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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 | |
---|---|---|---|---|---|---|---|---|
-1.50 | -4.04% | 35.60 | 37.63 | 35.03 | 37.16 | 1,322,089 | 21:03:10 |
— Second quarter net income of $152 million, or $0.98 per diluted share —
— Return on equity of 13.6% —
— Book value per share growth of 12% year-over-year to $29.66 —
— Available Holding Company Liquidity increased to $1.2 billion following $200 million ordinary dividend from Radian Guaranty during the second quarter —
— Share repurchase authorization increased to $900 million and extended through June 2026; $50 million of shares repurchased during the second quarter and $667 million of purchase authority remaining —
Radian Group Inc. (NYSE: RDN) today reported net income for the quarter ended June 30, 2024, of $152 million, or $0.98 per diluted share. This compares with net income for the quarter ended June 30, 2023, of $146 million, or $0.91 per diluted share.
Adjusted pretax operating income for the quarter ended June 30, 2024, was $193 million, or $0.99 per diluted share. This compares with adjusted pretax operating income for the quarter ended June 30, 2023, of $184 million, or $0.91 per diluted share.
Key Financial Highlights
Quarter ended
($ in millions, except per-share amounts)
June 30, 2024
March 31, 2024
June 30, 2023
Total revenues
$321
$319
$290
Net income
$152
$152
$146
Diluted net income per share
$0.98
$0.98
$0.91
Consolidated pretax income
$188
$199
$183
Adjusted pretax operating income (1)
$193
$203
$184
Adjusted diluted net operating income per share (1) (2)
$0.99
$1.03
$0.91
Return on equity (3)
13.6%
13.8%
14.1%
Adjusted net operating return on equity (1) (2)
13.6%
14.5%
14.1%
New Insurance Written (NIW) - mortgage insurance
$13,902
$11,534
$16,946
Net premiums earned - mortgage insurance
$235
$234
$211
New defaults
11,104
11,756
9,775
Provision for losses - mortgage insurance
($2)
($7)
($22)
As of
($ in millions, except per-share amounts)
June 30, 2024
March 31, 2024
June 30, 2023
Book value per share
$29.66
$29.30
$26.51
Accumulated other comprehensive income (loss) value per share (4)
($2.50)
($2.39)
($2.69)
PMIERs Available Assets (5)
$5,978
$5,989
$5,689
PMIERs excess Available Assets (6)
$2,206
$2,282
$1,662
Available Holding Company Liquidity (7)
$1,190
$1,094
$1,010
Total investments
$6,588
$6,327
$5,896
Primary mortgage insurance in force
$272,827
$270,986
$266,859
Percentage of primary loans in default (8)
2.0%
2.1%
2.0%
Mortgage insurance loss reserves
$351
$357
$373
(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 available liquidity, excluding 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 June 30, 2024, was $29.66, compared to $29.30 at March 31, 2024, and $26.51 at June 30, 2023. This represents a 12% growth in book value per share at June 30, 2024, as compared to June 30, 2023, and includes accumulated other comprehensive income (loss) of $(2.50) per share as of June 30, 2024, and $(2.69) per share as of June 30, 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 reported another quarter with excellent results for Radian. We increased book value per share by 12% year-over-year, generated net income of $152 million and delivered a return on equity of 13.6% in the second quarter,” said Radian’s Chief Executive Officer Rick Thornberry. “Our strong operational performance reflects the high quality of our mortgage insurance portfolio, the resilience of our business model, the strength and quality of our investment portfolio, the depth of our customer relationships and the commitment of our team.”
