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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Radian Group Inc | NYSE:RDN | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 30.70 | 0 | 09:28:13 |
— First quarter net income of $152 million, or $0.98 per diluted share —
— Return on equity of 13.8% and adjusted net operating return on equity of 14.5% —
— Default rate declines to 2.1% with highest quarterly cure rate in more than 20 years —
— Primary mortgage insurance in force growth of 4% year-over-year to an all-time high of $271 billion —
— Total revenue growth of 3% year-over-year to $319 million —
— Book value per share growth of 12% year-over-year to $29.30 —
— Completed $625 million senior notes offering and redemption of $525 million senior notes in the quarter —
Radian Group Inc. (NYSE: RDN) today reported net income for the quarter ended March 31, 2024, of $152 million, or $0.98 per diluted share. This compares with net income for the quarter ended March 31, 2023, of $158 million, or $0.98 per diluted share.
Adjusted pretax operating income for the quarter ended March 31, 2024, was $203 million, or $1.03 per diluted share. This compares with adjusted pretax operating income for the quarter ended March 31, 2023, of $200 million, or $0.98 per diluted share.
Key Financial Highlights
Quarter ended
($ in millions, except per-share amounts)
March 31,
2024
December 31,
2023
March 31,
2023
Total revenues
$319
$329
$310
Net income
$152
$143
$158
Diluted net income per share
$0.98
$0.91
$0.98
Consolidated pretax income
$199
$180
$204
Adjusted pretax operating income (1)
$203
$192
$200
Adjusted diluted net operating income per share (1) (2)
$1.03
$0.96
$0.98
Return on equity (3)
13.8%
13.4%
15.7%
Adjusted net operating return on equity (1) (2)
14.5%
14.2%
15.7%
New Insurance Written (NIW) - mortgage insurance
$11,534
$10,629
$11,261
Net premiums earned - mortgage insurance
$234
$230
$231
New defaults
11,756
12,452
10,624
Provision for losses - mortgage insurance
($7)
$5
($17)
As of
($ in millions, except per-share amounts)
March 31,
2024
December 31,
2023
March 31,
2023
Book value per share
$29.30
$28.71
$26.23
Accumulated other comprehensive income (loss) value per share (4)
($2.39)
($2.16)
($2.47)
PMIERs Available Assets (5)
$5,989
$5,890
$5,651
PMIERs excess Available Assets (6)
$2,282
$2,260
$1,740
Total Holding Company Liquidity (7)
$1,369
$1,267
$1,231
Total investments
$6,327
$6,086
$5,838
Primary mortgage insurance in force
$270,986
$269,979
$261,450
Percentage of primary loans in default (8)
2.1%
2.2%
2.1%
Mortgage insurance loss reserves
$357
$365
$400
(1)
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.
(2)
Calculated using the Company’s federal statutory tax rate of 21%.
(3)
Calculated by dividing annualized net income by average stockholders’ equity, based on the average of the beginning and ending balances for each period presented.
(4)
Included in book value per share for each period presented.
(5)
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.
(6)
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.
(7)
Represents Radian Group’s total liquidity, including available capacity under its $275 million unsecured revolving credit facility.
(8)
Represents the number of primary loans in default as a percentage of the total number of insured primary loans.
Book value per share at March 31, 2024, was $29.30, compared to $28.71 at December 31, 2023, and $26.23 at March 31, 2023. This represents a 12% growth in book value per share at March 31, 2024, as compared to March 31, 2023, and includes accumulated other comprehensive income (loss) of $(2.39) per share as of March 31, 2024, and $(2.47) per share as of March 31, 2023. Changes in accumulated other comprehensive income (loss) are primarily from net unrealized gains or losses on investments as a result of decreases or increases, respectively, in market interest rates.
“We had a strong start to the year with excellent first quarter operating results for Radian. We increased book value per share by 12% year-over-year and delivered return on equity of approximately 14%. These results demonstrate the embedded economic value of our high-quality mortgage insurance portfolio, which is the main driver of future earnings for our company and reached an all-time high of $271 billion during the quarter,” said Radian’s Chief Executive Officer Rick Thornberry. “We continue to strategically manage capital, paying our fifth consecutive quarterly dividend of $100 million from Radian Guaranty to Radian Group and returning capital to stockholders through dividends and share repurchases.”
