Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

Radian Announces First Quarter 2022 Financial Results


Radian Group Inc. (NYSE: RDN) today reported net income for the quarter ended March 31, 2022, of $181.1 million, or $1.01 per diluted share. This compares with net income for the quarter ended March 31, 2021, of $125.6 million, or $0.64 per diluted share.

Key Financial Highlights (dollars in millions, except per-share amounts)

 

Quarter ended

 

March 31, 2022

December 31, 2021

March 31, 2021

Net income (1)

$181.1

$193.4

$125.6

Diluted net income per share

$1.01

$1.07

$0.64

Consolidated pretax income

$234.1

$246.5

$161.2

Adjusted pretax operating income (2)

$264.9

$245.1

$167.3

Adjusted diluted net operating income per share (2)(3)

$1.17

$1.07

$0.68

Return on equity (1)(4)

17.2 %

18.2 %

11.8 %

Adjusted net operating return on equity (2)(3)

19.9 %

18.2 %

12.4 %

New Insurance Written (NIW) - mortgage insurance

$18,655

$23,710

$20,161

Net premiums earned - mortgage insurance

$245.2

$249.7

$264.7

New defaults (5)

9,393

9,342

11,851

Provision for losses - mortgage insurance

($84.2)

($46.6)

$45.9

homegenius revenues

$33.9

$44.7

$25.8

Book value per share

$23.75

$24.28

$22.14

Accumulated other comprehensive income

(loss) value per share (6)

($0.74)

$0.68

$0.61

PMIERs Available Assets (7)

$5,102

$5,406

$4,909

PMIERs excess Available Assets (8)

$1,560

$2,077

$1,451

Total Holding Company Liquidity (9)

$1,282

$880

$1,292

Total investments

$6,335

$6,514

$6,672

Primary mortgage insurance in force

$248,951

$245,972

$238,921

Percentage of primary loans in default (10)

2.6 %

2.9 %

4.9 %

Mortgage insurance loss reserves

$722

$823

$883

(1)

Net income for the first quarter of 2022 includes a pretax net loss on investments and other financial instruments of $29.5 million, compared with a $3.0 million pretax net gain on investments and other financial instruments in the fourth quarter of 2021 and a pretax net loss on investments and other financial instruments of $5.2 million for the first quarter of 2021.

(2)

Adjusted results, including adjusted pretax operating income, adjusted diluted net operating income per share and adjusted net operating return on equity, are non-GAAP financial measures. For definitions and reconciliations of these measures to the comparable GAAP measures, see Exhibits F and G.

(3)

Calculated using the company's statutory tax rate of 21 percent.

(4)

Calculated by dividing annualized net income by average stockholders' equity, based on the average of the beginning and ending balances for each period presented.

(5)

Represents the number of new defaults reported during the period on loans related to primary mortgage insurance policies.

(6)

Included in book value per share for each period presented.

(7)

Represents Radian Guaranty's Available Assets, calculated in accordance with the Private Mortgage Insurer Eligibility Requirements (PMIERs) financial requirements in effect for each date shown.

(8)

Represents Radian Guaranty's excess or "cushion" of Available Assets over its Minimum Required Assets, calculated in accordance with the PMIERs financial requirements in effect for each date shown.

(9)

Represents Radian Group's total liquidity, including available capacity under its unsecured revolving credit facility.

(10)

Represents the number of primary loans in default as a percentage of the total number of insured primary loans.

Adjusted pretax operating income for the quarter ended March 31, 2022, was $264.9 million, or $1.17 per diluted share. This compares with adjusted pretax operating income for the quarter ended March 31, 2021, of $167.3 million, or $0.68 per diluted share.

Book value per share at March 31, 2022, was $23.75, compared to $24.28 at December 31, 2021 and $22.14 at March 31, 2021. This represents a 7.3 percent growth in book value per share at March 31, 2022 as compared to March 31, 2021, and includes accumulated other comprehensive income (loss) of $(0.74) per share as of March 31, 2022 and $0.61 per share as of March 31, 2021, which, if excluded as of both dates, would represent 13.7 percent growth for the period. Changes in accumulated other comprehensive income (loss) for the period are primarily from net unrealized losses on investments as a result of an increase in market interest rates during the period. We do not expect to realize these losses given that we have the ability and the expectation to hold these securities to maturity.

"We had a strong start to our 45th year in business, growing net income year-over-year to $181 million, return on equity to 17.2 percent and book value per share to $23.75. Over the same period our primary mortgage insurance in force, which is the main driver of future earnings for our company, grew more than 4 percent and the total number of defaulted loans in our mortgage insurance portfolio declined by 49 percent," said Radian's Chief Executive Officer Rick Thornberry. "We continue to strategically manage capital by maintaining strong holding company liquidity and PMIERs cushion, repurchasing shares opportunistically and returning $116 million in dividends to stockholders over the past year."

Thornberry continued, "We are proud of our history of ensuring affordable, sustainable and equitable homeownership for so many years and are even more excited about the promise of our future."

FIRST QUARTER HIGHLIGHTS

CAPITAL AND LIQUIDITY UPDATE

Radian Group

Radian Guaranty

CONFERENCE CALL

Radian will discuss first quarter 2022 financial results in a conference call tomorrow, Wednesday, May 4, 2022, at 10:00 a.m. Eastern time. The conference call will be broadcast live over the Internet at https://radian.com/who-we-are/for-investors/webcasts or at www.radian.com. The call may also be accessed by dialing 877.742.9092 inside the U.S., or 270.833.1298 for international callers, using passcode 7364078 by referencing Radian.

A digital replay of the webcast will be available on the Radian website approximately two hours after the live broadcast ends for a period of two weeks at https://radian.com/who-we-are/for-investors/webcasts using passcode 7364078.

In addition to the information provided in the company's earnings news release, other statistical and financial information, which is expected to be referred to during the conference call, will be available on Radian's website at www.radian.com, under Investors.

NON-GAAP FINANCIAL MEASURES

Radian believes that adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity (non-GAAP measures) facilitate evaluation of the company's fundamental financial performance and provide relevant and meaningful information to investors about the ongoing operating results of the company. On a consolidated basis, these measures are not recognized in accordance with accounting principles generally accepted in the United States of America (GAAP) and should not be considered in isolation or viewed as substitutes for GAAP measures of performance. The measures described below have been established in order to increase transparency for the purpose of evaluating the company's operating trends and enabling more meaningful comparisons with Radian's competitors.

Adjusted pretax operating income (loss) is defined as GAAP consolidated pretax income (loss) excluding the effects of: (i) net gains (losses) on investments and other financial instruments, except for certain investments attributable to our reportable segments; (ii) loss on extinguishment of debt; (iii) amortization and impairment of goodwill and other acquired intangible assets; and (iv) impairment of other long-lived assets and other non-operating items, such as impairment of internal-use software, gains (losses) from the sale of lines of business and acquisition-related income and expenses. Adjusted diluted net operating income (loss) per share is calculated by dividing (i) adjusted pretax operating income (loss) attributable to common stockholders, net of taxes computed using the Company's statutory tax rate, by (ii) the sum of the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. Adjusted net operating return on equity is calculated by dividing annualized adjusted pretax operating income (loss), net of taxes computed using the Company's statutory tax rate, by average stockholders' equity, based on the average of the beginning and ending balances for each period presented.

In addition to the above non-GAAP measures for the consolidated company, we also have presented as supplemental information non-GAAP measures for our homegenius segment of adjusted pretax operating income (loss) before allocated corporate operating expenses and adjusted gross profit. Adjusted pretax operating income (loss) before allocated corporate operating expenses is calculated as adjusted pretax operating income (loss) as described above (which is the segment's ASC 280 GAAP measure of operating performance), adjusted to remove the impact of corporate allocations of other operating expenses for the homegenius segment. Adjusted gross profit is further adjusted to remove other operating expenses. In addition, homegenius adjusted pretax operating margin before allocated corporate operating expenses and adjusted gross profit margin are calculated by dividing homegenius adjusted pretax operating margin before allocated corporate operating expenses and adjusted gross profit, respectively, by GAAP total revenue for the homegenius segment. For the homegenius segment, adjusted pretax operating income (loss) before allocated corporate operating expenses, adjusted gross profit, and the related profit margins are used to facilitate comparisons with other services companies, since they are widely accepted measures of performance in the services industry and are used internally as supplemental measures to evaluate the performance of our homegenius segment.

See Exhibit F or Radian's website for a description of these items, as well as Exhibit G for reconciliations to the most comparable consolidated GAAP measures.

