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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 | |
---|---|---|---|---|---|---|---|---|
0.50 | 1.43% | 35.41 | 35.42 | 34.695 | 35.08 | 702,248 | 21:03:31 |
-- GAAP net income of $126 million, or $0.67 per diluted share --
-- Adjusted diluted net operating income of $0.67 per diluted share --
-- New Insurance Written of $26.6 billion, grows 23% quarter-over-quarter --
-- Primary mortgage insurance in force grows $4.3 billion to $241.6 billion quarter-over-quarter --
-- Book value per share grows 9% year-over-year to $23.48 --
-- homegenius revenues grow 51% year-over-year to $45.1 million --
-- Company purchases 7.1 million shares or $158.3 million of Radian Group common stock during the three months ended September 30th --
Radian Group Inc. (NYSE: RDN) today reported net income for the quarter ended September 30, 2021, of $126.4 million, or $0.67 per diluted share. This compares with net income for the quarter ended September 30, 2020, of $135.1 million, or $0.70 per diluted share.
Key Financial Highlights (dollars in millions, except per-share amounts)
Quarter ended
September 30, 2021
June 30, 2021
September 30, 2020
Net income (1)
$126.4
$155.2
$135.1
Diluted net income per share
$0.67
$0.80
$0.70
Consolidated pretax income
$161.6
$195.5
$161.2
Adjusted pretax operating income (2)
$160.6
$184.7
$145.0
Adjusted diluted net operating
income per share (2)(3)
$0.67
$0.75
$0.59
Return on equity (1)(4)
11.8%
14.5%
13.3%
Adjusted net operating return on equity (2)(3)
11.8%
13.6%
11.3%
New Insurance Written (NIW) - mortgage insurance
$26,558
$21,662
$33,320
Net premiums earned - mortgage insurance
$236.9
$247.1
$283.4
New defaults (5)
8,132
8,145
20,508
Provision for losses - mortgage insurance
$16.8
$3.3
$87.8
Book value per share (6)
$23.48
$23.02
$21.52
PMIERs Available Assets (7)
$5,262
$5,042
$4,469
PMIERs excess Available Assets (8)
$1,741
$1,857
$970
Total Holding Company Liquidity (9)
$1,036
$1,191
$1,376
Total investments
$6,658
$6,682
$6,585
Primary mortgage insurance in force
$241,575
$237,302
$245,467
Percentage of primary loans in default (10)
3.4%
4.0%
5.9%
Mortgage insurance loss reserves
$888
$881
$822
homegenius revenues
$45.1
$33.5
$29.8
(1)Net income for the third quarter of 2021 includes a pretax net gain on investments and other financial instruments of $2.1 million, compared to a pretax net gain on investments and other financial instruments of $15.7 million in the second quarter of 2021 and a pretax net gain on investments and other financial instruments for the third quarter of 2020 of $17.7 million.
(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)
Book value per share includes accumulated other comprehensive income (loss) of $0.84 as of September 30, 2021, $0.95 as of June 30, 2021 and $1.21 as of September 30, 2020.
(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 the $35 million minimum liquidity requirement and available capacity under its unsecured revolving credit facility.
(10)
Represents the number of primary loans in default as a percentage of the total number of insured primary loans.
Adjusted pretax operating income for the quarter ended September 30, 2021, was $160.6 million, or $0.67 per diluted share. This compares with adjusted pretax operating income for the quarter ended September 30, 2020, of $145.0 million, or $0.59 per diluted share.
Book value as of September 30, 2021, was $4.3 billion, an increase of 3 percent compared to $4.1 billion as of September 30, 2020. Book value per share at September 30, 2021, was $23.48, an increase of 9 percent compared to $21.52 at September 30, 2020.
“We continue to see strong growth in the housing and real estate markets, driven by historically low interest rates and robust demand. And while we continue to closely monitor the pandemic and the economic environment, we are encouraged by the favorable credit trends within our insured portfolio," said Radian’s Chief Executive Officer Rick Thornberry. “We reported net income of $126 million, increased book value per share by 9% year-over-year, grew our primary mortgage insurance in-force portfolio to $241.6 billion and reported a year-over-year increase in homegenius revenue of 51%. These results reflect the momentum of our businesses, the strength of our products and customer relationships, and the dedication of our team.”