FIRST QUARTER HIGHLIGHTS
CAPITAL AND LIQUIDITY UPDATE
Radian Group
Radian Guaranty
RECENT EVENTS AND OTHER MATTERS
CONFERENCE CALL
Radian will discuss first quarter 2024 financial results in a conference call tomorrow, Thursday, May 2, 2024, at 12:00 p.m. Eastern time. The conference call will be webcast live on the company’s website at https://radian.com/who-we-are/for-investors/webcasts or at www.radian.com. The webcast is listen-only. Those interested in participating in the question-and-answer session should follow the conference call dial-in instructions below.
The call may be accessed via telephone by registering for the call here to receive the dial-in numbers and unique PIN. It is recommended that you join 10 minutes prior to the event start (although you may register and dial in at any time during the call).
A digital replay of the webcast will be available on Radian’s website approximately two hours after the live broadcast ends for a period of one year at https://radian.com/who-we-are/for-investors/webcasts.
In addition to the information provided in the company’s earnings news release, other statistical and financial information, which is expected to be referred to during the conference call, will be available on Radian’s website at www.radian.com, under Investors.
NON-GAAP FINANCIAL MEASURES
Radian believes that adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity (non-GAAP measures) facilitate evaluation of the company’s fundamental financial performance and provide relevant and meaningful information to investors about the ongoing operating results of the company. On a consolidated basis, these measures are not recognized in accordance with accounting principles generally accepted in the United States of America (GAAP) and should not be considered in isolation or viewed as substitutes for GAAP measures of performance. The measures described below have been established in order to increase transparency for the purpose of evaluating the company’s operating trends and enabling more meaningful comparisons with Radian’s competitors.
Adjusted pretax operating income (loss) is defined as GAAP consolidated pretax income (loss) excluding the effects of: (i) net gains (losses) on investments and other financial instruments, except for certain investments and other financial instruments attributable to our reportable segment or All Other activities; (ii) amortization and impairment of goodwill and other acquired intangible assets; and (iii) impairment of other long-lived assets and other non-operating items, if any, such as gains (losses) from the sale of lines of business, acquisition-related income (expenses) and gains (losses) on extinguishment of debt. Adjusted diluted net operating income (loss) per share is calculated by dividing adjusted pretax operating income (loss) attributable to common stockholders, net of taxes computed using the company’s statutory tax rate, by 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.
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, valuation, asset management and other real estate 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 and homegenius.com to learn more about how Radian and its pioneering homegenius platform are building a smarter future for mortgage and real estate services.
FINANCIAL RESULTS AND SUPPLEMENTAL INFORMATION CONTENTS (Unaudited)
Exhibit A:
Condensed Consolidated Statements of Operations
Exhibit B:
Net Income Per Share
Exhibit C:
Condensed Consolidated Balance Sheets
Exhibit D:
Condensed Consolidated Statements of Operations Detail
Exhibit E:
Segment Information
Exhibit F:
Definition of Consolidated Non-GAAP Financial Measures
Exhibit G:
Consolidated Non-GAAP Financial Measure Reconciliations
Exhibit H:
Mortgage Insurance Supplemental Information - New Insurance Written
Exhibit I:
Mortgage Insurance Supplemental Information - Primary Insurance in Force and Risk in Force
Radian Group Inc. and Subsidiaries Condensed Consolidated Statements of Operations(1) Exhibit A
2024
2023
(In thousands, except per-share amounts)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Revenues
Net premiums earned
$
235,857
$
232,649
$
240,262
$
213,429
$
233,238
Services revenue
12,588
12,419
10,892
11,797
10,984
Net investment income
69,221
68,824
67,805
63,348
58,453
Net gains (losses) on investments and other financial instruments
490
13,447
(8,555
)
(236
)
5,585
Other income
1,262
1,305
2,109
1,241
1,592
Total revenues
319,418
328,644
312,513
289,579
309,852
Expenses
Provision for losses
(7,034
)
4,170
(8,135
)
(21,632
)
(16,929
)
Policy acquisition costs
6,794
6,147
6,920
5,218
6,293
Cost of services
9,327
8,950
8,886
10,257
10,398
Other operating expenses
82,636
95,218
79,206
89,885
83,269
Interest expense
29,046
23,169
23,282
21,805
21,439
Impairment of goodwill
—
9,802
—
—
—
Amortization of other acquired intangible assets
—
1,371
1,371
1,370
1,371
Total expenses
120,769
148,827
111,530
106,903
105,841
Pretax income
198,649
179,817
200,983
182,676
204,011
Income tax provision
46,295
37,124
44,401
36,589
46,254
Net income
$
152,354
$
142,693
$
156,582
$
146,087
$
157,757
Diluted net income per share
$
0.98
$
0.91
$
0.98
$
0.91
$
0.98
(1) See Exhibit D for additional details.