ABOUT RADIAN

Radian Group Inc. (NYSE: RDN) is ensuring the American dream of homeownership responsibly and sustainably through products and services that include industry-leading mortgage insurance and a comprehensive suite of mortgage, risk, title, real estate and technology products and services. We are powered by technology, informed by data and driven to deliver new and better ways to transact and manage risk. Visit www.radian.com to learn more about how Radian is shaping the future of mortgage and real estate services.

FINANCIAL RESULTS AND SUPPLEMENTAL INFORMATION CONTENTS (Unaudited)

Exhibit A:

Condensed Consolidated Statements of Operations Trend Schedule

Exhibit B:

Net Income Per Share Trend Schedule

Exhibit C:

Condensed Consolidated Balance Sheets

Exhibit D:

Net Premiums Earned

Exhibit E:

Segment Information

Exhibit F:

Definition of Consolidated Non-GAAP Financial Measures

Exhibit G:

Consolidated Non-GAAP Financial Measure Reconciliations

Exhibit H:

Mortgage Supplemental Information

 

New Insurance Written

Exhibit I:

Mortgage Supplemental Information

 

Primary Insurance in Force and Risk in Force

Exhibit J:

Mortgage Supplemental Information

 

Claims and Reserves, Default Statistics

Exhibit K:

Mortgage Supplemental Information

 

Reinsurance Programs

 

Radian Group Inc. and Subsidiaries

Condensed Consolidated Statements of Operations Trend Schedule

Exhibit A

 

 

2022

 

2021

(In thousands, except per-share amounts)

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Net premiums earned

$

254,190

 

 

$

261,437

 

 

$

249,118

 

$

254,756

 

$

271,872

 

Services revenue

 

29,348

 

 

 

35,693

 

 

 

37,773

 

 

29,464

 

 

22,895

 

Net investment income

 

38,196

 

 

 

37,407

 

 

 

35,960

 

 

36,291

 

 

38,251

 

Net gains (losses) on investments and other financial instruments

 

(29,457

)

 

 

3,025

 

 

 

2,098

 

 

15,661

 

 

(5,181

)

Other income

 

703

 

 

 

805

 

 

 

809

 

 

822

 

 

976

 

Total revenues

 

292,980

 

 

 

338,367

 

 

 

325,758

 

 

336,994

 

 

328,813

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

Provision for losses

 

(83,754

)

 

 

(46,219

)

 

 

17,305

 

 

3,648

 

 

46,143

 

Policy acquisition costs

 

6,605

 

 

 

7,271

 

 

 

7,924

 

 

4,838

 

 

8,996

 

Cost of services

 

24,753

 

 

 

28,333

 

 

 

30,520

 

 

24,615

 

 

20,246

 

Other operating expenses

 

89,541

 

 

 

80,476

 

 

 

86,479

 

 

86,469

 

 

70,262

 

Interest expense

 

20,846

 

 

 

21,137

 

 

 

21,027

 

 

21,065

 

 

21,115

 

Amortization of other acquired intangible assets

 

849

 

 

 

863

 

 

 

862

 

 

863

 

 

862

 

Total expenses

 

58,840

 

 

 

91,861

 

 

 

164,117

 

 

141,498

 

 

167,624

 

 

 

 

 

 

 

 

 

 

 

Pretax income

 

234,140

 

 

 

246,506

 

 

 

161,641

 

 

195,496

 

 

161,189

 

Income tax provision

 

53,009

 

 

 

53,061

 

 

 

35,229

 

 

40,290

 

 

35,581

 

Net income

$

181,131

 

 

$

193,445

 

 

$

126,412

 

$

155,206

 

$

125,608

 

 

 

 

 

 

 

 

 

 

 

Diluted net income per share

$

1.01

 

 

$

1.07

 

 

$

0.67

 

$

0.80

 

$

0.64

 

Selected Mortgage Key Ratios

 

 

 

 

2022

 

2021

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Loss ratio (1)

(34.3)%

 

(18.6)%

 

7.1 %

 

1.3 %

 

17.3 %

Expense ratio (2)

27.2 %

 

25.6 %

 

28.6 %

 

25.4 %

 

21.9 %

(1)

Calculated as provision for losses on a GAAP basis expressed as a percentage of net premiums earned.

(2)

Calculated as operating expenses (which include policy acquisition costs and other operating expenses, as well as allocated corporate operating expenses) on a GAAP basis expressed as a percentage of net premiums earned.

Radian Group Inc. and Subsidiaries

Net Income Per Share Trend Schedule

Exhibit B

The calculation of basic and diluted net income per share was as follows:

 

 

2022

 

2021

(In thousands, except per-share amounts)

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Net income ?basic and diluted

$

181,131

 

$

193,445

$

126,412

$

155,206

$

125,608

 

 

 

 

 

 

 

Average common shares outstanding?basic

 

176,816

 

 

179,500

 

186,741

 

193,436

 

193,439

Dilutive effect of stock-based compensation arrangements (1)

 

2,263

 

 

1,628

 

 

1,301

 

 

1,202

 

1,764

Adjusted average common shares outstanding?diluted

 

179,079

 

 

181,128

 

 

188,042

 

 

194,638

 

 

195,203

 

 

 

 

 

 

 

 

 

 

Basic net income per share

$

1.02

 

$

1.08

 

$

0.68

 

$

0.80

$

0.65

 

 

 

 

 

Diluted net income per share

$

1.01

 

$

1.07

$

0.67

$

0.80

$

0.64

(1)

The following number of shares of our common stock equivalents issued under our share-based compensation arrangements were not included in the calculation of diluted net income (loss) per share because they were anti-dilutive:

 

2022

 

2021

(In thousands)

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Shares of common stock equivalents

?

 

35

 

?

 

?

 

?

Radian Group Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

Exhibit C

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

(In thousands, except per-share amounts)

2022

 

2021

 

2021

 

2021

 

2021

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

Investments

$

6,334,950

 

 

$

6,513,542

 

 

$

6,658,487

 

 

$

6,681,659

 

 

$

6,671,874

 

Cash

 

131,853

 

 

 

151,145

 

 

 

154,709

 

 

 

134,939

 

 

 

102,776

 

Restricted cash

 

1,651

 

 

 

1,475

 

 

 

1,866

 

 

 

2,968

 

 

 

20,987

 

Accrued investment income

 

35,531

 

 

 

32,812

 

 

 

33,258

 

 

 

32,223

 

 

 

34,841

 

Accounts and notes receivable

 

142,579

 

 

 

124,016

 

 

 

166,730

 

 

 

153,128

 

 

 

134,075

 

Reinsurance recoverables

 

55,015

 

 

 

67,896

 

 

 

76,048

 

 

 

75,411

 

 

 

76,664

 

Deferred policy acquisition costs

 

16,383

 

 

 

16,317

 

 

 

16,823

 

 

 

17,873

 

 

 

15,652

 

Property and equipment, net

 

75,275

 

 

 

75,086

 

 

 

74,170

 

 

 

74,288

 

 

 

78,309

 

Goodwill and other acquired intangible assets, net

 

18,744

 

 

 

19,593

 

 

 

20,456

 

 

 

21,318

 

 

 

22,181

 

Other assets

 

803,765

 

 

 

837,303

 

 

 

839,061

 

 

 

815,261

 

 

 

763,502

 

Total assets

$

7,615,746

 

 

$

7,839,185

 

 

$

8,041,608

 

 

$

8,009,068

 

 

$

7,920,861

 

 

 

 

 

 

 

 

 

 

 

Liabilities and stockholders' equity:

 

 

 

 

 

 

 

 

 

Unearned premiums

$

312,013

 

 

$

329,090

 

 

$

348,322

 

 

$

373,031

 

 

$

406,689

 

Reserve for losses and loss adjustment expense

 

727,247

 

 

 

828,642

 

 

 

893,155

 

 

 

885,498

 

 

 

887,355

 

Senior notes

 

1,410,458

 

 

 

1,409,473

 

 

 

1,408,502

 

 

 

1,407,545

 

 

 

1,406,603

 

FHLB advances

 

148,983

 

 

 

150,983

 

 

 

172,649

 

 

 

153,983

 

 

 

138,833

 

Reinsurance funds withheld

 

225,363

 

 

 

228,078

 

 

 

290,502

 

 

 

285,406

 

 

 

282,345

 

Net deferred tax liability

 

324,004

 

 

 

337,509

 

 

 

286,957

 

 

 

266,330

 

 

 

210,571

 

Other liabilities

 

320,114

 

 

 

296,614

 

 

 