SECOND QUARTER HIGHLIGHTS
CAPITAL AND LIQUIDITY UPDATE
Radian Group
Radian Guaranty
RECENT EVENTS
CONFERENCE CALL
Radian will discuss second quarter 2024 financial results in a conference call tomorrow, Thursday, August 1, 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 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Revenues
Net premiums earned
$
237,731
$
235,857
$
232,649
$
240,262
$
213,429
Services revenue
13,265
12,588
12,419
10,892
11,797
Net investment income
73,766
69,221
68,824
67,805
63,348
Net gains (losses) on investments and other financial instruments
(4,487
)
490
13,447
(8,555
)
(236
)
Other income
872
1,262
1,305
2,109
1,241
Total revenues
321,147
319,418
328,644
312,513
289,579
Expenses
Provision for losses
(1,745
)
(7,034
)
4,170
(8,135
)
(21,632
)
Policy acquisition costs
6,522
6,794
6,147
6,920
5,218
Cost of services
9,535
9,327
8,950
8,886
10,257
Other operating expenses
91,648
82,636
95,218
79,206
89,885
Interest expense
27,064
29,046
23,169
23,282
21,805
Impairment of goodwill
—
—
9,802
—
—
Amortization of other acquired intangible assets
—
—
1,371
1,371
1,370
Total expenses
133,024
120,769
148,827
111,530
106,903
Pretax income
188,123
198,649
179,817
200,983
182,676
Income tax provision
36,220
46,295
37,124
44,401
36,589
Net income
$
151,903
$
152,354
$
142,693
$
156,582
$
146,087
Diluted net income per share
$
0.98
$
0.98
$
0.91
$
0.98
$
0.91
(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 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Net income—basic and diluted
$
151,903
$
152,354
$
142,693
$
156,582
$
146,087
Average common shares outstanding—basic
153,110
153,817
155,318
158,461
159,010
Dilutive effect of share-based compensation arrangements (1)
1,289
2,154
1,909
1,686
1,734
Adjusted average common shares outstanding—diluted
154,399
155,971
157,227
160,147
160,744
Basic net income per share
$
0.99
$
0.99
$
0.92
$
0.99
$
0.92
Diluted net income per share
$
0.98
$
0.98
$
0.91
$
0.98
$
0.91
(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 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Shares of common stock equivalents
64
—
—
—
112
Radian Group Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
Exhibit C
June 30, 2024
March 31, 2024
December 31, 2023
September 30, 2023
June 30, 2023
(In thousands, except per-share amounts)
Assets
Investments
$
6,588,149
$
6,327,114
$
6,085,654
$
5,885,652
$
5,895,871
Cash
13,791
26,993
18,999
55,489
61,142
Restricted cash
1,993
1,832
1,066
1,305
1,317
Accrued investment income
47,607
46,334
45,783
45,623
42,650
Accounts and notes receivable
137,777
130,095
123,857
144,614
138,432
Reinsurance recoverable
31,064
28,151
25,909
24,148
22,979
Deferred policy acquisition costs
18,566
18,561
18,718
18,817
19,272
Property and equipment, net
56,360
60,521
63,822
74,558
73,885
Goodwill and other acquired intangible assets, net
—
—
—
11,173
12,543
Prepaid federal income taxes
837,736
750,320
750,320
696,820
663,320
Other assets
396,600
369,944
459,805
420,483
375,132
Total assets
$
8,129,643
$
7,759,865
$
7,593,933
$
7,378,682
$
7,306,543
Liabilities and stockholders’ equity
Unearned premiums
$
206,094
$
215,124
$
225,396
$