Radian Group Inc. and Subsidiaries Net Income Per Share Exhibit B
The calculation of basic and diluted net income per share is as follows.
2024
2023
(In thousands, except per-share amounts)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Net income—basic and diluted
$
152,354
$
142,693
$
156,582
$
146,087
$
157,757
Average common shares outstanding—basic
153,817
155,318
158,461
159,010
158,304
Dilutive effect of share-based compensation arrangements (1)
2,154
1,909
1,686
1,734
3,045
Adjusted average common shares outstanding—diluted
155,971
157,227
160,147
160,744
161,349
Basic net income per share
$
0.99
$
0.92
$
0.99
$
0.92
$
1.00
Diluted net income per share
$
0.98
$
0.91
$
0.98
$
0.91
$
0.98
(1)The following number of shares of our common stock equivalents issued under our share-based compensation arrangements are not included in the calculation of diluted net income per share because their effect would be anti-dilutive.
2024
2023
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Shares of common stock equivalents
—
—
—
112
25
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)
2024
2023
2023
2023
2023
Assets
Investments
$
6,327,114
$
6,085,654
$
5,885,652
$
5,895,871
$
5,837,892
Cash
26,993
18,999
55,489
61,142
50,167
Restricted cash
1,832
1,066
1,305
1,317
577
Accrued investment income
46,334
45,783
45,623
42,650
42,567
Accounts and notes receivable
130,095
123,857
144,614
138,432
129,565
Reinsurance recoverable
28,151
25,909
24,148
22,979
24,396
Deferred policy acquisition costs
18,561
18,718
18,817
19,272
18,236
Property and equipment, net
60,521
63,822
74,558
73,885
72,111
Goodwill and other acquired intangible assets, net
—
—
11,173
12,543
13,914
Prepaid federal income taxes
750,320
750,320
696,820
663,320
596,368
Other assets
369,944
459,805
420,483
375,132
418,609
Total assets
$
7,759,865
$
7,593,933
$
7,378,682
$
7,306,543
$
7,204,402
Liabilities and stockholders’ equity
Unearned premiums
$
215,124
$
225,396
$
236,400
$
246,666
$
257,735
Reserve for losses and loss adjustment expense
361,833
370,148
367,568
379,434
405,651
Senior notes
1,512,860
1,417,781
1,416,687
1,415,610
1,414,549
Secured borrowings
207,601
119,476
241,753
178,762
121,642
Reinsurance funds withheld
133,460
130,564
156,114
154,354
153,099
Net deferred tax liability
626,353
589,564
497,560
479,754
455,517
Other liabilities
262,902
343,199
309,701
281,127
289,731
Total liabilities
3,320,133
3,196,128
3,225,783
3,135,707
3,097,924
Common stock
171
173
175
177
176
Treasury stock
(946,202
)
(945,870
)
(945,504
)
(945,032
)
(931,313
)
Additional paid-in capital
1,390,436
1,430,594
1,482,712
1,522,895
1,515,852
Retained earnings
4,357,823
4,243,759
4,136,598
4,016,482
3,908,396
Accumulated other comprehensive income (loss)
(362,496
)
(330,851
)
(521,082
)
(423,686
)
(386,633
)
Total stockholders’ equity
4,439,732
4,397,805
4,152,899
4,170,836
4,106,478
Total liabilities and stockholders’ equity
$
7,759,865
$
7,593,933
$
7,378,682
$
7,306,543
$
7,204,402
Shares outstanding
151,509
153,179
155,582
157,350
156,547
Book value per share
$
29.30
$
28.71
$
26.69
$
26.51
$
26.23
Holding company debt-to-capital ratio (1)
25.4
%
24.4
%
25.4
%
25.3
%
25.6
%
(1)
Calculated as carrying value of senior notes, which were issued and are owed by our holding company, divided by carrying value of senior notes and stockholders’ equity. This holding company ratio does not include the effects of amounts owed by our subsidiaries related to secured borrowings.