383,585

 

 

 

303,442

 

 

 

353,173

 

Total liabilities

 

3,468,182

 

 

 

3,580,389

 

 

 

3,783,672

 

 

 

3,675,235

 

 

 

3,685,569

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

193

 

 

 

194

 

 

 

200

 

 

 

207

 

 

 

210

 

Treasury stock

 

(920,958

)

 

 

(920,798

)

 

 

(920,355

)

 

 

(920,225

)

 

 

(910,347

)

Additional paid-in capital

 

1,871,763

 

 

 

1,878,372

 

 

 

2,012,870

 

 

 

2,161,857

 

 

 

2,242,950

 

Retained earnings

 

3,326,119

 

 

 

3,180,935

 

 

 

3,012,997

 

 

 

2,913,138

 

 

 

2,785,744

 

Accumulated other comprehensive income (loss)

 

(129,553

)

 

 

120,093

 

 

 

152,224

 

 

 

178,856

 

 

 

116,735

 

Total stockholders' equity

 

4,147,564

 

 

 

4,258,796

 

 

 

4,257,936

 

 

 

4,333,833

 

 

 

4,235,292

 

Total liabilities and stockholders' equity

$

7,615,746

 

 

$

7,839,185

 

 

$

8,041,608

 

 

$

8,009,068

 

 

$

7,920,861

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding

 

174,648

 

 

 

175,421

 

 

 

181,336

 

 

 

188,290

 

 

 

191,311

 

 

 

 

 

 

 

 

 

 

 

Book value per share

$

23.75

 

 

$

24.28

 

 

$

23.48

 

 

$

23.02

 

 

$

22.14

 

Debt to capital ratio (1)

25.4 %

 

24.9 %

 

24.9 %

 

24.5 %

 

24.9 %

Risk to capital ratio-Radian Guaranty only

12.1:1

 

11.1:1

 

11.4:1

 

11.4:1

 

11.9 :1

(1) Calculated as senior notes divided by senior notes and stockholders' equity.

Radian Group Inc. and Subsidiaries

Net Premiums Earned

Exhibit D

 

 

2022

 

2021

(In thousands)

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

 

 

 

 

 

 

 

 

 

 

Premiums earned:

 

 

 

 

 

 

 

 

 

Direct - Mortgage:

 

 

 

 

 

 

 

 

 

Premiums earned, excluding revenue from cancellations

$

243,599

 

 

$

248,704

 

 

$

239,786

 

 

$

243,077

 

 

$

256,905

 

Single Premium Policy cancellations

 

14,696

 

 

 

20,530

 

 

 

25,592

 

 

 

31,592

 

 

 

38,510

 

Total direct - Mortgage

 

258,295

 

 

 

269,234

 

 

 

265,378

 

 

 

274,669

 

 

 

295,415

 

 

 

 

 

 

 

 

 

 

 

Assumed - Mortgage: (1)

 

1,332

 

 

 

1,470

 

 

 

1,683

 

 

 

1,615

 

 

 

2,298

 

 

 

 

 

 

 

 

 

 

 

Ceded - Mortgage:

 

 

 

 

 

 

 

 

 

Premiums earned, excluding revenue from cancellations

 

(27,339

)

 

 

(28,333

)

 

 

(27,662

)

 

 

(27,324

)

 

 

(25,373

)

Single Premium Policy cancellations (2)

 

(4,192

)

 

 

(5,905

)

 

 

(7,338

)

 

 

(9,036

)

 

 

(11,109

)

Profit commission - other (3)

 

17,078

 

 

 

13,199

 

 

 

4,806

 

 

 

7,162

 

 

 

3,433

 

Total ceded premiums - Mortgage (4)

 

(14,453

)

 

 

(21,039

)

 

 

(30,194

)

 

 

(29,198

)

 

 

(33,049

)

Net premiums earned - Mortgage

 

245,174

 

 

 

249,665

 

 

 

236,867

 

 

 

247,086

 

 

 

264,664

 

Net premiums earned - homegenius

 

9,016

 

 

 

11,772

 

 

 

12,251

 

 

 

7,670

 

 

 

7,208

 

Net premiums earned

$

254,190

 

 

$

261,437

 

 

$

249,118

 

 

$

254,756

 

 

$

271,872

(1)

Relates primarily to premiums earned from our participation in certain credit risk transfer programs.

(2)

Includes the impact of related profit commissions.

(3)

The amounts represent the profit commission on the Single Premium QSR Program, excluding the impact of Single Premium Policy cancellations.

(4)

See Exhibit K for additional information on ceded premiums for our various reinsurance programs.

Radian Group Inc. and Subsidiaries

Segment Information

Exhibit E (page 1 of 6)

Summarized financial information concerning our operating segments as of and for the periods indicated is as follows. For a definition of adjusted pretax operating income (loss), homegenius adjusted pretax operating income (loss) before allocated corporate operating expenses and homegenius adjusted gross profit, along with reconciliations to consolidated GAAP measures, see Exhibits F and G.

 

 

Three Months Ended March 31, 2022

(In thousands)

Mortgage

 

homegenius

 

All Other

 

Inter-
segment (1)

 

Total

Net premiums written (2)

$

248,360

 

 

$

9,016

 

 

$

?

 

$

?

 

 

$

257,376

 

Increase in unearned premiums

 

(3,186

)

 

 

?

 

 

 

?

 

 

?

 

 

 

(3,186

)

Net premiums earned

 

245,174

 

 

 

9,016

 

 

 

?

 

 

?

 

 

 

254,190

 

Services revenue

 

4,552

 

 

 

24,878

 

 

 

?

 

 

(82

)

 

 

29,348

 

Net investment income

 

34,017

 

 

 

18

 

 

 

4,161

 

 

?

 

 

 

38,196

 

Other income

 

703

 

 

 

?

 

 

 

?

 

 

?

 

 

 

703

 

Total

 

284,446

 

 

 

33,912

 

 

 

4,161

 

 

(82

)

 

 

322,437

 

Provision for losses

 

(84,193

)

 

 

481

 

 

 

?

 

 

(42

)

 

 

(83,754

)

Policy acquisition costs

 

6,605

 

 

 

?

 

 

 

?

 

 

?

 

 

 

6,605

 

Cost of services

 

3,383

 

 

 

21,370

 

 

 

?

 

 

?

 

 

 

24,753

 

Other operating expenses before allocated corporate operating expenses (3)

 

23,755

 

 

 

20,287

 

 

 

3,142

 

 

(40

)

 

 

47,144

 

Interest expense (4)

 

20,846

 

 

 

?

 

 

 

?

 

 

?

 

 

 

20,846

 

Total

 

(29,604

)

 

 

42,138

 

 

 

3,142

 

 

(82

)

 

 

15,594

 

Adjusted pretax operating income (loss) before allocated corporate operating expenses

 

314,050

 

 

 

(8,226

)

 

 

1,019

 

 

?

 

 

 

306,843

 

Allocation of corporate operating expenses

 

36,209

 

 

 

5,280

 

 

 

406

 

 

?

 

 

 

41,895

 

Adjusted pretax operating income (loss)

$

277,841

 

 

$

(13,506

)

 

$

613

 

$

?

 

 

$

264,948

 

 

Three Months Ended March 31, 2021

(In thousands)

Mortgage

 

homegenius

 

All Other

 

Inter-
segment (1)

 

Total

Net premiums written (2)

$

246,874

 

$

7,208

 

 

$

?

 

$

?

 

 

$

254,082

Decrease in unearned premiums

 

17,790

 

 

?

 

 

 

?

 

 

?

 

 

 

17,790

Net premiums earned

 

264,664

 

 

7,208

 

 

 

?

 

 

?

 

 

 

271,872

Services revenue

 

4,351

 

 

18,550

 

 

 

53

 

 

(59

)

 

 

22,895

Net investment income

 

34,013

 

 

37

 

 

 

4,201

 

 

?

 

 

 

38,251

Other income

 

769

 

 

?

 

 

 

207

 

 

?

 

 

 

976

Total

 

303,797

 

 

25,795

 

 

 

4,461

 

 

(59

)

 

 

333,994

Provision for losses

 

45,869

 

 

296

 

 

 

?

 

 

(22

)

 

 

46,143

Policy acquisition costs

 

8,996

 

 

?

 

 

 

?

 

 

?

 

 

 

8,996

Cost of services

 

3,192

 

 

17,028

 

 

 

28

 

 

(2

)

 

 

20,246

Other operating expenses before allocated corporate operating expenses (3)

 

21,340

 

 

14,928

 

 

 

2,065

 

 

(35

)

 

 

38,298

Interest expense (4)

 

21,115

 

 

?