THIRD QUARTER HIGHLIGHTS
CAPITAL AND LIQUIDITY UPDATE
Radian Group
Radian Guaranty
RECENT EVENTS
Insurance-Linked Note
As previously announced, Radian Guaranty expects to obtain up to $484.1 million of credit-risk protection from Eagle Re 2021-2 Ltd. (Eagle Re), covering an existing portfolio of mortgage insurance policies written predominantly from January 1,2021 through and including July 31, 2021. Eagle Re will finance the coverage through the issuance of ILNs to capital markets investors of $484.1 million aggregate principal amount of 12.5-year mortgage insurance-linked notes, in an unregistered private offering that priced on October 29, 2021. The offering is expected to close on or about November 9, 2021. Eagle Re is a special purpose insurer domiciled in Bermuda and is not a subsidiary or affiliate of Radian Guaranty. Radian Guaranty's related PMIERs credit under this ILN transaction will be subject to GSE approval. As of September 30, 2021, assuming the November ILN transaction described above closes on or about November 9, 2021, as expected:
CONFERENCE CALL
Radian will discuss third quarter 2021 financial results in a conference call tomorrow, Wednesday, November 3, 2021, at 11:00 a.m. Eastern daylight 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 800.447.0521 inside the U.S., or 847.413.3238 for international callers, using passcode 50246248 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 50246248.
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, adjusted diluted net operating income 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; (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 homegenius adjusted gross profit margin are calculated by dividing homegenius adjusted pretax operating margin before allocated corporate operating expenses and homegenius 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 homegenius 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, valuation, asset management, software-as-a service 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 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
Exhibit K:
Mortgage Supplemental Information
Default Statistics
Exhibit L:
Mortgage Supplemental Information
Reinsurance Programs
Radian Group Inc. and Subsidiaries
Condensed Consolidated Statements of Operations Trend Schedule
Exhibit A
2021
2020
(In thousands, except per-share amounts)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Revenues:
Net premiums earned
$
249,118
$
254,756
$
271,872
$
302,140
(1)
$
286,471
Services revenue
37,773
29,464
22,895
11,440
(1)
33,943
Net investment income
35,960
36,291
38,251
38,115
36,255
Net gains (losses) on investments and other financial instruments
2,098
15,661
(5,181)
17,376
17,652
Other income
809
822
976
790
913
Total revenues
325,758
336,994
328,813
369,861
375,234
Expenses:
Provision for losses
17,305
3,648
46,143
56,664
88,084
Policy acquisition costs
7,924
4,838
8,996
7,395
10,166
Cost of services
30,520
24,615
20,246
21,600
24,353
Other operating expenses
86,479
86,469
70,262
81,641
69,377
Interest expense
21,027
21,065
21,115
21,169
21,088
Amortization and impairment of other acquired intangible assets
862
863
862
2,225
961
Total expenses
164,117
141,498
167,624
190,694
214,029
Pretax income
161,641
195,496
161,189
179,167
161,205
Income tax provision
35,229
40,290
35,581
31,154
26,102
Net income
$
126,412
$
155,206
$
125,608
$
148,013
$
135,103
Diluted net income per share
$
0.67
$
0.80
$
0.64
$
0.76
$
0.70
(1)
Includes the impact of a line item reclassification recorded in the fourth quarter to correct earlier periods in 2020, which increased net premiums earned and decreased services revenue by $7.8 million each. See Exhibit E for additional detail by period related to this out-of-period adjustment reflected in our All Other results.
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:
2021
2020
(In thousands, except per-share amounts)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Net income —basic and diluted
$
126,412
$
155,206
$
125,608
$
148,013
$
135,103
Average common shares outstanding—basic
186,741
193,436
193,439
193,248
193,176
Dilutive effect of stock-based compensation arrangements (1)
1,301
1,202
1,764
1,415
980
Adjusted average common shares outstanding—diluted
188,042
194,638
195,203
194,663
194,156
Basic net income per share
$
0.68
$
0.80
$
0.65
$
0.77
.