Radian Group Inc. and Subsidiaries Condensed Consolidated Statements of Operations Detail Exhibit D (page 1 of 3)
Net Premiums Earned
2024
2023
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Premiums earned
Direct - Mortgage insurance
Premiums earned, excluding revenue from cancellations
$
258,593
$
256,632
$
254,903
$
252,537
$
251,166
Single Premium Policy cancellations
2,114
2,058
3,304
3,980
5,361
Total direct - Mortgage insurance
260,707
258,690
258,207
256,517
256,527
Ceded - Mortgage insurance
Premiums earned, excluding revenue from cancellations
(38,997
)
(40,065
)
(32,363
)
(57,916
)
(1)
(35,526
)
Single Premium Policy cancellations (2)
(112
)
(444
)
(873
)
(1,114
)
(1,472
)
Profit commission - other (3)
12,401
12,199
11,830
13,245
11,921
Total ceded premiums - Mortgage insurance
(26,708
)
(28,310
)
(21,406
)
(45,785
)
(25,077
)
Net premiums earned - Mortgage insurance
233,999
230,380
236,801
210,732
231,450
Net premiums earned - Title insurance
1,858
2,269
3,461
2,697
1,788
Net premiums earned
$
235,857
$
232,649
$
240,262
$
213,429
$
233,238
(1)
Includes the result of the tender offers by Eagle Re 2019-1 Ltd. and Eagle Re 2020-1 Ltd. to purchase the mortgage insurance-linked notes that supported their reinsurance agreements with Radian Guaranty. As a result, Radian Guaranty incurred additional ceded premiums earned during the second quarter of 2023 of $21 million.
(2)Includes the impact of related profit commissions.
(3)The amounts represent the profit commission under our QSR Program, excluding the impact of Single Premium Policy cancellations.
Services Revenue
2024
2023
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Mortgage Insurance
Contract underwriting services
$
210
$
202
$
266
$
284
$
336
All Other
Real estate services
9,193
8,888
7,046
7,598
7,395
Title
2,573
2,713
2,964
3,233
2,554
Real estate technology
612
616
616
682
699
Total services revenue
$
12,588
$
12,419
$
10,892
$
11,797
$
10,984
Radian Group Inc. and Subsidiaries Condensed Consolidated Statements of Operations Detail Exhibit D (page 2 of 3)
Net Investment Income
2024
2023
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Fixed-maturities
$
57,259
$
58,669
$
59,599
$
56,439
$
52,948
Equity securities
2,539
3,753
3,222
3,512
2,932
Mortgage loans held for sale
1,793
1,725
1,719
574
194
Short-term investments
8,958
5,871
5,405
3,976
3,588
Other (1)
(1,328
)
(1,194
)
(1,140
)
(1,153
)
(1,209
)
Net investment income
$
69,221
$
68,824
$
67,805
$
63,348
$
58,453
(1)
Includes investment management expenses, as well as the net impact from our securities lending activities.
Provision for Losses
2024
2023
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Mortgage insurance
Current period defaults (1)
$
53,688
$
53,981
$
46,630
$
41,223
$
50,578
Prior period defaults (2)
(60,574
)
(49,373
)
(54,887
)
(62,846
)
(67,442
)
Total Mortgage insurance
(6,886
)
4,608
(8,257
)
(21,623
)
(16,864
)
Title insurance
(148
)
(438
)
122
(9
)
(65
)
Total provision for losses
$
(7,034
)
$
4,170
$
(8,135
)
$
(21,632
)
$
(16,929
)
(1)Related to defaulted loans with the most recent default notice dated in the period indicated. For example, if a loan had defaulted in a prior period, but then subsequently cured and later re-defaulted in the current period, the default would be considered a current period default.
(2)Related to defaulted loans with a default notice dated in a period earlier than the period indicated, which have been continuously in default since that time.
Other Operating Expenses
2024
2023
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Other operating expenses by type
Salaries and other base employee expenses
$
39,723
$
34,182
$
33,272
$
39,032
$
35,064
Variable and share-based incentive compensation
17,515
20,262
19,546
18,908
18,273
Other general operating expenses
30,262
45,186
(1)
29,812
35,655
33,863
Ceding commissions
(5,644
)
(5,327
)
(5,153
)
(4,824
)
(4,628
)
Title agent commissions
780
915
1,729
1,114
697
Total
$
82,636
$
95,218
$
79,206
$
89,885
$
83,269
(1)
Includes $14 million of impairment of long-lived assets, primarily from impairments to our lease-related assets and internal-use software.