 

 

 

?

 

 

?

 

 

 

21,115

Total

 

100,512

 

 

32,252

 

 

 

2,093

 

 

(59

)

 

 

134,798

Adjusted pretax operating income (loss) before allocated corporate operating expenses

 

203,285

 

 

(6,457

)

 

 

2,368

 

 

?

 

 

 

199,196

Allocation of corporate operating expenses

 

27,576

 

 

3,996

 

 

 

308

 

 

?

 

 

 

31,880

Adjusted pretax operating income (loss)

$

175,709

 

$

(10,453

)

 

$

2,060

 

$

?

 

 

$

167,316

Radian Group Inc. and Subsidiaries
Segment Information
Exhibit E (page 2 of 6)

 

 

(1)

 

Includes immaterial inter-segment services revenue for our homegenius segment and immaterial inter-segment provision for losses, cost of services and other operating expenses for our Mortgage segment.

(2)

 

Net of ceded premiums written under the QSR Programs and the Excess-of-Loss Program. See Exhibit K for additional information.

(3)

 

Does not include impairment of long-lived assets and other non-operating items, which are not considered components of adjusted pretax operating income (loss).

(4)

 

Relates to interest on our borrowing and financing activities including our Senior Notes issued by our holding company and FHLB borrowings made by our mortgage insurance subsidiaries.

 

Radian Group Inc. and Subsidiaries

Segment Information

Exhibit E (page 3 of 6)

 

 

Mortgage

 

2022

 

2021

(In thousands)

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Net premiums written (1)

$

248,360

 

 

$

238,529

 

 

$

228,116

 

$

231,027

 

$

246,874

(Increase) decrease in unearned premiums

 

(3,186

)

 

 

11,136

 

 

 

8,751

 

 

16,059

 

 

17,790

Net premiums earned

 

245,174

 

 

 

249,665

 

 

 

236,867

 

 

247,086

 

 

264,664

Services revenue

 

4,552

 

 

 

4,560

 

 

 

5,027

 

 

3,732

 

 

4,351

Net investment income

 

34,017

 

 

 

33,916

 

 

 

32,158

 

 

32,842

 

 

34,013

Other income

 

703

 

 

 

661

 

 

 

607

 

 

641

 

 

769

Total

 

284,446

 

 

 

288,802

 

 

 

274,659

 

 

284,301

 

 

303,797

 

 

 

 

 

 

 

 

 

 

Provision for losses (2)

 

(84,193

)

 

 

(46,560

)

 

 

16,794

 

 

3,334

 

 

45,869

Policy acquisition costs

 

6,605

 

 

 

7,271

 

 

 

7,924

 

 

4,838

 

 

8,996

Cost of services (2)

 

3,383

 

 

 

3,710

 

 

 

3,865

 

 

3,161

 

 

3,192

Other operating expenses before allocated corporate operating expenses (2) (3)

 

23,755

 

 

 

23,365

 

 

 

25,866

 

 

25,222

 

 

21,340

Interest expense (4)

 

20,846

 

 

 

21,137

 

 

 

21,027

 

 

21,065

 

 

21,115

Total (2)

 

(29,604

)

 

 

8,923

 

 

 

75,476

 

 

57,620

 

 

100,512

Adjusted pretax operating income before allocated corporate operating expenses

 

314,050

 

 

 

279,879

 

 

 

199,183

 

 

226,681

 

 

203,285

Allocation of corporate operating expenses

 

36,209

 

 

 

33,305

 

 

 

33,963

 

 

32,638

 

 

27,576

Adjusted pretax operating income

$

277,841

 

 

$

246,574

 

 

$

165,220

 

$

194,043

 

$

175,709

 

homegenius

 

2022

 

2021

(In thousands)

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Net premiums earned

$

9,016

 

 

$

11,772

 

 

$

12,251

 

 

$

7,670

 

 

$

7,208

 

Services revenue (2)

 

24,878

 

 

 

31,177

 

 

 

32,805

 

 

 

25,750

 

 

 

18,550

 

Net investment income

 

18

 

 

 

255

 

 

 

35

 

 

 

31

 

 

 

37

 

Net gains (losses) on investments

 

?

 

 

 

1,509

 

 

 

?

 

 

 

?

 

 

 

?

 

Total (2)

 

33,912

 

 

 

44,713

 

 

 

45,091

 

 

 

33,451

 

 

 

25,795

 

 

 

 

 

 

 

 

 

 

 

Provision for losses

 

481

 

 

 

369

 

 

 

540

 

 

 

335

 

 

 

296

 

Cost of services

 

21,370

 

 

 

24,615

 

 

 

26,646

 

 

 

21,433

 

 

 

17,028

 

Other operating expenses before allocated corporate operating expenses (3)

 

20,287

 

 

 

16,998

 

 

 

18,544

 

 

 

16,160

 

 

 

14,928

 

Total

 

42,138

 

 

 

41,982

 

 

 

45,730

 

 

 

37,928

 

 

 

32,252

 

Adjusted pretax operating income (loss) before allocated corporate operating expenses

 

(8,226

)

 

 

2,731

 

 

 

(639

)

 

 

(4,477

)

 

 

(6,457

)

Allocation of corporate operating expenses

 

5,280

 

 

 

4,847

 

 

 

4,918

 

 

 

4,721

 

 

 

3,996

 

Adjusted pretax operating income (loss)

$

(13,506

)

 

$

(2,116

)

 

$

(5,557

)

 

$

(9,198

)

 

$

(10,453

)

 

Radian Group Inc. and Subsidiaries

Segment Information

Exhibit E (page 4 of 6)

 

 

All Other (5)

 

2022

 

2021

(In thousands)

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Services revenue

$

?

 

$

30

 

$

27

 

$

44

 

 

$

53

Net investment income

 

4,161

 

 

3,236

 

 

3,767

 

 

3,418

 

 

 

4,201

Other income

 

?

 

 

144

 

 

202

 

 

181

 

 

 

207

Total

 

4,161

 

 

3,410

 

 

3,996

 

 

3,643

 

 

 

4,461

 

 

 

 

 

 

 

 

 

 

Cost of services

 

?

 

 

8

 

 

9

 

 

19

 

 

 

28

Other operating expenses before allocated corporate operating expenses (3)

 

3,142

 

 

2,422

 

 

2,623

 

 

3,387

 

 

 

2,065

Total

 

3,142

 

 

2,430

 

 

2,632

 

 

3,406

 

 

 

2,093

Adjusted pretax operating income (loss) before allocated corporate operating expenses

 

1,019

 

 

980

 

 

1,364

 

 

237

 

 

 

2,368

Allocation of corporate operating expenses

 

406

 

 

373

 

 

378

 

 

363

 

 

 

308

Adjusted pretax operating income (loss)

$

613

 

$

607

 

$

986

 

$

(126

)

 

$

2,060

(1)

Net of ceded premiums written under the QSR Programs and the Excess-of-Loss Program. See Exhibit K for additional information.

(2)

Includes immaterial inter-segment services revenue for our homegenius segment and immaterial inter-segment provision for losses, cost of services and other operating expenses for our Mortgage segment.

(3)

Does not include impairment of long-lived assets and other non-operating items, which are not considered components of adjusted pretax operating income (loss).

(4)

Relates to interest on our borrowing and financing activities including our Senior Notes issued by our holding company and FHLB borrowings made by our mortgage insurance subsidiaries.

(5)

All Other activities include: (i) income (losses) from assets held by our holding company; (ii) related general corporate operating expenses not attributable or allocated to our reportable segments; (iii) for all periods presented, the income and expenses related to our traditional appraisal services, which we wound down beginning in the fourth quarter of 2020; and (iv) certain other immaterial activities, including investments in new business opportunities.

