|
1.6 |
% |
|
|
2.9 |
% |
|
|
8.6 |
% |
|
|
8.9 |
% |
|
|
10.2 |
% |
NIW by FICO score (1) |
|
|
|
|
|
|
|
|
|
|
||||||||||
>=740 |
|
|
63.3 |
% |
|
|
59.6 |
% |
|
|
57.1 |
% |
|
|
53.8 |
% |
|
|
56.0 |
% |
680-739 |
|
|
28.5 |
|
|
|
32.3 |
|
|
|
35.7 |
|
|
|
36.9 |
|
|
|
34.9 |
|
620-679 |
|
|
8.2 |
|
|
|
8.1 |
|
|
|
7.2 |
|
|
|
9.3 |
|
|
|
9.1 |
|
Total NIW |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
NIW by LTV |
|
|
|
|
|
|
|
|
|
|
||||||||||
95.01% and above |
|
|
18.3 |
% |
|
|
17.7 |
% |
|
|
14.6 |
% |
|
|
16.3 |
% |
|
|
12.1 |
% |
90.01% to 95.00% |
|
|
37.1 |
|
|
|
39.9 |
|
|
|
42.0 |
|
|
|
41.9 |
|
|
|
46.7 |
|
85.01% to 90.00% |
|
|
28.0 |
|
|
|
26.7 |
|
|
|
29.4 |
|
|
|
28.4 |
|
|
|
26.5 |
|
85.00% and below |
|
|
16.6 |
|
|
|
15.7 |
|
|
|
14.0 |
|
|
|
13.4 |
|
|
|
14.7 |
|
Total NIW |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
(1) |
For loans with multiple borrowers, the percentage of NIW by FICO score represents the lowest of the borrowers’ FICO scores. |
Radian Group Inc. and Subsidiaries |
||||||||||||||||||||
Mortgage Supplemental Information - Primary Insurance in Force and Risk in Force |
||||||||||||||||||||
Exhibit I |
||||||||||||||||||||
|
|
September 30, |
|
June 30 |
|
March 31, |
|
December 31, |
|
September 30, |
||||||||||
($ in millions) |
|
2022 |
|
2022 |
|
2022 |
|
2021 |
|
2021 |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Primary insurance in force |
|
$ |
259,121 |
|
|
$ |
254,226 |
|
|
$ |
248,951 |
|
|
$ |
245,972 |
|
|
$ |
241,575 |
|
Primary risk in force ("RIF") |
|
$ |
65,288 |
|
|
$ |
63,770 |
|
|
$ |
62,036 |
|
|
$ |
60,913 |
|
|
$ |
59,421 |
|
Primary RIF by premium type |
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct monthly and other recurring premiums |
|
|
86.4 |
% |
|
|
85.6 |
% |
|
|
84.9 |
% |
|
|
83.9 |
% |
|
|
82.7 |
% |
Direct single premiums (1) |
|
|
13.6 |
% |
|
|
14.4 |
% |
|
|
15.1 |
% |
|
|
16.1 |
% |
|
|
17.3 |
% |
Primary RIF by FICO score (2) |
|
|
|
|
|
|
|
|
|
|
||||||||||
>=740 |
|
|
57.5 |
% |
|
|
57.2 |
% |
|
|
56.9 |
% |
|
|
56.9 |
% |
|
|
57.3 |
% |
680-739 |
|
|
34.5 |
|
|
|
34.9 |
|
|
|
35.1 |
|
|
|
35.0 |
|
|
|
34.8 |
|
620-679 |
|
|
7.6 |
|
|
|
7.5 |
|
|
|
7.5 |
|
|
|
7.6 |
|
|
|
7.4 |
|
<=619 |
|
|
0.4 |
|
|
|
0.4 |
|
|
|
0.5 |
|
|
|
0.5 |
|
|
|
0.5 |
|
Total Primary |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Primary RIF by LTV |
|
|
|
|
|
|
|
|
|
|
||||||||||
95.01% and above |
|
|
16.8 |
% |
|
|
16.1 |
% |
|
|
15.5 |
% |
|
|
15.1 |
% |
|
|
14.6 |
% |
90.01% to 95.00% |
|
|
48.4 |
|
|
|
48.7 |
|
|
|
48.9 |
|
|
|
48.9 |
|
|
|
48.9 |
|
85.01% to 90.00% |
|
|
27.2 |
|
|
|