Radian Group Inc. and Subsidiaries Condensed Consolidated Statements of Operations Detail Exhibit D (page 3 of 3)
Interest Expense
2024
2023
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Senior notes
$
22,128
$
20,335
$
20,320
$
20,303
$
20,288
Loss on extinguishment of debt(1)
4,275
—
—
—
—
Mortgage loan financing facilities
1,438
1,421
1,609
400
77
FHLB advances
945
1,059
1,039
611
745
Revolving credit facility
260
354
310
399
311
Other
—
—
4
92
18
Total interest expense
$
29,046
$
23,169
$
23,282
$
21,805
$
21,439
(1)
Primarily comprised of the acceleration of remaining unamortized issuance costs related to the March 2024 redemption of our Senior Notes due 2025.
Radian Group Inc. and Subsidiaries Segment Information Exhibit E (page 1 of 4)
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), along with a reconciliation to its consolidated GAAP measure, see Exhibits F and G.
Three Months Ended March 31, 2024
(In thousands)
Mortgage Insurance
All Other (1)
Inter- segment
Total
Net premiums written
$
231,877
$
1,858
$
—
$
233,735
(Increase) decrease in unearned premiums
2,122
—
—
2,122
Net premiums earned
233,999
1,858
—
235,857
Services revenue
210
12,493
(115
)
12,588
Net investment income
49,574
19,647
—
69,221
Net gains (losses) on investments and other financial instruments
—
383
—
383
Other income
1,240
25
(3
)
1,262
Total
285,023
34,406
(118
)
319,311
Provision for losses
(6,886
)
(148
)
—
(7,034
)
Policy acquisition costs
6,794
—
—
6,794
Cost of services
153
9,174
—
9,327
Other operating expenses before allocated corporate operating expenses
17,270
27,264
(118
)
44,416
Interest expense
23,333
1,438
—
24,771
Total
40,664
37,728
(118
)
78,274
Adjusted pretax operating income (loss) before allocated corporate operating expenses
244,359
(3,322
)
—
241,037
Allocation of corporate operating expenses
34,509
3,711
—
38,220
Adjusted pretax operating income (loss) (2)
$
209,850
$
(7,033
)
$
—
$
202,817
Radian Group Inc. and Subsidiaries Segment Information Exhibit E (page 2 of 4)
Three Months Ended March 31, 2023
(In thousands)
Mortgage Insurance
All Other (1)
Inter- segment
Total
Net premiums written
$
229,419
$
1,788
$
—
$
231,207
(Increase) decrease in unearned premiums
2,031
—
—
2,031
Net premiums earned
231,450
1,788
—
233,238
Services revenue
336
10,743
(95
)
10,984
Net investment income
45,993
12,460
—
58,453
Net gains (losses) on investments and other financial instruments
—
80
—
80
Other income
1,587
5
—
1,592
Total
279,366
25,076
(95
)
304,347
Provision for losses
(16,864
)
(65
)
—
(16,929
)
Policy acquisition costs
6,293
—
—
6,293
Cost of services
241
10,157
—
10,398
Other operating expenses before allocated corporate operating expenses
18,806
21,770
(95
)
40,481
Interest expense
21,362
77
—
21,439
Total
29,838
31,939
(95
)
61,682
Adjusted pretax operating income (loss) before allocated corporate operating expenses
249,528
(6,863
)
—
242,665
Allocation of corporate operating expenses
34,829
7,973
—
42,802
Adjusted pretax operating income (loss) (2)
$
214,699
$
(14,836
)
$
—
$
199,863
(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) the operating results from certain other immaterial activities and operating segments, including our mortgage conduit, title, real estate services and real estate technology businesses.
(2)
See Exhibits F and G for additional information on the use and definition of this term and a reconciliation to consolidated net income.