236,400
$
246,666
Reserve for losses and loss adjustment expense
357,470
361,833
370,148
367,568
379,434
Senior notes
1,513,782
1,512,860
1,417,781
1,416,687
1,415,610
Secured borrowings
484,665
207,601
119,476
241,753
178,762
Reinsurance funds withheld
135,849
133,460
130,564
156,114
154,354
Net deferred tax liability
656,113
626,353
589,564
497,560
479,754
Other liabilities
293,351
262,902
343,199
309,701
281,127
Total liabilities
3,647,324
3,320,133
3,196,128
3,225,783
3,135,707
Common stock
172
171
173
175
177
Treasury stock
(967,218
)
(946,202
)
(945,870
)
(945,504
)
(945,032
)
Additional paid-in capital
1,356,341
1,390,436
1,430,594
1,482,712
1,522,895
Retained earnings
4,470,335
4,357,823
4,243,759
4,136,598
4,016,482
Accumulated other comprehensive income (loss)
(377,311
)
(362,496
)
(330,851
)
(521,082
)
(423,686
)
Total stockholders’ equity
4,482,319
4,439,732
4,397,805
4,152,899
4,170,836
Total liabilities and stockholders’ equity
$
8,129,643
$
7,759,865
$
7,593,933
$
7,378,682
$
7,306,543
Shares outstanding
151,148
151,509
153,179
155,582
157,350
Book value per share
$
29.66
$
29.30
$
28.71
$
26.69
$
26.51
Holding company debt-to-capital ratio (1)
25.2
%
25.4
%
24.4
%
25.4
%
25.3
%
(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 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Direct - Mortgage insurance
Premiums earned, excluding revenue from cancellations
$
259,342
$
258,593
$
256,632
$
254,903
$
252,537
Single Premium Policy cancellations
2,076
2,114
2,058
3,304
3,980
Total direct - Mortgage insurance
261,418
260,707
258,690
258,207
256,517
Ceded - Mortgage insurance
Premiums earned, excluding revenue from cancellations
(39,925
)
(38,997
)
(40,065
)
(32,363
)
(57,916
)
(1)
Single Premium Policy cancellations (2)
732
(112
)
(444
)
(873
)
(1,114
)
Profit commission - other (3)
12,593
12,401
12,199
11,830
13,245
Total ceded premiums - Mortgage insurance
(26,600
)
(26,708
)
(28,310
)
(21,406
)
(45,785
)
Net premiums earned - Mortgage insurance
234,818
233,999
230,380
236,801
210,732
Net premiums earned - Title insurance
2,913
1,858
2,269
3,461
2,697
Net premiums earned
$
237,731
$
235,857
$
232,649
$
240,262
$
213,429
(1)
Includes the impact of the completed 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 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Mortgage Insurance
Contract underwriting services
$
309
$
210
$
202
$
266
$
284
All Other
Real estate services
8,777
9,193
8,888
7,046
7,598
Title
3,540
2,573
2,713
2,964
3,233
Real estate technology
639
612
616
616
682
Total services revenue
$
13,265
$
12,588
$
12,419
$
10,892
$
11,797
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 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Fixed-maturities
$
57,924
$
57,259
$
58,669
$
58,599
$
56,439
Equity securities
3,067
2,539
3,753
3,222
3,512
Mortgage loans held for sale
5,411
1,793
1,725
1,719
574
Short-term investments
8,614
8,958
5,871
5,405
3,976
Other (1)
(1,250
)
(1,328
)
(1,194
)
(1,140
)
(1,153
)
Net investment income
$
73,766
$
69,221
$
68,824
$
67,805
$
63,348
(1)
Includes investment management expenses, as well as the net impact from our securities lending activities.