$
0.70
Diluted net income per share
$
0.67
$
0.80
$
0.64
$
0.76
$
0.70
(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:
2021
2020
(In thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Shares of common stock equivalents
—
—
—
324
710
Radian Group Inc. and Subsidiaries Condensed Consolidated Balance Sheets Exhibit C
September 30,
June 30,
March 31,
December 31,
September 30,
(In thousands, except per-share amounts)
2021
2021
2021
2020
2020
Assets:
Investments
$
6,658,487
$
6,681,659
$
6,671,874
$
6,788,442
$
6,584,577
Cash
154,709
134,939
102,776
87,915
82,020
Restricted cash
1,866
2,968
20,987
6,231
4,424
Accrued investment income
33,258
32,223
34,841
34,047
36,093
Accounts and notes receivable
166,730
153,128
134,075
121,294
145,164
Reinsurance recoverables
76,048
75,411
76,664
73,202
66,515
Deferred policy acquisition costs
16,823
17,873
15,652
18,305
17,926
Property and equipment, net
74,170
74,288
78,309
80,457
88,717
Goodwill and other acquired intangible assets, net
20,456
21,318
22,181
23,043
25,268
Other assets
839,061
815,261
763,502
715,085
726,641
Total assets
$
8,041,608
$
8,009,068
$
7,920,861
$
7,948,021
$
7,777,345
Liabilities and stockholders’ equity:
Unearned premiums
$
348,322
$
373,031
$
406,689
$
448,791
$
501,787
Reserve for losses and loss adjustment expense
893,155
885,498
887,355
848,413
825,792
Senior notes
1,408,502
1,407,545
1,406,603
1,405,674
1,404,759
FHLB advances
172,649
153,983
138,833
176,483
141,058
Reinsurance funds withheld
290,502
285,406
282,345
278,555
318,773
Net deferred tax liability
286,957
266,330
210,571
213,897
166,136
Other liabilities
383,585
303,442
353,173
291,855
296,661
Total liabilities
3,783,672
3,675,235
3,685,569
3,663,668
3,654,966
Common stock
200
207
210
210
210
Treasury stock
(920,355
)
(920,225
)
(910,347
)
(910,115
)
(909,745
)
Additional paid-in capital
2,012,870
2,161,857
2,242,950
2,245,897
2,238,869
Retained earnings
3,012,997
2,913,138
2,785,744
2,684,636
2,561,076
Accumulated other comprehensive income
152,224
178,856
116,735
263,725
231,969
Total stockholders’ equity
4,257,936
4,333,833
4,235,292
4,284,353
4,122,379
Total liabilities and stockholders’ equity
$
8,041,608
$
8,009,068
$
7,920,861
$
7,948,021
$
7,777,345
Shares outstanding
181,336
188,290
191,311
191,606
191,556
Book value per share
$
23.48
$
23.02
$
22.14
$
22.36
$
21.52
Debt to capital ratio (1)
24.9
%
24.5
%
24.9
%
24.7
%
25.4
%
Risk to capital ratio-Radian Guaranty only
11.4:1
11.4:1
11.9:1
12.7:1
13.2:1
(1)
Calculated as senior notes divided by senior notes and stockholders' equity.
Radian Group Inc. and Subsidiaries
Net Premiums Earned
Exhibit D
2021
2020
(In thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Premiums earned:
Direct - Mortgage:
Premiums earned, excluding revenue from cancellations (1)
$
239,786
$
243,077
$
256,905
$
272,331
$
259,889
Single Premium Policy cancellations
25,592
31,592
38,510
53,526
65,667
Total direct - Mortgage (1)
265,378
274,669
295,415
325,857
325,556
Assumed - Mortgage: (2)
1,683
1,615
2,298
2,615
2,946
Ceded - Mortgage:
Premiums earned, excluding revenue from cancellations
(27,662)
(27,324)
(25,373)
(27,229)
(25,120)
Single Premium Policy cancellations (3)
(7,338)
(9,036)
(11,109)
(15,197)
(18,679)
Profit commission - other (4)
4,806
7,162
3,433
770
(1,347)
Total ceded premiums - Mortgage (5)
(30,194)
(29,198)
(33,049)
(41,656)
(45,146)
Net premiums earned - Mortgage (1)
236,867
247,086
264,664
286,816
283,356
Net premiums earned - homegenius (6)
12,251
7,670
7,208
7,572
7,099
Net premiums earned - All Other (6)
—
—
—
7,752
(3,984)
Net premiums earned (1)
$
249,118
$
254,756
$
271,872
$
302,140
$
286,471
(1)
The fourth quarter of 2020 includes an increase to premiums earned of $11.3 million related to changes in present value estimates for initial premiums on monthly policies that are deferred and not collected until cancellation. The impact of changes in this estimate in other periods is not material.