Radian Group Inc. and Subsidiaries Segment Information Exhibit E (page 3 of 4)
Mortgage Insurance
2024
2023
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Net premiums written
$
231,877
$
225,112
$
235,169
$
214,540
$
229,419
(Increase) decrease in unearned premiums
2,122
5,268
1,632
(3,808
)
2,031
Net premiums earned
233,999
230,380
236,801
210,732
231,450
Services revenue
210
202
266
284
336
Net investment income
49,574
51,061
49,953
48,070
45,993
Other income
1,240
1,302
1,237
1,246
1,587
Total
285,023
282,945
288,257
260,332
279,366
Provision for losses
(6,886
)
4,608
(8,257
)
(21,623
)
(16,864
)
Policy acquisition costs
6,794
6,147
6,920
5,218
6,293
Cost of services
153
157
172
143
241
Other operating expenses before allocated corporate operating expenses
17,270
15,559
16,776
20,009
18,806
Interest expense
23,333
21,748
21,673
21,405
21,362
Total
40,664
48,219
37,284
25,152
29,838
Adjusted pretax operating income before allocated corporate operating expenses
244,359
234,726
250,973
235,180
249,528
Allocation of corporate operating expenses
34,509
36,929
31,744
37,081
34,829
Adjusted pretax operating income (1)
$
209,850
$
197,797
$
219,229
$
198,099
$
214,699
Radian Group Inc. and Subsidiaries Segment Information Exhibit E (page 4 of 4)
All Other (2)
2024
2023
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Net premiums earned
$
1,858
$
2,269
$
3,461
$
2,697
$
1,788
Services revenue
12,493
12,311
10,723
11,617
10,743
Net investment income
19,647
17,763
17,852
15,278
12,460
Net gains (losses) on investments and other financial instruments
383
356
283
95
80
Other income
25
14
9
(1
)
5
Total (3)
34,406
32,713
32,328
29,686
25,076
Provision for losses
(148
)
(438
)
122
(9
)
(65
)
Cost of services
9,174
8,793
8,714
10,114
10,157
Other operating expenses before allocated corporate operating expenses
27,264
23,660
26,062
27,538
21,770
Interest expense
1,438
1,421
1,609
400
77
Total
37,728
33,436
36,507
38,043
31,939
Adjusted pretax operating income before allocated corporate operating expenses
(3,322
)
(723
)
(4,179
)
(8,357
)
(6,863
)
Allocation of corporate operating expenses
3,711
5,340
4,595
5,367
7,973
Adjusted pretax operating income (loss) (1)
$
(7,033
)
$
(6,063
)
$
(8,774
)
$
(13,724
)
$
(14,836
)
(1)
See Exhibits F and G for additional information on the use and definition of this term and a reconciliation to consolidated net income.
(2)
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) the operating results from certain other immaterial activities and operating segments, including our mortgage conduit, title, real estate services and real estate technology businesses.
(3)
Details of All Other revenue are as follows.
2024
2023
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Holding company (a)
$
16,536
$
15,374
$
15,601
$
14,202
$
11,840
Real estate services
9,517
9,014
7,126
7,676
7,484
Title
4,997
5,516
6,948
6,422
4,776
Mortgage conduit
2,690
2,171
2,020
678
275
Real estate technology
666
638
633
708
701
Total
$
34,406
$
32,713
$
32,328
$
29,686
$
25,076
(a)
Consists of net investment income earned from assets held by Radian Group, our holding company, that are not attributable or allocated to our underlying businesses.
Selected Mortgage Insurance Key Ratios
2024
2023
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Loss ratio (1)
(2.9
)%
2.0
%
(3.5
)%
(10.3
)%
(7.3
)%
Expense ratio (2)
25.0
%
25.5
%
23.4
%
29.6
%
25.9
%
(1)
For our Mortgage Insurance segment, calculated as provision for losses expressed as a percentage of net premiums earned.
(2)
For our Mortgage Insurance segment, calculated as operating expenses, (which consist of policy acquisition costs and other operating expenses, as well as allocated corporate operating expenses), expressed as a percentage of net premiums earned.
Radian Group Inc. and Subsidiaries Definition of Consolidated Non-GAAP Financial Measures Exhibit F (page 1 of 2)
Use of Non-GAAP Financial Measures
In addition to the traditional GAAP financial measures, we have presented “adjusted pretax operating income (loss),” “adjusted diluted net operating income (loss) per share” and “adjusted net operating return on equity,” which are non-GAAP financial measures for the consolidated company, among our key performance indicators to evaluate our fundamental financial performance. These non-GAAP financial measures align with the way our business performance is evaluated by both management and by our board of directors. These measures have been established in order to increase transparency for the purposes of evaluating our operating trends and enabling more meaningful comparisons with our peers. Although on a consolidated basis adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity are non-GAAP financial measures, we believe these measures aid in understanding the underlying performance of our operations. Our senior management, including our Chief Executive Officer (Radian’s chief operating decision maker), uses adjusted pretax operating income (loss) as our primary measure to evaluate the fundamental financial performance of our businesses and to allocate resources to them.
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 and other financial instruments attributable to our reportable segment or All Other activities; (ii) amortization and impairment of goodwill and other acquired intangible assets; and (iii) impairment of other long-lived assets and other non-operating items, if any, such as gains (losses) from the sale of lines of business, acquisition-related income (expenses) and gains (losses) on extinguishment of debt. Adjusted diluted net operating income (loss) per share is calculated by dividing adjusted pretax operating income (loss) attributable to common stockholders, net of taxes computed using the company’s statutory tax rate, by 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 and other financial instruments attributable to specific operating segments, we do not view them to be indicative of our fundamental operating activities.