Provision for Losses
2024
2023
(In thousands)
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Mortgage insurance
Current period defaults (1)
$
47,918
$
53,688
$
53,981
$
46,630
$
41,223
Prior period defaults (2)
(49,687
)
(60,574
)
(49,373
)
(54,887
)
(62,846
)
Total Mortgage insurance
(1,769
)
(6,886
)
4,608
(8,257
)
(21,623
)
Title insurance
24
(148
)
(438
)
122
(9
)
Total provision for losses
$
(1,745
)
$
(7,034
)
$
4,170
$
(8,135
)
$
(21,632
)
(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 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Salaries and other base employee expenses
$
41,431
$
39,723
$
34,182
$
33,272
$
39,032
Variable and share-based incentive compensation
23,223
17,515
20,262
19,546
18,908
Other general operating expenses
31,623
30,262
45,186
(1)
29,812
35,655
Ceding commissions
(5,957
)
(5,644
)
(5,327
)
(5,153
)
(4,824
)
Title agent commissions
1,328
780
915
1,729
1,114
Total
$
91,648
$
82,636
$
95,218
$
79,206
$
89,885
(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 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Senior notes
$
21,156
$
22,128
$
20,335
$
20,320
$
20,303
Loss on extinguishment of debt (1)
—
4,275
—
—
—
Mortgage loan financing facilities
5,108
1,438
1,421
1,609
400
FHLB advances
544
945
1,059
1,039
611
Revolving credit facility
256
260
354
310
399
Other
—
—
—
4
92
Total interest expense
$
27,064
$
29,046
$
23,169
$
23,282
$
21,805
(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 June 30, 2024
(In thousands)
Mortgage Insurance
All Other (1)
Inter-segment
Total
Net premiums written
$
232,645
$
2,913
$
—
$
235,558
(Increase) decrease in unearned premiums
2,173
—
—
2,173
Net premiums earned
234,818
2,913
—
237,731
Services revenue
309
13,064
(108
)
13,265
Net investment income
50,102
23,664
—
73,766
Net gains (losses) on investments and other financial instruments
—
(49
)
—
(49
)
Other income
754
130
(12
)
872
Total
285,983
39,722
(120
)
325,585
Provision for losses
(1,769
)
24
—
(1,745
)
Policy acquisition costs
6,522
—
—
6,522
Cost of services
156
9,379
—
9,535
Other operating expenses before allocated corporate operating expenses
17,157
26,615
(120
)
43,652
Interest expense
21,957
5,107
—
27,064
Total
44,023
41,125
(120
)
85,028
Adjusted pretax operating income (loss) before allocated corporate operating expenses
241,960
(1,403
)
—
240,557
Allocation of corporate operating expenses
43,197
4,677
—
47,874
Adjusted pretax operating income (loss) (2)
$
198,763
$
(6,080
)
$
—
$
192,683
Radian Group Inc. and Subsidiaries
Segment Information
Exhibit E (page 2 of 4)
Three Months Ended June 30, 2023
(In thousands)
Mortgage Insurance
All Other (1)
Inter-segment
Total
Net premiums written
$
214,540
$
2,697
$
—
$
217,237
(Increase) decrease in unearned premiums
(3,808
)
—
—
(3,808
)
Net premiums earned
210,732
2,697
—
213,429
Services revenue
284
11,617
(104
)
11,797
Net investment income
48,070
15,278
—
63,348
Net gains (losses) on investments and other financial instruments
—
95
—
95
Other income
1,246
(1
)
(4
)
1,241
Total
260,332
29,686
(108
)
289,910
Provision for losses
(21,623
)
(9
)
—
(21,632
)
Policy acquisition costs
5,218
—
—
5,218
Cost of services
143
10,114
—
10,257
Other operating expenses before allocated corporate operating expenses
20,009
27,537
(108
)
47,438
Interest expense
21,405
400
—
21,805
Total
25,152
38,042
(108
)
63,086
Adjusted pretax operating income (loss) before allocated corporate operating expenses
235,180
(8,356
)
—
226,824
Allocation of corporate operating expenses
37,081
5,368
—
42,449
Adjusted pretax operating income (loss) (2)
$
198,099
$
(13,724
)
$
—
$
184,375