Radian Group Inc. and Subsidiaries

Segment Information

Exhibit E (page 5 of 6)

Supplemental Other Operating Expense Information by Segment

 

 

Mortgage

 

2022

 

2021

(In thousands)

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Other operating expenses by type

 

 

 

 

 

 

 

 

 

Salaries and other base employee expenses

$

22,189

 

 

$

23,610

 

 

$

22,685

 

 

$

22,542

 

 

$

23,320

 

Variable and share-based incentive compensation

 

16,697

 

 

 

12,649

 

 

 

17,143

 

 

 

15,236

 

 

 

8,947

 

Other general operating expenses

 

25,027

 

 

 

25,290

 

 

 

25,639

 

 

 

26,583

 

 

 

24,338

 

Ceding commissions

 

(3,949

)

 

 

(4,879

)

 

 

(5,638

)

 

 

(6,501

)

 

 

(7,689

)

Total

$

59,964

 

 

$

56,670

 

 

$

59,829

 

 

$

57,860

 

 

$

48,916

 

 

homegenius

 

2022

 

2021

(In thousands)

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Other operating expenses by type

 

 

 

 

 

 

 

 

 

Salaries and other base employee expenses

$

10,375

 

$

7,993

 

$

6,975

 

$

6,701

 

$

8,290

Variable and share-based incentive compensation

 

5,522

 

 

4,678

 

 

6,238

 

 

5,896

 

 

2,974

Other general operating expenses

 

8,571

 

 

7,851

 

 

7,982

 

 

6,525

 

 

6,253

Title agent commissions

 

1,099

 

 

1,323

 

 

2,267

 

 

1,759

 

 

1,407

Total

$

25,567

 

$

21,845

 

$

23,462

 

$

20,881

 

$

18,924

 

All Other

 

2022

 

2021

(In thousands)

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Other operating expenses by type

 

 

 

 

 

 

 

 

 

Salaries and other base employee expenses

$

1,613

 

$

1,001

 

$

1,158

 

$

1,187

 

$

997

Variable and share-based incentive compensation

 

953

 

 

874

 

 

1,144

 

 

958

 

 

399

Other general operating expenses

 

982

 

 

920

 

 

699

 

 

1,605

 

 

977

Total

$

3,548

 

$

2,795

 

$

3,001

 

$

3,750

 

$

2,373

 

Radian Group Inc. and Subsidiaries

Segment Information

Exhibit E (page 6 of 6)

 

 

Inter-segment

 

2022

 

2021

(In thousands)

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Other operating expenses by type

 

 

 

 

 

 

 

 

 

Other general operating expenses

$

(40

)

 

$

(46

)

 

$

(57

)

 

$

(43

)

 

$

(35

)

Total

$

(40

)

 

$

(46

)

 

$

(57

)

 

$

(43

)

 

$

(35

)

 

Total

 

2022

 

2021

(In thousands)

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Other operating expenses by type

 

 

 

 

 

 

 

 

 

Salaries and other base employee expenses

$

34,177

 

 

$

32,604

 

 

$

30,818

 

 

$

30,430

 

 

$

32,607

 

Variable and share-based incentive compensation

 

23,172

 

 

 

18,201

 

 

 

24,525

 

 

 

22,090

 

 

 

12,320

 

Other general operating expenses

 

34,540

 

 

 

34,015

 

 

 

34,263

 

 

 

34,670

 

 

 

31,533

 

Ceding commissions

 

(3,949

)

 

 

(4,879

)

 

 

(5,638

)

 

 

(6,501

)

 

 

(7,689

)

Title agent commissions

 

1,099

 

 

 

1,323

 

 

 

2,267

 

 

 

1,759

 

 

 

1,407

 

Total

$

89,039

 

 

$

81,264

 

 

$

86,235

 

 

$

82,448

 

 

$

70,178

 

Radian Group Inc. and Subsidiaries
Definition of Consolidated Non-GAAP Financial Measures
Exhibit F (page 1 of 2)

 

Use of Non-GAAP Financial Measures
 

In addition to the traditional GAAP financial measures, we have presented "adjusted pretax operating income (loss)," "adjusted diluted net operating income (loss) per share" and "adjusted net operating return on equity," which are non-GAAP financial measures for the consolidated company, among our key performance indicators to evaluate our fundamental financial performance. These non-GAAP financial measures align with the way the Company's business performance is evaluated by both management and the board of directors. These measures have been established in order to increase transparency for the purposes of evaluating our operating trends and enabling more meaningful comparisons with our peers. Although on a consolidated basis "adjusted pretax operating income (loss)," "adjusted diluted net operating income (loss) per share" and "adjusted net operating return on equity" are non-GAAP financial measures, we believe these measures aid in understanding the underlying performance of our operations. Our senior management, including our Chief Executive Officer (Radian's chief operating decision maker), uses adjusted pretax operating income (loss) as our primary measure to evaluate the fundamental financial performance of the Company's business segments and to allocate resources to the segments.

 

 

 

 

Adjusted pretax operating income (loss) is defined as GAAP consolidated pretax income (loss) excluding the effects of: (i) net gains (losses) on investments and other financial instruments, except for certain investments attributable to our reportable segments; (ii) loss on extinguishment of debt; (iii) amortization and impairment of goodwill and other acquired intangible assets; and (iv) impairment of other long-lived assets and other non-operating items, such as impairment of internal-use software, gains (losses) from the sale of lines of business and acquisition-related income and expenses. Adjusted diluted net operating income (loss) per share is calculated by dividing (i) adjusted pretax operating income (loss) attributable to common stockholders, net of taxes computed using the Company's statutory tax rate, by (ii) the sum of the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. Adjusted net operating return on equity is calculated by dividing annualized adjusted pretax operating income (loss), net of taxes computed using the Company's statutory tax rate, by average stockholders' equity, based on the average of the beginning and ending balances for each period presented.

 

 

 

 

Although adjusted pretax operating income (loss) excludes certain items that have occurred in the past and are expected to occur in the future, the excluded items represent those that are: (i) not viewed as part of the operating performance of our primary activities or (ii) not expected to result in an economic impact equal to the amount reflected in pretax income (loss). These adjustments, along with the reasons for their treatment, are described below.

 

 

(1)

 

Net gains (losses) on investments and other financial instruments. The recognition of realized investment gains or losses can vary significantly across periods as the activity is highly discretionary based on the timing of individual securities sales due to such factors as market opportunities, our tax and capital profile and overall market cycles. Unrealized gains and losses arise primarily from changes in the market value of our investments that are classified as trading or equity securities. These valuation adjustments may not necessarily result in realized economic gains or losses.

 

 

 

 

 

 

 

Trends in the profitability of our fundamental operating activities can be more clearly identified without the fluctuations of these realized and unrealized gains or losses and changes in fair value of other financial instruments. Except for certain investments attributable to our reportable segments, we do not view them to be indicative of our fundamental operating activities.

 

 

 

 

 

(2)

 

Loss on extinguishment of debt. Gains or losses on early extinguishment of debt and losses incurred to purchase our debt prior to maturity are discretionary activities that are undertaken in order to take advantage of market opportunities to strengthen our financial and capital positions; therefore, we do not view these activities as part of our operating performance. Such transactions do not reflect expected future operations and do not provide meaningful insight regarding our current or past operating trends.

 

 

 

 

 

(3)

 

Amortization and impairment of goodwill and other acquired intangible assets. Amortization of acquired intangible assets represents the periodic expense required to amortize the cost of acquired intangible assets over their estimated useful lives. Acquired intangible assets are also periodically reviewed for potential impairment, and impairment adjustments are made whenever appropriate. We do not view these charges as part of the operating performance of our primary activities.

 

 

 

 

 

(4)

 

Impairment of other long-lived assets and other non-operating items. Includes activities that we do not view to be indicative of our fundamental operating activities, such as: (i) impairment of internal-use software and other long-lived assets; (ii) gains (losses) from the sale of lines of business: and (iii) acquisition-related income and expenses.

Radian Group Inc. and Subsidiaries

Definition of Consolidated Non-GAAP Financial Measures

Exhibit F (page 2 of 2)

In addition to the above non-GAAP measures for the consolidated company, we also have presented as supplemental information non-GAAP measures for our homegenius segment of adjusted pretax operating income (loss) before allocated corporate operating expenses and adjusted gross profit. Adjusted pretax operating income (loss) before allocated corporate operating expenses is calculated as adjusted pretax operating income (loss) as described above (which is the segment's ASC 280 GAAP measure of operating performance), adjusted to remove the impact of corporate allocations of other operating expenses for the homegenius segment. Adjusted gross profit is further adjusted to remove other operating expenses. In addition, homegenius adjusted pretax operating margin before allocated corporate operating expenses and adjusted gross profit margin are calculated by dividing homegenius adjusted pretax operating margin before allocated corporate operating expenses and adjusted gross profit, respectively, by GAAP total revenue for the homegenius segment. For the homegenius segment, adjusted pretax operating income (loss) before allocated corporate operating expenses, adjusted gross profit, and the related profit margins are used to facilitate comparisons with other services companies, since they are widely accepted measures of performance in the services industry and are used internally as supplemental measures to evaluate the performance of our homegenius segment.