(2)
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.
(3)
Impairment of other long-lived assets and other non-operating items, if any. 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; (iii) acquisition-related income and expenses; and (iv) gains (losses) on extinguishment of debt.
Radian Group Inc. and Subsidiaries Definition of Consolidated Non-GAAP Financial Measures Exhibit F (page 2 of 2)
See Exhibit G for the reconciliations 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.
Total adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity 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). Our definitions of adjusted pretax operating income (loss) and adjusted diluted net operating income (loss) per share 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 2)
Reconciliation of Consolidated Pretax Income to Adjusted Pretax Operating Income
2024
2023
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Consolidated pretax income
$
198,649
$
179,817
$
200,983
$
182,676
$
204,011
Less reconciling income (expense) items
Net gains (losses) on investments and other financial instruments (1)
107
13,091
(8,838
)
(331
)
5,505
Amortization and impairment of goodwill and other acquired intangible assets
—
(11,173
)
(1,371
)
(1,370
)
(1,371
)
Impairment of other long-lived assets and other non-operating items
(4,275
)
(2)
(13,835
)
(3)
737
2
14
Total adjusted pretax operating income (4)
$
202,817
$
191,734
$
210,455
$
184,375
$
199,863
(1)
Excludes certain net gains (losses), if any, on investments and other financial instruments that are attributable to specific operating segments and therefore included in adjusted pretax operating income (loss).
(2)
This amount is included in interest expense on the Condensed Consolidated Statement of Operations in Exhibit A and relates to the loss on extinguishment of debt.
(3)
This amount is included in other operating expenses on the Condensed Consolidated Statement of Operations in Exhibit A and primarily relates to impairment of other long-lived assets.
(4)
Total adjusted pretax operating income consists of adjusted pretax operating income (loss) for our reportable segment and All Other activities as follows.
2024
2023
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Adjusted pretax operating income (loss)
Mortgage Insurance segment
$
209,850
$
197,797
$
219,229
$
198,099
$
214,699
All Other activities
(7,033
)
(6,063
)
(8,774
)
(13,724
)
(14,836
)
Total adjusted pretax operating income
$
202,817
$
191,734
$
210,455
$
184,375
$
199,863
Reconciliation of Diluted Net Income Per Share to Adjusted Diluted Net Operating Income Per Share
2024
2023
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Diluted net income per share
$
0.98
$
0.91
$
0.98
$
0.91
$
0.98
Less per-share impact of reconciling income (expense) items
Net gains (losses) on investments and other financial instruments
—
0.08
(0.06
)
—
0.03
Amortization and impairment of goodwill and other acquired intangible assets
—
(0.07
)
(0.01
)
(0.01
)
(0.01
)
Impairment of other long-lived assets and other non-operating items
(0.03
)
(0.09
)
0.01
—
—
Income tax (provision) benefit on reconciling income (expense) items (1)
0.01
0.02
0.01
—
(0.01
)
Difference between statutory and effective tax rates
(0.03
)
0.01
(0.01
)
0.01
(0.01
)
Per-share impact of reconciling income (expense) items
(0.05
)
(0.05
)
(0.06
)
—
—
Adjusted diluted net operating income per share (1)
$
1.03
$
0.96
$
1.04
$
0.91
$
0.98
(1)
Calculated using the company’s federal statutory tax rate of 21%.
Radian Group Inc. and Subsidiaries Consolidated Non-GAAP Financial Measure Reconciliations Exhibit G (page 2 of 2)
Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity (1)
2024
2023
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Return on equity (1)
13.8
%
13.4
%
15.0
%
14.1
%
15.7
%
Less impact of reconciling income (expense) items (2)
Net gains (losses) on investments and other financial instruments
—
1.2
(0.9
)
—
0.5
Amortization and impairment of goodwill and other acquired intangible assets
—
(1.0
)
(0.2
)
(0.1
)
(0.1
)
Impairment of other long-lived assets and other non-operating items
(0.4
)
(1.3
)
0.1
—
—
Income tax (provision) benefit on reconciling income (expense) items (3)
0.1
0.2
0.2
(0.1
)
(0.1
)
Difference between statutory and effective tax rates
(0.4
)
0.1
(0.2
)
0.2
(0.3
)
Impact of reconciling income (expense) items
(0.7
)
(0.8
)
(1.0
)
—
—
Adjusted net operating return on equity (3)
14.5
%
14.2
%
16.0
%
14.1
%
15.7
%
(1)Calculated by dividing annualized net income 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%.