(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 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Net premiums written
$
232,645
$
231,877
$
225,112
$
235,169
$
214,540
(Increase) decrease in unearned premiums
2,173
2,122
5,268
1,632
(3,808
)
Net premiums earned
234,818
233,999
230,380
236,801
210,732
Services revenue
309
210
202
266
284
Net investment income
50,102
49,574
51,061
49,953
48,070
Other income
754
1,240
1,302
1,237
1,246
Total
285,983
285,023
282,945
288,257
260,332
Provision for losses
(1,769
)
(6,886
)
4,608
(8,257
)
(21,623
)
Policy acquisition costs
6,522
6,794
6,147
6,920
5,218
Cost of services
156
153
157
172
143
Other operating expenses before allocated corporate operating expenses
17,157
17,270
15,559
16,776
20,009
Interest expense
21,957
23,333
21,748
21,673
21,405
Total
44,023
40,664
48,219
37,284
25,152
Adjusted pretax operating income before allocated corporate operating expenses
241,960
244,359
234,726
250,973
235,180
Allocation of corporate operating expenses
43,197
34,509
36,929
31,744
37,081
Adjusted pretax operating income (1)
$
198,763
$
209,850
$
197,797
$
219,229
$
198,099
Radian Group Inc. and Subsidiaries
Segment Information
Exhibit E (page 4 of 4)
All Other (2)
2024
2023
(In thousands)
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Net premiums earned
$
2,913
$
1,858
$
2,269
$
3,461
$
2,697
Services revenue
13,064
12,493
12,311
10,723
11,617
Net investment income
23,664
19,647
17,763
17,852
15,278
Net gains (losses) on investments and other financial instruments
(49
)
383
356
283
95
Other income
130
25
14
9
(1
)
Total (3)
39,722
34,406
32,713
32,328
29,686
Provision for losses
24
(148
)
(438
)
122
(9
)
Cost of services
9,379
9,174
8,793
8,714
10,114
Other operating expenses before allocated corporate operating expenses
26,615
27,264
23,660
26,062
27,538
Interest expense
5,107
1,438
1,421
1,609
400
Total
41,125
37,728
33,436
36,507
38,043
Adjusted pretax operating income (loss) before allocated corporate operating expenses
(1,403
)
(3,322
)
(723
)
(4,179
)
(8,357
)
Allocation of corporate operating expenses
4,677
3,711
5,340
4,595
5,367
Adjusted pretax operating income (loss) (1)
$
(6,080
)
$
(7,033
)
$
(6,063
)
$
(8,774
)
$
(13,724
)
(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 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Holding company (a)
$
17,042
$
16,536
$
15,374
$
15,601
$
14,202
Real estate services
9,110
9,517
9,014
7,126
7,676
Title
7,047
4,997
5,516
6,948
6,422
Mortgage conduit
5,815
2,690
2,171
2,020
678
Real estate technology
708
666
638
633
708
Total
$
39,722
$
34,406
$
32,713
$
32,328
$
29,686
(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 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Loss ratio (1)
(0.8
)%
(2.9
)%
2.0
%
(3.5
)%
(10.3
)%
Expense ratio (2)
28.5
%
25.0
%
25.5
%
23.4
%
29.6
%
(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 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Consolidated pretax income
$
188,123
$
198,649
$
179,817
$
200,983
$
182,676
Less reconciling income (expense) items
Net gains (losses) on investments and other financial instruments (1)
(4,438
)
107
13,091
(8,838
)
(331
)
Amortization and impairment of goodwill and other acquired intangible assets
—
—
(11,173
)
(1,371
)
(1,370
)
Impairment of other long-lived assets and other non-operating items
(122
)
(4,275
)
(2)
(13,835
)
(3)
737
2
Total adjusted pretax operating income (4)
$
192,683
$
202,817
$
191,734
$
210,455
$
184,375
(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 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Adjusted pretax operating income (loss)
Mortgage Insurance segment
$
198,763
$
209,850
$
197,797
$
219,229
$
198,099
All Other activities
(6,080
)
(7,033
)
