v3.26.1
Segment Reporting
 3 Months Ended
Mar. 31, 2026
Segment Reporting [Abstract]  
Segment Reporting

5. Segment Reporting

Subsequent to the acquisition of Inigo in the first quarter of 2026, our Chief Executive Officer (Radian’s chief operating decision maker) implemented certain changes that caused the composition of our reportable segments and the allocations of certain expenses for segment measurements to change.

Effective with the first quarter of 2026, we have two reportable business segments that are managed separately, Mortgage and Specialty. Our Mortgage segment primarily derives its revenue by providing private mortgage insurance on residential first-lien mortgage loans to mortgage lending institutions and mortgage credit investors. Our Specialty segment primarily derives its revenue by providing insurance and reinsurance lines of business, including property, casualty, financial lines and other specialty lines, to some of the world’s largest commercial and industrial enterprises.

The Company’s Mortgage and Specialty segments are managed by the Co-heads of Mortgage Insurance and the Chief Executive Officer of Inigo, respectively, who are responsible for the overall profitability of their respective segments and who are directly accountable to our chief operating decision maker.

In addition to these reportable segments, effective with the first quarter of 2026, we report in a Corporate category activities that comprise: (i) income (losses) from assets held by Radian Group; (ii) interest expense from Radian Group’s borrowings, including the Intercompany Note with Radian Guaranty; and (iii) general corporate operating expenses not attributable or allocated to our reportable segments, related primarily to corporate oversight activities.

As further described in Note 18, we also report the results of our Mortgage Conduit, Title and Real Estate Services businesses as discontinued operations in our condensed consolidated statements of operations.

As of December 31, 2025, we had previously reported our results from continuing operations as a single reportable segment, mortgage insurance, which had included all the net investment income, interest expense and other operating expenses from our holding company. As described above, consistent with how our chief operating decision maker evaluates segment performance, all net investment income and interest expense from our holding company is now reported in our Corporate category, along with a portion of our holding company operating expenses estimated to relate to corporate oversight activities.

The remaining portion of our holding company operating expenses are allocated to our Mortgage segment, based on the estimated percentage of management time spent directly supporting that business. No holding company expenses are allocated to the Specialty segment or to discontinued operations. We have reflected these changes in our segment operating results for all periods presented, as shown below.

See Note 1 for additional details about our Mortgage and Specialty businesses.

Adjusted Pretax Operating Income (Loss)

Our senior management, including our Chief Executive Officer, uses adjusted pretax operating income (loss) as our primary measure to evaluate the fundamental financial performance of our businesses.

The tables below present details on the operating results for our Mortgage segment and our Specialty segment, including a disaggregation of significant segment expenses as monitored by Radian’s chief operating decision maker.

Segment operating results and other information

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2026

 

($ in thousands)

 

Mortgage

 

 

Specialty (1)

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net premiums earned

 

$

238,177

 

 

$

164,351

 

 

$

402,528

 

Net investment income (2)

 

 

53,327

 

 

 

16,899

 

 

 

70,226

 

Other income

 

 

1,663

 

 

 

1,327

 

 

 

2,990

 

Total revenues

 

 

293,167

 

 

 

182,577

 

 

 

475,744

 

Less: expenses

 

 

 

 

 

 

 

 

 

Provision for losses

 

 

24,276

 

 

 

86,268

 

 

 

110,544

 

Amortization of deferred policy acquisition costs (3)

 

 

6,899

 

 

 

29,065

 

 

 

35,964

 

Other operating expenses (4)

 

 

 

 

 

 

 

 

 

Salaries and share-based employee expenses

 

 

30,011

 

 

 

10,037

 

 

 

40,048

 

Other non-employee operating expenses

 

 

17,129

 

 

 

14,444

 

 

 

31,573

 

Depreciation expense

 

 

1,802

 

 

 

404

 

 

 

2,206

 

Ceding commissions

 

 

(8,219

)

 

 

—

 

 

 

(8,219

)

Total other operating expenses

 

 

40,723

 

 

 

24,885

 

 

 

65,608

 

Interest expense

 

 

470

 

 

 

2,290

 

 

 

2,760

 

Adjusted pretax operating income

 

$

220,799

 

 

$

40,069

 

 

 

260,868

 

 

 

 

 

 

 

 

 

 

 

Reconciling items

 

 

 

 

 

 

 

 

 

Corporate adjusted pretax operating income (loss)

 

 

 

 

 

 

 

 

 

Corporate net investment income

 

 

 

 

 

 

 

 

9,222

 

Corporate other operating expenses

 

 

 

 

 

 

 

 

(10,699

)

Corporate interest expense (5)

 

 

 

 

 

 

 

 

(27,584

)

Net gains (losses) on financial instruments and foreign exchange

 

 

 

 

 

 

 

 

(8,879

)

Amortization and impairment of other acquired intangible assets

 

 

 

 

 

 

 

 

(3,909

)

Other purchase accounting adjustments, net (6)

 

 

 

 

 

 

 

 

(23,330

)

Acquisition-related expenses and other non-operating items (7)

 

 

 

 

 

 

 

 

(22,026

)

Pretax income from continuing operations

 

 

 

 

 

 

 

$

173,663

 

 

 

 

 

 

 

 

 

 

 

Key segment ratios

 

 

 

 

 

 

 

 

 