27.4 |
|
|
|
27.6 |
|
|
|
27.7 |
|
|
|
27.8 |
|
85.00% and below |
|
|
7.6 |
|
|
|
7.8 |
|
|
|
8.0 |
|
|
|
8.3 |
|
|
|
8.7 |
|
Total |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Primary RIF by policy year |
|
|
|
|
|
|
|
|
|
|
||||||||||
2008 and prior |
|
|
3.7 |
% |
|
|
4.0 |
% |
|
|
4.3 |
% |
|
|
4.7 |
% |
|
|
5.2 |
% |
2009 - 2016 |
|
|
7.4 |
|
|
|
8.3 |
|
|
|
9.3 |
|
|
|
10.8 |
|
|
|
12.5 |
|
2017 |
|
|
3.5 |
|
|
|
3.9 |
|
|
|
4.3 |
|
|
|
4.9 |
|
|
|
5.7 |
|
2018 |
|
|
3.7 |
|
|
|
4.1 |
|
|
|
4.6 |
|
|
|
5.2 |
|
|
|
6.1 |
|
2019 |
|
|
7.1 |
|
|
|
7.7 |
|
|
|
8.6 |
|
|
|
9.7 |
|
|
|
11.4 |
|
2020 |
|
|
23.0 |
|
|
|
25.0 |
|
|
|
27.2 |
|
|
|
29.2 |
|
|
|
32.1 |
|
2021 |
|
|
30.6 |
|
|
|
32.1 |
|
|
|
34.0 |
|
|
|
35.5 |
|
|
|
27.0 |
|
2022 |
|
|
21.0 |
|
|
|
14.9 |
|
|
|
7.7 |
|
|
|
— |
|
|
|
— |
|
Total |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Persistency Rate (12 months ended) |
|
|
75.9 |
% |
|
|
71.7 |
% |
|
|
68.0 |
% |
|
|
64.3 |
% |
|
|
60.8 |
% |
Persistency Rate (quarterly, annualized) (3) |
|
|
81.6 |
% |
(4) |
|
79.8 |
% |
|
|
76.9 |
% |
(4) |
|
71.7 |
% |
|
|
67.5 |
% |
(1) |
Borrower-paid Single Premium Policies were 7.9%, 8.1%, 8.4%, 8.5% and 8.8% 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 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|||||||||
Net claims paid (1) |
|
|
|
|
|
|
|
|
|
|
|||||||||
Primary claims paid |
|
$ |
3,606 |
|
|
$ |
3,659 |
|
|
$ |
5,153 |
|
|
$ |
4,300 |
|
|
$ |
5,330 |
Pool and other |
|
|
(420 |
) |
|
|
(396 |
) |
|
|
(415 |
) |
|
|
(462 |
) |
|
|
991 |
Subtotal |
|
|
3,186 |
|
|
|
3,263 |
|
|
|
4,738 |
|
|
|
3,838 |
|
|
|
6,321 |
Impact of commutations and settlements (2) |
|
|
1,317 |
|
|
|
— |
|
|
|
— |
|
|
|
6,549 |
|
|
|
3,915 |
Total net claims paid |
|
$ |
4,503 |
|
|
$ |
3,263 |
|
|
$ |
4,738 |
|
|
$ |
10,387 |
|
|
$ |
10,236 |
Total average net primary claims paid (1) (3) |
|
$ |
45.1 |
|
|
$ |
41.6 |
|
|
$ |
41.6 |
|
|
$ |
47.8 |
|
|
$ |
42.0 |
Average direct primary claims paid (3) (4) |
|
$ |
45.2 |
|
|
$ |
41.9 |
|
|
$ |
42.1 |
|
|
$ |
49.1 |
|
|
$ |
43.2 |
(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. |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
||||||
($ in thousands, except per default amounts) |
|
2022 |
|
2022 |
|
2022 |
|
2021 |
|
2021 |
|||||
Reserve for losses by category (1) |
|
|
|
|
|
|
|
|
|
|
|||||
Mortgage reserves |
|
|
|
|
|
|
|
|
|
|
|||||
Primary case reserves |
|
$ |
454,726 |
|
$ |
562,436 |
|
$ |
691,090 |
|
$ |
790,380 |
|
$ |
851,151 |
LAE |
|
|
11,443 |
|
|
14,147 |
|
|
17,367 |
|
|
19,859 |
|
|
21,400 |
IBNR |
|
|
2,229 |
|
|
2,424 |
|
|
2,539 |
|
|
2,886 |