See Exhibit G for the reconciliation of the most comparable GAAP measures, consolidated pretax income (loss), diluted net income (loss) per share and return on equity to our non-GAAP financial measures for the consolidated company, adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity, respectively. Exhibit G also contains the reconciliation of adjusted pretax operating income (loss) to adjusted pretax operating income (loss) before allocated corporate operating expenses and adjusted gross profit for the homegenius segment.

Total adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share, adjusted net operating return on equity, homegenius adjusted pretax operating income (loss) before allocated corporate operating expenses and homegenius adjusted gross profit should not be considered in isolation or viewed as substitutes for GAAP pretax income (loss), diluted net income (loss) per share, return on equity or net income (loss), or in the case of the homegenius non-GAAP measures, for homegenius adjusted pretax operating income (loss). Our definitions of adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share, adjusted net operating return on equity and homegenius adjusted pretax operating income (loss) before allocated corporate operating expenses, homegenius adjusted gross profit, homegenius adjusted pretax operating margin before allocated corporate operating expenses or homegenius adjusted gross profit margin may not be comparable to similarly-named measures reported by other companies.

Radian Group Inc. and Subsidiaries

Consolidated Non-GAAP Financial Measure Reconciliations

Exhibit G (page 1 of 3)

Reconciliation of Consolidated Pretax Income to Adjusted Pretax Operating Income

 

 

2022

 

2021

(In thousands)

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Consolidated pretax income

$

234,140

 

 

$

246,506

 

 

$

161,641

 

 

$

195,496

 

 

$

161,189

 

Less reconciling income (expense) items:

 

 

 

 

 

 

 

 

 

Net gains (losses) on investments and other financial instruments (1)

 

(29,457

)

 

 

1,516

 

 

 

2,098

 

 

 

15,661

 

 

 

(5,181

)

Amortization of other acquired intangible assets

 

(849

)

 

 

(863

)

 

 

(862

)

 

 

(863

)

 

 

(862

)

Impairment of other long-lived assets and other non-operating items (2)

 

(502

)

 

 

788

 

 

 

(244

)

 

 

(4,021

)

 

 

(84

)

Total adjusted pretax operating income (3)

$

264,948

 

 

$

245,065

 

 

$

160,649

 

 

$

184,719

 

 

$

167,316

 

(1)

For the fourth quarter of 2021, excludes $1.5 million in net gains on investments attributable to our homegenius segment and included in adjusted pretax operating income (loss) for that reportable segment.

(2)

The amounts for all the periods presented are included in other operating expenses on the Condensed Consolidated Statement of Operations in Exhibit A and primarily relate to impairments of other long-lived assets.

(3)

Total adjusted pretax operating income (loss) consists of adjusted pretax operating income (loss) for each reportable segment and All Other activities as follows:

 

2022

 

2021

(In thousands)

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Adjusted pretax operating income (loss):

 

 

 

 

 

 

 

 

 

Mortgage segment

$

277,841

 

 

$

246,574

 

 

$

165,220

 

 

$

194,043

 

 

$

175,709

 

homegenius segment

 

(13,506

)

 

 

(2,116

)

 

 

(5,557

)

 

 

(9,198

)

 

 

(10,453

)

All Other activities

 

613

 

 

 

607

 

 

 

986

 

 

 

(126

)

 

 

2,060

 

Total adjusted pretax operating income

$

264,948

 

 

$

245,065

 

 

$

160,649

 

 

$

184,719

 

 

$

167,316

 

Radian Group Inc. and Subsidiaries

Consolidated Non-GAAP Financial Measure Reconciliations

Exhibit G (page 2 of 3)

Reconciliation of Diluted Net Income Per Share to Adjusted Diluted Net Operating Income Per Share

 

 

2022

 

2021

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Diluted net income per share

$

1.01

 

 

$

1.07

 

 

$

0.67

 

 

$

0.80

 

 

$

0.64

 

 

 

 

 

 

 

 

 

 

 

Less per-share impact of reconciling income (expense) items:

 

 

 

 

 

 

 

 

 

Net gains (losses) on investments and other financial instruments

 

(0.16

)

 

 

0.01

 

 

 

0.01

 

 

 

0.08

 

 

 

(0.03

)

Amortization of other acquired intangible assets

 

(0.01

)

 

 

?

 

 

 

?

 

 

 

?

 

 

 

?

 

Impairment of other long-lived assets and other non-operating items

 

?

 

 

 

?

 

 

 

?

 

 

 

(0.02

)

 

 

?

 

Income tax (provision) benefit on reconciling income (expense) items (1)

 

0.03

 

 

 

?

 

 

 

?

 

 

 

(0.01

)

 

 

0.01

 

Difference between statutory and effective tax rate

 

(0.02

)

 

 

(0.01

)

 

 

(0.01

)

 

 

?

 

 

 

(0.02

)

Per-share impact of reconciling income (expense) items

 

(0.16

)

 

 

?

 

 

 

?

 

 

 

0.05

 

 

 

(0.04

)

Adjusted diluted net operating income per share (1)

$

1.17

 

 

$

1.07

 

 

$

0.67

 

 

$

0.75

 

 

$

0.68

(1)

Calculated using the company's federal statutory tax rate of 21%. Any permanent tax adjustments and state income taxes on these items have been deemed immaterial and are not included.

Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity (1)

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

 

 

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Return on equity (1)

17.2

%

 

18.2

%

 

11.8

%

 

14.5

%

 

11.8

%

Less impact of reconciling income (expense) items: (2)

 

 

 

 

 

 

 

 

 

Net gains (losses) on investments and other financial instruments

(2.8

)

 

0.1

 

 

0.2

 

 

1.5

 

 

(0.5

)

Amortization of other acquired intangible assets

(0.1

)

 

(0.1

)

 

(0.1

)

 

(0.1

)

 

(0.1

)

Impairment of other long-lived assets and other non-operating items

?

 

 

0.1

 

 

?

 

 

(0.4

)

 

?

 

Income tax (provision) benefit on reconciling income (expense) items (3)

0.6

 

 

?

 

 

?

 

 

(0.2

)

 

0.1

 

Difference between statutory and effective tax rate

(0.4

)

 

(0.1

)

 

(0.1

)

 

0.1

 

 

(0.1

)

Impact of reconciling income (expense) items

(2.7

)

 

?

 

 

0.0

 

 

0.9

 

 

(0.6

)

Adjusted net operating return on equity (3)

19.9

%

 

18.2

%

 

11.8

%

 

13.6

%

 

12.4

%

(1)

Calculated by dividing annualized net income (loss) by average stockholders' equity, based on the average of the beginning and ending balances for each period presented.

(2)

Annualized, as a percentage of average stockholders' equity.

(3)

Calculated using the company's federal statutory tax rate of 21%. Any permanent tax adjustments and state income taxes on these items have been deemed immaterial and are not included.

Radian Group Inc. and Subsidiaries

Consolidated Non-GAAP Financial Measure Reconciliations

Exhibit G (page 3 of 3)

Reconciliation of homegenius Adjusted Pretax Operating Income (Loss) to homegenius Adjusted Gross Profit

 

 

2022

 

2021

(In thousands)

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

homegenius adjusted pretax operating income (loss)

$

(13,506

)

 

$

(2,116

)

 

$

(5,557

)

 

$

(9,198

)

 

$

(10,453

)

Less reconciling income (expense) items:

 

 

 

 

 

 

 

 

 

Allocation of corporate operating expenses

 

(5,280

)

 

 

(4,847

)

 

 

(4,918

)

 

 

(4,721

)

 

 

(3,996

)

Adjusted pretax operating income (loss) before allocated corporate operating expenses

 

(8,226

)

 

 

2,731

 

 

 

(639

)

 

 

(4,477

)

 

 

(6,457

)

Less reconciling income (expense) items:

 

 

 

 

 

 

 

 

 

Other operating expenses before allocated corporate operating expenses

 

(20,287

)

 

 

(16,998

)

 

 

(18,544

)

 

 

(16,160

)

 

 

(14,928

)

homegenius adjusted gross profit

$

12,061

 

 

$

19,729

 

 

$

17,905

 

 

$

11,683

 

 

$

8,471

 

On a consolidated basis, "adjusted pretax operating income (loss)," "adjusted diluted net operating income (loss) per share" and "adjusted net operating return on equity" are measures not determined in accordance with GAAP. In addition, "homegenius adjusted pretax operating income (loss) before allocated corporate operating expenses", "homegenius adjusted gross profit," "homegenius adjusted pretax operating margin before allocated corporate operating expenses" and "homegenius adjusted pretax operating margin" are also non-GAAP measures. These measures should not be considered in isolation or viewed as substitutes for GAAP pretax income (loss), diluted net income (loss) per share, return on equity or net income (loss), or in the case of the homegenius non-GAAP measures, for homegenius adjusted pretax operating income (loss).