Loss Ratio

 

 

10.2

%

 

 

52.5

%

 

 

 

Expense Ratio

 

 

20.0

%

 

 

32.8

%

 

 

 

Combined Ratio

 

 

30.2

%

 

 

85.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment assets as of period end

 

$

6,549,091

 

 

$

3,690,037

 

 

 

 

 

 

 

(1)
Results are for the two-month period subsequent to the Closing Date.
(2)
Mortgage segment includes $10 million related to Intercompany Note that is reported as interest expense in Corporate category and eliminated in consolidation.
(3)
Ceding commissions represent fees paid by reinsurers to offset certain costs incurred by the primary insurer. We report such commissions based on the nature of the underlying costs. For the Specialty segment, ceding commissions primarily relate to reimbursement of acquisition costs and are reported in amortization of deferred policy acquisition costs. For the Mortgage segment, ceding commissions primarily relate to reimbursement of operating expenses and are reported primarily in other operating expenses.
(4)
Mortgage segment includes $20 million of allocated holding company operating expenses, representing estimated time spent directly supporting the Mortgage business.
(5)
Includes $10 million related to Intercompany Note that is reported as net investment income in the Mortgage segment and eliminated in consolidation.
(6)
Primarily includes $53 million of net VOBA asset and liability amortization, offset by $30 million reversal of policy acquisition costs that is reflected in segment results but eliminated under purchase accounting on a consolidated basis.
(7)
Relates to acquisition-related expenses, which are included in other operating expenses on the condensed consolidated statement of operations.

 

Segment operating results and other information

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2025

 

($ in thousands)

 

Mortgage

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net premiums earned

 

$

234,044

 

 

$

234,044

 

Net investment income

 

 

48,451

 

 

 

48,451

 

Other income

 

 

1,782

 

 

 

1,782

 

Total revenues

 

 

284,277

 

 

 

284,277

 

Less: expenses

 

 

 

 

 

 

Provision for losses

 

 

15,340

 

 

 

15,340

 

Amortization of deferred policy acquisition costs

 

 

6,388

 

 

 

6,388

 

Other operating expenses (1)

 

 

 

 

 

 

Salaries and share-based employee expenses

 

 

32,636

 

 

 

32,636

 

Other non-employee operating expenses

 

 

15,416

 

 

 

15,416

 

Depreciation expense

 

 

1,873

 

 

 

1,873

 

Ceding commissions

 

 

(6,722

)

 

 

(6,722

)

Total other operating expenses

 

 

43,203

 

 

 

43,203

 

Interest expense

 

 

425

 

 

 

425

 

Adjusted pretax operating income

 

$

218,921

 

 

 

218,921

 

 

 

 

 

 

 

 

Reconciling items

 

 

 

 

 

 

Corporate adjusted pretax operating income (loss)

 

 

 

 

 

 

Corporate net investment income

 

 

 

 

 

12,559

 

Corporate other operating expenses

 

 

 

 

 

(14,321

)

Corporate interest expense

 

 

 

 

 

(16,064

)

Net gains (losses) on financial instruments and foreign exchange

 

 

 

 

 

(2,001

)

Acquisition-related expenses and other non-operating items

 

 

 

 

 

(384

)

Pretax income from continuing operations

 

 

 

 

$

198,710

 

 

 

 

 

 

 

 

Key segment ratios

 

 

 

 

 

 

Loss Ratio

 

 

6.6

%

 

 

 

Expense Ratio

 

 

21.2

%

 

 

 

Combined Ratio

 

 

27.8

%

 

 

 

 

 

 

 

 

 

 

Segment assets as of period end

 

$

6,558,761

 

 

 

 

 

(1)
Includes $27 million of allocated holding company operating expenses, representing estimated time spent directly supporting the Mortgage business.

As detailed below, the calculation of adjusted pretax operating income is presented for continuing operations only and therefore excludes income (loss) from discontinued operations, net of tax, for all periods presented herein.

While adjusted pretax operating income (loss) excludes from pretax income (loss) from continuing operations the effects of 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) from continuing operations. These adjustments to pretax income (loss) from continuing operations, along with the reasons for their treatment, are described below.

Net gains (losses) on financial instruments and foreign exchange. The recognition of realized gains or losses on financial instruments and foreign currency exchange gains or losses can vary significantly across periods as such amounts are influenced by discretionary actions, including the timing of individual securities transactions, as well as by market conditions, our tax and capital profile, foreign currency movements 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 and from changes in foreign exchange rates affecting monetary assets and liabilities. 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, foreign currency exchange impacts and changes in fair value of financial instruments.

Amortization of other acquired intangible assets. Amortization of other 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.

Other purchase accounting adjustments, net. Other purchase accounting adjustments include amortization related to VOBA and other impacts resulting from purchase accounting, such as the reversal of amortization related to Inigo’s historical deferred acquisition costs and capitalized software as of the acquisition date. These non-cash amounts arise from acquisition-related accounting requirements and do not necessarily reflect the underlying operating performance of the acquired business.

Acquisition-related expenses and other non-operating items. Acquisition-related expenses and other non-operating items includes activities that we do not view to be indicative of our fundamental operating activities, such as: (i) acquisition-related income and expenses; (ii) impairment of internal-use software and other long-lived assets; and (iii) gains (losses) on extinguishment of debt.