(2)
Relates primarily to premiums earned from our participation in certain credit risk transfer programs.
(3)
Includes the impact of related profit commissions.
(4)
The amounts represent the profit commission on the Single Premium QSR Program, excluding the impact of Single Premium Policy cancellations.
(5)
See Exhibit L for additional information on ceded premiums for our various reinsurance programs.
(6)
See Exhibit E for additional information on changes that impacted our reported segment results for all periods.
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), homegenius adjusted pretax operating income (loss) before allocated corporate operating expenses and homegenius adjusted gross profit, along with reconciliations to consolidated GAAP measures, see Exhibits F and G.
Three Months Ended September 30, 2021
(In thousands)
Mortgage
homegenius
All Other
Inter-segment
Total
Net premiums written (1)
$
228,116
$
12,251
$
—
$
—
$
240,367
(Increase) decrease in unearned premiums
8,751
—
—
—
8,751
Net premiums earned
236,867
12,251
—
—
249,118
Services revenue
5,027
32,805
27
(86)
37,773
Net investment income
32,158
35
3,767
—
35,960
Other income
607
—
202
—
809
Total
274,659
45,091
3,996
(86)
323,660
Provision for losses
16,794
540
—
(29)
17,305
Policy acquisition costs
7,924
—
—
—
7,924
Cost of services
3,865
26,646
9
—
30,520
Other operating expenses before allocated corporate operating expenses (2)
27,584
18,544
905
(57)
46,976
Interest expense (3)
21,027
—
—
—
21,027
Total (4)
77,194
45,730
914
(86)
123,752
Adjusted pretax operating income (loss) before allocated corporate operating expenses
197,465
(639)
3,082
—
199,908
Allocation of corporate operating expenses
34,341
4,918
—
—
39,259
Adjusted pretax operating income (loss)
$
163,124
$
(5,557)
$
3,082
$
—
$
160,649
Three Months Ended September 30, 2020
(In thousands)
Mortgage
homegenius
All Other
Inter-segment
Total
Net premiums written (1)
$
259,278
$
7,099
$
(3,984)
$
—
$
262,393
(Increase) decrease in unearned premiums
24,078
—
—
—
24,078
Net premiums earned
283,356
7,099
(3,984)
—
286,471
Services revenue
3,914
22,627
8,267
(865)
33,943
Net investment income
32,054
67
4,134
—
36,255
Other income
689
—
224
—
913
Total
320,013
29,793
8,641
(865)
357,582
Provision for losses
87,753
370
—
(39)
88,084
Policy acquisition costs
10,166
—
—
—
10,166
Cost of services
2,908
18,085
4,127
(767)
24,353
Other operating expenses before allocated corporate operating expenses (2)
21,635
13,136
1,824
(59)
36,536
Interest expense (3) (5)
21,088
—
—
—
21,088
Total (4)
143,550
31,591
5,951
(865)
180,227
Adjusted pretax operating income (loss) before allocated corporate operating expenses
176,463
(1,798)
2,690
—
177,355
Allocation of corporate operating expenses
29,127
3,248
—
—
32,375
Adjusted pretax operating income (loss)
$
147,336
$
(5,046)
$
2,690
$
—
$
144,980
Radian Group Inc. and Subsidiaries
Segment Information
Exhibit E (page 2 of 4)
Mortgage
2021
2020
(In thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Net premiums written (1) (6)
$
228,116
$
231,027
$
246,874
$
261,244
$
259,278
(Increase) decrease in unearned premiums
8,751
16,059
17,790
25,572
24,078
Net premiums earned
236,867
247,086
264,664
286,816
283,356
Services revenue
5,027
3,732
4,351
3,717
3,914
Net investment income
32,158
32,842
34,013
34,235
32,054
Other income
607
641
769
735
689
Total
274,659
284,301
303,797
325,503
320,013
Provision for losses
16,794
3,334
45,869
56,312
87,753