(6,063
)
(8,774
)
(13,724
)
Total adjusted pretax operating income
$
192,683
$
202,817
$
191,734
$
210,455
$
184,375
Reconciliation of Diluted Net Income Per Share to Adjusted Diluted Net Operating Income Per Share
2024
2023
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Diluted net income per share
$
0.98
$
0.98
$
0.91
$
0.98
$
0.91
Less per-share impact of reconciling income (expense) items
Net gains (losses) on investments and other financial instruments
(0.03
)
—
0.08
(0.06
)
—
Amortization and impairment of goodwill and other acquired intangible assets
—
—
(0.07
)
(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
—
Difference between statutory and effective tax rates
0.02
(0.03
)
0.01
(0.01
)
0.01
Per-share impact of reconciling income (expense) items
(0.01
)
(0.05
)
(0.05
)
(0.06
)
—
Adjusted diluted net operating income per share (1)
$
0.99
$
1.03
$
0.96
$
1.04
$
0.91
(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 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Return on equity (1)
13.6
%
13.8
%
13.4
%
15.0
%
14.1
%
Less impact of reconciling income (expense) items (2)
Net gains (losses) on investments and other financial instruments
(0.4
)
—
1.2
(0.9
)
—
Amortization and impairment of goodwill and other acquired intangible assets
—
—
(1.0
)
(0.2
)
(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
0.1
0.2
0.2
(0.1
)
Difference between statutory and effective tax rates
0.3
(0.4
)
0.1
(0.2
)
0.2
Impact of reconciling income (expense) items
—
(0.7
)
(0.8
)
(1.0
)
—
Adjusted net operating return on equity (3)
13.6
%
14.5
%
14.2
%
16.0
%
14.1
%
(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 2
Qtr 1
Qtr 4
Qtr 3
Qtr 2
NIW
$
13,902
$
11,534
$
10,629
$
13,922
$
16,946
NIW by premium type
Direct monthly and other recurring premiums
96.5
%
96.7
%
96.4
%
96.0
%
96.5
%
Direct single premiums
3.5
%
3.3
%
3.6
%
4.0
%
3.5
%
NIW for purchases
98.3
%
96.9
%
98.8
%
98.7
%
98.6
%
NIW for refinances
1.7
%
3.1
%
1.2
%
1.3
%
1.4
%
NIW by FICO score (1)
>=740
69.4
%
67.3
%
66.5
%
67.3
%
66.1
%
680-739
25.5
27.1
27.9
27.4
28.4
620-679
5.1
5.6
5.6
5.3
5.5
<=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
16.5
%
15.4
%
15.4
%
16.5
%
17.9
%
90.01% to 95.00%
37.2
40.8
40.0
38.6
39.1
85.01% to 90.00%
32.4
31.3
31.3
30.2
29.5
85.00% and below
13.9
12.5
13.3
14.7
13.5
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
June 30, 2024
March 31, 2024
December 31, 2023
September 30, 2023
June 30, 2023
($ in millions)
Primary insurance in force
$
272,827
$
270,986
$
269,979
$
269,511
$
266,859
Primary risk in force (“RIF”)
$
71,109
$
70,299
$
69,710
$
69,298
$
68,323
Primary RIF by premium type
Direct monthly and other recurring premiums
89.5
%
89.2
%
88.9
%
88.6
%
88.2
%
Direct single premiums
10.5
%
10.8
%
11.1
%
11.4
%
11.8
%
Primary RIF by FICO score (1)
>=740
59.2
%
58.8
%
58.5
%
58.2
%
57.8
%
680-739
33.3
33.6
33.9
34.0
34.3
620-679
7.2
7.3
7.3
7.4
7.5
<=619
0.3
0.3
0.3
0.4
0.4
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Primary RIF by LTV (2)
95.01% and above
19.2
%
18.9
%
18.6
%
18.4
%
18.0
%
90.01% to 95.00%
48.1
48.2
48.2
48.2
48.4
85.01% to 90.00%
27.3
27.1
27.1
27.0
26.9
85.00% and below
5.4
5.8
6.1
6.4
6.7
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Persistency Rate (12 months ended)
84.3
%
84.3
%
84.0
%
83.6
%
82.8
%
Persistency Rate (quarterly, annualized) (3)
83.5
%
85.3
%
85.8
%
84.2
%
83.5
%
(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/20240726283220/en/
For Investors Dan Kobell - Phone: 215.231.1113 email: daniel.kobell@radian.com
For Media Rashi Iyer - Phone: 215.231.1167 email: rashi.iyer@radian.com
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