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. 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).
Our definitions of adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity 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 Insurance Supplemental Information - New Insurance Written Exhibit H
2024
2023
($ in millions)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
NIW
$
11,534
$
10,629
$
13,922
$
16,946
$
11,261
NIW by premium type
Direct monthly and other recurring premiums
96.7
%
96.4
%
96.0
%
96.5
%
94.9
%
Direct single premiums
3.3
%
3.6
%
4.0
%
3.5
%
5.1
%
NIW for purchases
96.9
%
98.8
%
98.7
%
98.6
%
97.6
%
NIW for refinances
3.1
%
1.2
%
1.3
%
1.4
%
2.4
%
NIW by FICO score (1)
>=740
67.3
%
66.5
%
67.3
%
66.1
%
60.7
%
680-739
27.1
27.9
27.4
28.4
32.8
620-679
5.6
5.6
5.3
5.5
6.5
<=619
0.0
0.0
0.0
0.0
0.0
Total NIW
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
NIW by LTV (2)
95.01% and above
15.4
%
15.4
%
16.5
%
17.9
%
17.7
%
90.01% to 95.00%
40.8
40.0
38.6
39.1
40.2
85.01% to 90.00%
31.3
31.3
30.2
29.5
28.7
85.00% and below
12.5
13.3
14.7
13.5
13.4
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 at origination.
(2)
At origination.
Radian Group Inc. and Subsidiaries Mortgage Insurance Supplemental Information - Primary Insurance in Force and Risk in Force Exhibit I
March 31,
December 31,
September 30,
June 30,
March 31,
($ in millions)
2024
2023
2023
2023
2023
Primary insurance in force
$
270,986
$
269,979
$
269,511
$
266,859
$
261,450
Primary risk in force (“RIF”)
$
70,299
$
69,710
$
69,298
$
68,323
$
66,580
Primary RIF by premium type
Direct monthly and other recurring premiums
89.2
%
88.9
%
88.6
%
88.2
%
87.6
%
Direct single premiums
10.8
%
11.1
%
11.4
%
11.8
%
12.4
%
Primary RIF by FICO score (1)
>=740
58.8
%
58.5
%
58.2
%
57.8
%
57.4
%
680-739
33.6
33.9
34.0
34.3
34.6
620-679
7.3
7.3
7.4
7.5
7.6
<=619
0.3
0.3
0.4
0.4
0.4
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Primary RIF by LTV (2)
95.01% and above
18.9
%
18.6
%
18.4
%
18.0
%
17.5
%
90.01% to 95.00%
48.2
48.2
48.2
48.4
48.5
85.01% to 90.00%
27.1
27.1
27.0
26.9
27.0
85.00% and below
5.8
6.1
6.4
6.7
7.0
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Primary RIF by policy year
2008 and prior
2.7
%
2.8
%
2.9
%
3.1
%
3.3
%
2009 - 2018
9.1
9.7
10.4
11.3
12.4
2019
5.1
5.4
5.6
5.9
6.4
2020
15.7
16.6
17.5
18.7
20.3
2021
23.3
24.5
25.6
26.9
28.6
2022
21.8
22.4
22.8
23.6
24.7
2023
18.1
18.6
15.2
10.5
4.3
2024
4.2
—
—
—
—
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Persistency Rate (12 months ended)
84.3
%
84.0
%
83.6
%
82.8
%
81.6
%
Persistency Rate (quarterly, annualized) (3)
85.3
%
85.8
%
84.2
%
83.5
%
84.4
%
(1)
For loans with multiple borrowers, the percentage of primary RIF by FICO score represents the lowest of the borrowers’ FICO scores at origination.
(2)
At origination.
(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.
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, 2023, and to subsequent reports and registration statements filed from time to time with the U.S. Securities and Exchange Commission. We caution you not to place undue reliance on these forward-looking statements, which are current only as of the date on which we issued this press release. We do not intend to, and we disclaim any duty or obligation to, update or revise any forward-looking statements to reflect new information or future events or for any other reason.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240426300947/en/
For Investors John Damian - Phone: 215.231.1383 email: john.damian@radian.com
For Media Rashi Iyer - Phone: 215.231.1167 email: rashi.iyer@radian.com
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