Policy acquisition costs
7,924
4,838
8,996
7,395
10,166
Cost of services
3,865
3,161
3,192
3,245
2,908
Other operating expenses before allocated corporate operating expenses (2)
27,584
27,441
22,454
21,974
21,635
Interest expense (3) (5)
21,027
21,065
21,115
21,169
21,088
Total (4)
77,194
59,839
101,626
110,095
143,550
Adjusted pretax operating income before allocated corporate operating expenses
197,465
224,462
202,171
215,408
176,463
Allocation of corporate operating expenses
34,341
33,000
27,884
31,102
29,127
Adjusted pretax operating income
$
163,124
$
191,462
$
174,287
$
184,306
$
147,336
homegenius (5)
2021
2020
(In thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Net premiums earned (7)
$
12,251
$
7,670
$
7,208
$
7,572
$
7,099
Services revenue (4) (7)
32,805
25,750
18,550
15,958
22,627
Net investment income
35
31
37
43
67
Total
45,091
33,451
25,795
23,573
29,793
Provision for losses
540
335
296
392
370
Cost of services
26,646
21,433
17,028
15,706
18,085
Other operating expenses before allocated corporate operating expenses (2)
18,544
16,160
14,928
15,238
13,136
Total (4)
45,730
37,928
32,252
31,336
31,591
Adjusted pretax operating income (loss) before allocated corporate operating expenses
(639)
(4,477)
(6,457)
(7,763)
(1,798)
Allocation of corporate operating expenses
4,918
4,721
3,996
3,369
3,248
Adjusted pretax operating income (loss)
$
(5,557)
$
(9,198)
$
(10,453)
$
(11,132)
$
(5,046)
Radian Group Inc. and Subsidiaries
Segment Information
Exhibit E (page 3 of 4)
All Other (5) (8)
2021
2020
(In thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Net premiums earned (7)
$
—
$
—
$
—
$
7,752
$
(3,984)
Services revenue (4) (7)
27
44
53
(7,963)
8,267
Net investment income
3,767
3,418
4,201
3,837
4,134
Other income
202
181
207
55
224
Total
3,996
3,643
4,461
3,681
8,641
Cost of services
9
19
28
2,835
4,127
Other operating expenses (2)
905
1,169
951
3,033
1,824
Total
914
1,188
979
5,868
5,951
Adjusted pretax operating income (loss)
$
3,082
$
2,455
$
3,482
$
(2,187)
$
2,690
(1)
Net of ceded premiums written under the QSR Programs and the Excess-of-Loss Program. See Exhibit L for additional information.
(2)
Does not include impairment of long-lived assets and other non-operating items, which are not considered components of adjusted pretax operating income (loss).
(3)
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.
(4)
Inter-segment information:
2021
2020
(In thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Inter-segment revenue included in:
Mortgage
$
—
$
—
$
—
$
—
$
—
homegenius
86
62
59
86
98
All Other
—
—
—
186
767
Total inter-segment revenue
$
86
$
62
$
59
$
272
$
865
Inter-segment expense included in:
Mortgage
$
86
$
62
$
59
$
86
$
98
homegenius
—
—
—
186
767
All Other
—
—
—
—
—
Total inter-segment expense
$
86
$
62
$
59
$
272
$
865
See notes continued on next page.
Radian Group Inc. and Subsidiaries
Segment Information
Exhibit E (page 4 of 4)
Notes continued from prior page.
(5)
The wind-down of our traditional appraisal business announced in the fourth quarter of 2020 caused the composition of our reportable segments to change, including all activity related to that business and certain other adjustments to services revenue now being reflected in All Other activities. In addition, there were certain other immaterial reclassifications to net investment income and interest expense. These changes to our reportable segments have been reflected in our segment operating results for all periods presented.