Our definitions of adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share, adjusted net operating return on equity, homegenius adjusted pretax operating income (loss) before allocated corporate operating expenses, homegenius adjusted gross profit, homegenius adjusted pretax operating margin before allocated corporate operating expenses or homegenius adjusted gross profit margin may not be comparable to similarly-named measures reported by other companies. See Exhibit F for additional information on our consolidated non-GAAP financial measures.

Radian Group Inc. and Subsidiaries

Mortgage Supplemental Information - New Insurance Written

Exhibit H

 

 

2022

 

2021

($ in millions)

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

 

 

 

 

 

 

 

 

 

 

New insurance written ("NIW")

$

18,655

 

 

$

23,710

 

 

$

26,558

 

 

$

21,662

 

 

$

20,161

 

 

 

 

 

 

 

 

 

 

 

Percentage of NIW

 

 

 

 

 

 

 

 

 

Borrower-paid

 

99.2

%

 

 

99.4

%

 

 

99.2

%

 

 

99.1

%

 

 

99.2

%

 

 

 

 

 

 

 

 

 

 

Percentage by premium type

 

 

 

 

 

 

 

 

 

Direct monthly and other recurring premiums

 

94.5

%

 

 

93.5

%

 

 

93.8

%

 

 

93.1

%

 

 

90.2

%

Borrower-paid (1) (2)

 

5.3

 

 

 

6.3

 

 

 

6.0

 

 

 

6.6

 

 

 

9.4

 

Lender-paid (1)

 

0.2

 

 

 

0.2

 

 

 

0.2

 

 

 

0.3

 

 

 

0.4

 

Direct single premiums (1)

 

5.5

 

 

 

6.5

 

 

 

6.2

 

 

 

6.9

 

 

 

9.8

 

Total NIW

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

NIW for purchases

 

91.4

%

 

 

91.1

%

 

 

89.8

%

 

 

77.1

%

 

 

59.1

%

NIW for refinances

 

8.6

%

 

 

8.9

%

 

 

10.2

%

 

 

22.9

%

 

 

40.9

%

 

 

 

 

 

 

 

 

 

 

Percentage of NIW by FICO score (3)

 

 

 

 

 

 

 

 

 

>=740

 

57.1

%

 

 

53.8

%

 

 

56.0

%

 

 

61.4

%

 

 

64.3

%

680-739

 

35.7

 

 

 

36.9

 

 

 

34.9

 

 

 

33.1

 

 

 

31.5

 

620-679

 

7.2

 

 

 

9.3

 

 

 

9.1

 

 

 

5.5

 

 

 

4.2

 

Total NIW

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

Percentage by LTV

 

 

 

 

 

 

 

 

 

95.01% and above

 

14.6

%

 

 

16.3

%

 

 

12.1

%

 

 

10.9

%

 

 

8.0

%

90.01% to 95.00%

 

42.0

 

 

 

41.9

 

 

 

46.7

 

 

 

40.4

 

 

 

31.6

 

85.01% to 90.00%

 

29.4

 

 

 

28.4

 

 

 

26.5

 

 

 

27.6

 

 

 

31.3

 

85.00% and below

 

14.0

 

 

 

13.4

 

 

 

14.7

 

 

 

21.1

 

 

 

29.1

 

Total NIW

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

(1)

Percentages exclude the impact of reinsurance.

(2)

Borrower-paid Single Premium Policies have lower Minimum Required Assets under PMIERs as compared to lender-paid Single Premium Policies.

(3)

For loans with multiple borrowers, the percentage of NIW by FICO score represents the lowest of the borrowers' FICO scores.

Radian Group Inc. and Subsidiaries

Mortgage Supplemental Information - Primary Insurance in Force and Risk in Force

Exhibit I

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

($ in millions)

2022

 

2021

 

2021

 

2021

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

Primary insurance in force (1)

$

248,951

 

 

$

245,972

 

 

$

241,575

 

 

$

237,302

 

 

$

238,921

 

 

 

 

 

 

 

 

 

 

 

 

 

Primary risk in force (1) (2)

$

62,036

 

 

$

60,913

 

 

$

59,421

 

 

$

58,040

 

 

$

58,508

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of primary risk in force

 

 

 

 

 

 

 

 

 

 

Direct monthly and other recurring premiums

 

84.9

%

 

 

83.9

%

 

 

82.7

%

 

 

81.2

%

 

 

80.0

%

 

Direct single premiums

 

15.1

%

 

 

16.1

%

 

 

17.3

%

 

 

18.8

%

 

 

20.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of primary risk in force by FICO score (3)

 

 

 

 

 

 

 

 

 

 

>=740

 

56.9

%

 

 

56.9

%

 

 

57.3

%

 

 

57.5

%

 

 

57.2

%

 

680-739

 

35.1

 

 

 

35.0

 

 

 

34.8

 

 

 

34.8

 

 

 

34.9

 

 

620-679

 

7.5

 

 

 

7.6

 

 

 

7.4

 

 

 

7.2

 

 

 

7.3

 

 

<=619

 

0.5

 

 

 

0.5

 

 

 

0.5

 

 

 

0.5

 

 

 

0.6

 

 

Total Primary

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of primary risk in force by LTV

 

 

 

 

 

 

 

 

 

 

95.01% and above

 

15.5

%

 

 

15.1

%

 

 

14.6

%

 

 

14.5

%

 

 

14.4

%

 

90.01% to 95.00%

 

48.9

 

 

 

48.9

 

 

 

48.9

 

 

 

48.5

 

 

 

48.6

 

 

85.01% to 90.00%

 

27.6

 

 

 

27.7

 

 

 

27.8

 

 

 

28.1

 

 

 

28.2

 

 

85.00% and below

 

8.0

 

 

 

8.3

 

 

 

8.7

 

 

 

8.9

 

 

 

8.8

 

 

Total

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of primary risk in force by policy year

 

 

 

 

 

 

 

 

 

 

2008 and prior

 

4.3

%

 

 

4.7

%

 

 

5.2

%

 

 

5.7

%

 

 

6.1

%

 

2009 - 2016

 

9.3

 

 

 

10.8

 

 

 

12.5

 

 

 

14.7

 

 

 

16.7

 

 

2017

 

4.3

 

 

 

4.9

 

 

 

5.7

 

 

 

6.8

 

 

 

8.0

 

 

2018

 

4.6

 

 

 

5.2

 

 

 

6.1

 

 

 

7.3

 

 

 

8.7

 

 

2019

 

8.6

 

 

 

9.7

 

 

 

11.4

 

 

 

13.6

 

 

 

15.6

 

 

2020

 

27.2

 

 

 

29.2

 

 

 

32.1

 

 

 

35.4

 

 

 

37.2

 

 

2021

 

34.0

 

 

 

35.5

 

 

 

27.0

 

 

 

16.5

 

 

 

7.7

 

 

2022

 

7.7

 

 

 

?

 

 

 

?

 

 

 

?

 

 

 

?

 

 

Total

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Persistency Rate (12 months ended)

 

68.0

%

 

 

64.3

%

 

 

60.8

%

 

 

57.7

%

(4)

 

57.2

%

(4)

Persistency Rate (quarterly, annualized) (5)

 

76.9

%

(4)

 

71.7

%

 

 

67.5

%

 

 

66.3

%

 

 

62.5

%

 

(1)

Excludes the impact of premiums ceded under our reinsurance agreements.

(2)

Does not include pool risk in force or other risk in force, which combined represent approximately 1% of our total risk in force for all periods presented.

(3)

For loans with multiple borrowers, the percentage of primary risk in force by FICO score represents the lowest of the borrowers' FICO scores.

(4)

The Persistency Rate was reduced by an increase in cancellations of Single Premium Policies due to increased cancellations identified by our ongoing servicer monitoring process for Single Premium Policies.

(5)

The Persistency Rate on a quarterly, annualized basis is calculated based on loan-level detail for the quarter ending as of the date shown. It may be impacted by seasonality or other factors, including the level of refinance activity during the applicable periods and may not be indicative of full-year trends.