|
|
3,788 |
Total primary reserves |
|
|
468,398 |
|
|
579,007 |
|
|
710,996 |
|
|
813,125 |
|
|
876,339 |
Total pool reserves |
|
|
9,175 |
|
|
9,756 |
|
|
10,330 |
|
|
9,826 |
|
|
11,413 |
Total 1st lien reserves |
|
|
477,573 |
|
|
588,763 |
|
|
721,326 |
|
|
822,951 |
|
|
887,752 |
Other |
|
|
174 |
|
|
184 |
|
|
184 |
|
|
185 |
|
|
269 |
Total Mortgage reserves |
|
|
477,747 |
|
|
588,947 |
|
|
721,510 |
|
|
823,136 |
|
|
888,021 |
homegenius reserves |
|
|
5,917 |
|
|
5,861 |
|
|
5,737 |
|
|
5,506 |
|
|
5,134 |
Total reserves |
|
$ |
483,664 |
|
$ |
594,808 |
|
$ |
727,247 |
|
$ |
828,642 |
|
$ |
893,155 |
Primary reserve per primary default excluding IBNR and other |
|
$ |
22,122 |
|
$ |
26,380 |
|
$ |
27,776 |
|
$ |
27,884 |
|
$ |
25,822 |
(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. |
|
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|||||
|
|
2022 |
|
2022 |
|
2022 |
|
2021 |
|
2021 |
|||||
Default Statistics |
|
|
|
|
|
|
|
|
|
|
|||||
Primary Insurance |
|
|
|
|
|
|
|
|
|
|
|||||
Number of insured loans |
|
1,004,305 |
|
|
998,520 |
|
|
994,721 |
|
|
999,203 |
|
|
998,408 |
|
Number of loans in default |
|
21,077 |
|
|
21,861 |
|
|
25,510 |
|
|
29,061 |
|
|
33,795 |
|
Percentage of loans in default |
|
2.10 |
% |
|
2.19 |
% |
|
2.56 |
% |
|
2.91 |
% |
|
3.38 |
% |
Radian Group Inc. and Subsidiaries | ||||||||||||||||||||
Mortgage Supplemental Information - Reinsurance Programs |
||||||||||||||||||||
Exhibit K |
||||||||||||||||||||
|
|
|
||||||||||||||||||
|
|
2022 |
|
2021 |
||||||||||||||||
($ in thousands) |
|
Qtr 3 |
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
||||||||||
2022 and 2012 QSR Agreements (1) |
|
|
|
|
|
|
|
|
|
|
||||||||||
Ceded premiums written (2) |
|
$ |
10,363 |
|
|
$ |
253 |
|
|
$ |
306 |
|
|
$ |
381 |
|
|
$ |
491 |
|
% of premiums written |
|
|
4.2 |
% |
|
|
0.1 |
% |
|
|
0.1 |
% |
|
|
0.1 |
% |
|
|
0.2 |
% |
Ceded premiums earned |
|
$ |
4,036 |
|
|
$ |
360 |
|
|
$ |
491 |
|
|
$ |
584 |
|
|
$ |
753 |
|
% of premiums earned |
|
|
1.5 |
% |
|
|
0.1 |
% |
|
|
0.2 |
% |
|
|
0.2 |
% |
|
|
0.3 |
% |
Ceding commissions written |
|
$ |
1,359 |
|
|
$ |
80 |
|
|
$ |
96 |
|
|
$ |
119 |
|
|
$ |
152 |
|
Ceding commissions earned (3) |
|
$ |
1,609 |
|
|
$ |
127 |
|
|
$ |
537 |
|
|
$ |
582 |
|
|
$ |
492 |
|
Profit commission |
|
$ |
4,008 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Ceded losses |
|
$ |
(235 |
) |
|
$ |
(917 |
) |
|
$ |
(720 |
) |
|
$ |
(358 |
) |
|
$ |
(170 |
) |
Single Premium QSR Program |
|
|
|
|
|
|
|
|
|
|
||||||||||
Ceded premiums written (2) |
|
$ |
(19,303 |
) |
|
$ |
(21,806 |
) |
|
$ |
(22,386 |
) |
|
$ |