(6)
The fourth quarter of 2020 includes an increase to premiums earned of $11.3 million, related to changes in present value estimates for initial premiums on monthly policies that are deferred and not collected until cancellation. The impact of changes in this estimate in other periods is not material.
(7)
In the fourth quarter of 2020, we reclassified certain revenue previously reflected in the homegenius segment results as services revenue to net premiums earned. As a result, for the third quarter of 2020, on the homegenius segment, net premiums earned has been increased and services revenue has been decreased, with offsetting adjustments reflected in All Other activities.
(8)
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; and (iv) certain other immaterial revenue and expense items.
Selected Mortgage Key Ratios
2021
2020
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Loss ratio (1)
7.1
%
1.3
%
17.3
%
19.6
%
31.0
%
Expense ratio (2)
29.5
%
26.4
%
22.4
%
21.1
%
21.5
%
(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
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; (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. 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) acquistion-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
2021
2020
(In thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Consolidated pretax income
$
161,641
$
195,496
$
161,189
$
179,167
$
161,205
Less reconciling income (expense) items:
Net gains (losses) on investments and other financial instruments
2,098
15,661
(5,181)
17,376
17,652
Amortization and impairment of other acquired intangible assets
(862)
(863)
(862)
(2,225)
(961)
Impairment of other long-lived assets and other non-operating items (1)
(244)
(4,021)
(84)
(6,971)
(466)
Total adjusted pretax operating income (2)
$
160,649
$
184,719
$
167,316
$
170,987
$
144,980
(1)
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.
(2)
Total adjusted pretax operating income (loss) consists of adjusted pretax operating income (loss) for each reportable segment and All Other activities as follows:
2021
2020
(In thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Adjusted pretax operating income (loss):
Mortgage segment
$
163,124
$
191,462
$
174,287
$
184,306
$
147,336
homegenius segment
(5,557)
(9,198)
(10,453)
(11,132)
(5,046)
All Other activities
3,082
2,455
3,482
(2,187)
2,690
Total adjusted pretax operating income
$
160,649
$
184,719
$
167,316
$
170,987
$
144,980
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
2021
2020
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Diluted net income per share
$
0.67
$
0.80
$
0.64
$
0.76
$
0.70
Less per-share impact of reconciling income (expense) items:
Net gains (losses) on investments and other financial instruments
0.01
0.08
(0.03)
0.09
0.09
Amortization and impairment of other acquired intangible assets
—
—
—
(0.01)
—
Impairment of other long-lived assets and other non-operating items
—
(0.02)
—
(0.04)
—
Income tax (provision) benefit on reconciling income (expense) items (1)
—
(0.01)
0.01
(0.01)
(0.02)
Difference between statutory and effective tax rate
(0.01)
—
(0.02)
0.04
0.04
Per-share impact of reconciling income (expense) items
—
0.05
(0.04)
0.07
0.11
Adjusted diluted net operating income per share (1)
$
0.67
$
0.75
$
0.68
$
0.69
$
0.59
(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)
2021
2020
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Return on equity (1)
11.8
%
14.5
%
11.8
%
14.1
%
13.3
%
Less impact of reconciling income (expense) items: (2)
Net gains (losses) on investments and other financial instruments
0.2
1.5
(0.5)
1.7
1.7