Radian Group Inc. and Subsidiaries

Mortgage Supplemental Information - Claims and Reserves, Default Statistics

Exhibit J

 

 

2022

 

2021

($ in thousands)

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

 

 

 

 

 

 

 

 

 

 

Net claims paid: (1)

 

 

 

 

 

 

 

 

 

Total primary claims paid

$

5,153

 

 

$

4,300

 

 

$

5,330

 

$

4,870

 

 

$

6,611

 

Total pool and other

 

(415

)

 

 

(462

)

 

 

991

 

 

(649

)

 

 

(138

)

Subtotal

 

4,738

 

 

 

3,838

 

 

 

6,321

 

 

4,221

 

 

 

6,473

 

Impact of commutations and settlements (2)

 

?

 

 

 

6,549

 

 

 

3,915

 

 

?

 

 

 

4,000

 

Total net claims paid

$

4,738

 

 

$

10,387

 

 

$

10,236

 

$

4,221

 

 

$

10,473

 

 

 

 

 

 

 

 

 

 

 

Total average net primary claims paid (1) (3)

$

41.6

 

 

$

47.8

 

 

$

42.0

 

$

46.8

 

 

$

43.8

 

 

 

 

 

 

 

 

 

 

 

Average direct primary claims paid (3) (4)

$

42.1

 

 

$

49.1

 

 

$

43.2

 

$

48.4

 

 

$

45.5

 

(1)

Includes the impact of reinsurance recoveries and LAE.

(2)

Includes payments to commute mortgage insurance coverage on certain performing and non-performing loans. For the first quarter of 2021, primarily includes payments made to settle certain previously disclosed legal proceedings.

(3)

Calculated without giving effect to the impact of commutations and settlements.

(4)

Before reinsurance recoveries.

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

($ in thousands, except per default amounts)

2022

 

2021

 

2021

 

2021

 

2021

 

 

 

 

 

 

 

 

 

 

Reserve for losses by category (1)

 

 

 

 

 

 

 

 

 

Mortgage reserves

 

 

 

 

 

 

 

 

 

Primary case reserves

$

691,090

 

$

790,380

 

$

851,151

 

$

840,764

 

$

841,555

IBNR and other

 

2,539

 

 

2,886

 

 

3,788

 

 

5,464

 

 

6,626

LAE

 

17,367

 

 

19,859

 

 

21,400

 

 

21,180

 

 

21,212

Total primary reserves

 

710,996

 

 

813,125

 

 

876,339

 

 

867,408

 

 

869,393

Total pool reserves

 

10,330

 

 

9,826

 

 

11,413

 

 

13,085

 

 

13,175

Total 1st lien reserves

 

721,326

 

 

822,951

 

 

887,752

 

 

880,493

 

 

882,568

Other

 

184

 

 

185

 

 

269

 

 

270

 

 

270

Total Mortgage reserves

 

721,510

 

 

823,136

 

 

888,021

 

 

880,763

 

 

882,838

homegenius reserves

 

5,737

 

 

5,506

 

 

5,134

 

 

4,735

 

 

4,517

Total reserves

$

727,247

 

$

828,642

 

$

893,155

 

$

885,498

 

$

887,355

 

 

 

 

 

 

 

 

 

 

Primary reserve per primary default excluding IBNR and other

$

27,776

 

$

27,884

 

$

25,822

 

$

21,304

 

$

17,219

(1)

Includes ceded losses on reinsurance transactions, which are expected to be recovered and are included in the reinsurance recoverables reported in our condensed consolidated balance sheets.

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

2022

 

2021

 

2021

 

2021

 

2021

Default Statistics

 

 

 

 

 

 

 

 

 

Primary Insurance:

 

 

 

 

 

 

 

 

 

Number of insured loans

994,721

 

 

999,203

 

 

998,408

 

 

1,000,549

 

 

1,021,364

 

Number of loans in default

25,510

 

 

29,061

 

 

33,795

 

 

40,464

 

 

50,106

 

Percentage of loans in default

2.56

%

 

2.91

%

 

3.38

%

 

4.04

%

 

4.91

%

Radian Group Inc. and Subsidiaries

Mortgage Supplemental Information - Reinsurance Programs

Exhibit K

 

 

2022

 

2021

($ in thousands)

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

 

 

 

 

 

 

 

 

 

 

Quota Share Reinsurance ("QSR") and Single Premium QSR Programs

 

 

 

 

 

 

 

 

 

Ceded premiums written (1)

$

(22,079

)

 

$

(7,670

)

 

$

(1,304

)

 

$

(7,032

)

 

$

(2,852

)

% of premiums written

 

(8.8

)%

 

 

(2.9

)%

 

 

(0.5

)%

 

 

(2.8

)%

 

 

(1.1

)%

Ceded premiums earned

$

(3,240

)

 

$

3,116

 

 

$

13,506

 

 

$

13,491

 

 

$

20,788

 

% of premiums earned

 

(1.2

)%

 

 

1.1

%

 

 

4.8

%

 

 

4.8

%

 

 

6.8

%

Ceding commissions written

$

(9,153

)

 

$

(8,232

)

 

$

(7,861

)

 

$

(2,362

)

 

$

(2,949

)

Ceding commissions earned (2)

$

5,123

 

 

$

6,288

 

 

$

7,087

 

 

$

7,920

 

 

$

10,407

 

Profit commission

$

22,075

 

 

$

20,290

 

 

$

13,630

 

 

$

17,935

 

 

$

16,350

 

Ceded losses

$

(12,588

)

 

$

(7,940

)

 

$

883

 

 

$

(1,007

)

 

$

3,661

 

 

 

 

 

 

 

 

 

 

 

Excess-of-Loss Program

 

 

 

 

 

 

 

 

 

Ceded premiums written

$

16,164

 

 

$

20,508

 

 

$

15,434

 

 

$

18,524

 

 

$

11,482

 

% of premiums written

 

6.4

%

 

 

7.9

%

 

 

6.1

%

 

 

7.4

%

 

 

4.4

%

Ceded premiums earned

$

17,588

 

 

$

17,817

 

 

$

16,581

 

 

$

15,601

 

 

$

12,154

 

% of premiums earned

 

6.5

%

 

 

6.3

%

 

 

5.9

%

 

 

5.5

%

 

 

4.0

%

 

 

 

 

 

 

 

 

 

 

Ceded RIF (3)

 

 

 

 

 

 

 

 

 

Single Premium QSR Program

$

4,855,228

 

 

$

5,228,037

 

 

$

5,439,056

 

 

$

5,728,142

 

 

$

6,147,808

 

Excess-of-Loss Program

 

2,199,919

 

 

 

2,295,954

 

 

 

1,873,426

 

 

 

1,952,900

 

 

 

1,525,100

 

QSR Program

 

186,930

 

 

 

207,106

 

 

 

232,539

 

 

 

268,337

 

 

 

317,827

 

Total Ceded RIF

$

7,242,077

 

 

$

7,731,097

 

 

$

7,545,021

 

 

$

7,949,379

 

 

$

7,990,735

 

 

 

 

 

 

 

 

 

 

 

PMIERs impact - reduction in Minimum Required Assets

 

 

 

 

 

 

 

 

 

Excess-of-Loss Program

$

881,917

 

 

$

995,171

 

 

$

659,151

 

 

$

907,112

 

 

$

673,957

 

Single Premium QSR Program

 

286,706

 

 

 

314,183

 

 

 

328,339

 

 

 

355,115

 

 

 

388,536

 

QSR Program

 

11,214

 

 

 

12,541

 

 

 

14,116

 

 

 

16,545

 

 

 

19,378

 

Total PMIERs impact

$

1,179,837

 

 

$

1,321,895

 

 

$

1,001,606

 

 

$

1,278,772

 

 

$

1,081,871

 

(1)

Net of profit commission.

(2)

Includes amounts reported in policy acquisition costs and other operating expenses. See Exhibit E for details.

(3)

Included in primary RIF.

FORWARD-LOOKING STATEMENTS

All statements in this press release that address events, developments or results that we expect or anticipate may occur in the future are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995. In most cases, forward-looking statements may be identified by words such as "anticipate," "may," "will," "could," "should," "would," "expect," "intend," "plan," "goal," "contemplate," "believe," "estimate," "predict," "project," "potential," "continue," "seek," "strategy," "future," "likely" or the negative or other variations on these words and other similar expressions. These statements, which may include, without limitation, projections regarding our future performance and financial condition, are made on the basis of management's current views and assumptions with respect to future events. These statements speak only as of the date they were made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We operate in a changing environment where new risks emerge from time to time and it is not possible for us to predict all risks that may affect us. The forward-looking statements are not guarantees of future performance, and the forward-looking statements, as well as our prospects as a whole, are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. These risks and uncertainties include, without limitation:

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.


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