(8,051 |
) |
|
$ |
(1,795 |
) |
% of premiums written |
|
|
(7.7 |
)% |
|
|
(8.6 |
)% |
|
|
(8.9 |
)% |
|
|
(3.1 |
)% |
|
|
(0.7 |
)% |
Ceded premiums earned |
|
$ |
(3,465 |
) |
|
$ |
(8,297 |
) |
|
$ |
(3,731 |
) |
|
$ |
2,532 |
|
|
$ |
12,752 |
|
% of premiums earned |
|
|
(1.3 |
)% |
|
|
(3.1 |
)% |
|
|
(1.4 |
)% |
|
|
0.9 |
% |
|
|
4.6 |
% |
Ceding commissions written |
|
$ |
(6,400 |
) |
|
$ |
(6,664 |
) |
|
$ |
(9,250 |
) |
|
$ |
(8,351 |
) |
|
$ |
(8,013 |
) |
Ceding commissions earned (3) |
|
$ |
3,153 |
|
|
$ |
3,287 |
|
|
$ |
4,586 |
|
|
$ |
5,706 |
|
|
$ |
6,595 |
|
Profit commission |
|
$ |
16,074 |
|
|
$ |
21,447 |
|
|
$ |
22,075 |
|
|
$ |
20,290 |
|
|
$ |
13,630 |
|
Ceded losses |
|
$ |
(9,049 |
) |
|
$ |
(14,120 |
) |
|
$ |
(11,868 |
) |
|
$ |
(7,582 |
) |
|
$ |
1,053 |
|
Excess-of-Loss Program |
|
|
|
|
|
|
|
|
|
|
||||||||||
Ceded premiums written |
|
$ |
18,114 |
|
|
$ |
18,151 |
|
|
$ |
16,164 |
|
|
$ |
20,508 |
|
|
$ |
15,434 |
|
% of premiums written |
|
|
7.3 |
% |
|
|
7.2 |
% |
|
|
6.4 |
% |
|
|
7.9 |
% |
|
|
6.1 |
% |
Ceded premiums earned |
|
$ |
22,184 |
|
|
$ |
19,292 |
|
|
$ |
17,588 |
|
|
$ |
17,817 |
|
|
$ |
16,581 |
|
% of premiums earned |
|
|
8.4 |
% |
|
|
7.3 |
% |
|
|
6.5 |
% |
|
|
6.3 |
% |
|
|
5.9 |
% |
Ceded RIF (4) |
|
|
|
|
|
|
|
|
|
|
||||||||||
Single Premium QSR Program |
|
$ |
4,273,500 |
|
|
$ |
4,665,020 |
|
|
$ |
4,855,228 |
|
|
$ |
5,228,037 |
|
|
$ |
5,439,056 |
|
Excess-of-Loss Program |
|
|
1,940,126 |
|
|
|
2,076,121 |
|
|
|
2,199,919 |
|
|
|
2,295,954 |
|
|
|
1,873,426 |
|
2022 QSR Agreement |
|
|
2,710,247 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
2012 QSR Agreements |
|
|
160,106 |
|
|
|
175,046 |
|
|
|
186,930 |
|
|
|
207,106 |
|
|
|
232,539 |
|
Total Ceded RIF |
|
$ |
9,083,979 |
|
|
$ |
6,916,187 |
|
|
$ |
7,242,077 |
|
|
$ |
7,731,097 |
|
|
$ |
7,545,021 |
|
PMIERs impact - reduction in Minimum Required Assets |
|
|
|
|
|
|
|
|
|
|
||||||||||
Excess-of-Loss Program |
|
$ |
732,895 |
|
|
$ |
785,705 |
|
|
$ |
881,917 |
|
|
$ |
995,171 |
|
|
$ |
659,151 |
|
Single Premium QSR Program |
|
|
243,911 |
|
|
|
268,847 |
|
|
|
286,706 |
|
|
|
314,183 |
|
|
|
328,339 |
|
2022 QSR Agreement |
|
|
189,408 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
2012 QSR Agreements |
|
|
9,310 |
|
|
|
10,226 |
|
|
|
11,214 |
|
|
|
12,541 |
|
|
|
14,116 |
|
Total PMIERs impact |
|
$ |
1,175,524 |
|
|
$ |
1,064,778 |
|
|
$ |
1,179,837 |
|
|
$ |
1,321,895 |
|
|
$ |
1,001,606 |
|
(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:
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.
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