Amortization and impairment of other acquired intangible assets
(0.1)
(0.1)
(0.1)
(0.2)
(0.1)
Impairment of other long-lived assets and other non-operating items
—
(0.4)
—
(0.7)
—
Income tax (provision) benefit on reconciling income (expense) items (3)
—
(0.2)
0.1
(0.2)
(0.3)
Difference between statutory and effective tax rate
(0.1)
0.1
(0.1)
0.6
0.7
Impact of reconciling income (expense) items
—
0.9
(0.6)
1.2
2.0
Adjusted net operating return on equity
11.8
%
13.6
%
12.4
%
12.9
%
11.3
%
(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
2021
2020
(In thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
homegenius adjusted pretax operating income (loss)
$
(5,557)
$
(9,198)
$
(10,453)
$
(11,132)
$
(5,046)
Less reconciling income (expense) items:
Allocation of corporate operating expenses
(4,918)
(4,721)
(3,996)
(3,369)
(3,248)
Adjusted pretax operating income (loss) before allocated corporate operating expenses
(639)
(4,477)
(6,457)
(7,763)
(1,798)
Less reconciling income (expense) items:
Other operating expenses before allocated corporate operating expenses
(18,544)
(16,160)
(14,928)
(15,238)
(13,136)
homegenius adjusted gross profit
$
17,905
$
11,683
$
8,471
$
7,475
$
11,338
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
2021
2020
($ in millions)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
New insurance written ("NIW")
$
26,558
$
21,662
$
20,161
$
29,781
$
33,320
Percentage of NIW
Borrower-paid
99.2
%
99.1
%
99.2
%
99.2
%
98.5
%
Percentage by premium type
Direct monthly and other recurring premiums
93.8
%
93.1
%
90.2
%
91.4
%
90.0
%
Borrower-paid (1) (2)
6.0
6.6
9.4
8.3
9.0
Lender-paid (1)
0.2
0.3
0.4
0.3
1.0
Direct single premiums (1)
6.2
6.9
9.8
8.6
10.0
Total NIW
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
NIW for purchases
89.8
%
77.1
%
59.1
%
64.6
%
70.5
%
NIW for refinances
10.2
%
22.9
%
40.9
%
35.4
%
29.5
%
Percentage of NIW by FICO score (3)
>=740
56.0
%
61.4
%
64.3
%
64.7
%
66.2
%
680-739
34.9
33.1
31.5
31.5
30.7
620-679
9.1
5.5
4.2
3.8
3.1
Total NIW
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Percentage by LTV
95.01% and above
12.1
%
10.9
%
8.0
%
8.9
%
9.7
%
90.01% to 95.00%
46.7
40.4
31.6
34.7
39.6
85.01% to 90.00%
26.5
27.6
31.3
29.8
28.3
85.00% and below
14.7
21.1
29.1
26.6
22.4
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 (page 1 of 2)
September 30,
June 30,
March 31,
December 31,
September 30,
($ in millions)
2021
2021
2021
2020
2020
Primary insurance in force (1)
Prime
$
238,047
$
233,543
$
234,980
$
242,044
$
241,166
Alt-A and A minus and below
3,528
3,759
3,941
4,100
4,301
Primary
$
241,575
$
237,302
$
238,921
$
246,144
$
245,467
Primary risk in force (1) (2)
Prime
$
58,585
$
57,155
$
57,579
$
59,689
$
59,972
Alt-A and A minus and below
836
885
929
967
1,017
Primary
$
59,421
$
58,040
$
58,508
$
60,656
$
60,989
Percentage of primary risk in force
Direct monthly and other recurring premiums
82.7
%
81.2
%
80.0
%
79.1
%
76.8
%
Direct single premiums
17.3
%
18.8
%
20.0
%
20.9
%
23.2
%
Percentage of primary risk in force by FICO score (3)
>=740
57.3
%
57.5
%
57.2
%
57.5
%
57.6
%
680-739
34.8
34.8
34.9
34.6
34.3
620-679
7.4
7.2
7.3
7.3
7.5
<=619
0.5
0.5
0.6
0.6
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
14.6
%
14.5
%
14.4
%
14.4
%
14.3
%
90.01% to 95.00%
48.9
48.5
48.6
49.3
50.1
85.01% to 90.00%
27.8
28.1
28.2
28.0
27.9
85.00% and below
8.7
8.9
8.8
8.3
7.7
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Percentage of primary risk in force by policy year
2008 and prior
5.2
%
5.7
%
6.1
%
6.2
%
6.6
%
2009 - 2015
7.4
8.7
9.9
11.3
13.3
2016
5.1
6.0
6.8
7.6
8.9
2017
5.7
6.8
8.0
9.1
10.7
2018
6.1
7.3
8.7
9.8
11.7
2019
11.4
13.6
15.6
17.8
20.6
2020
32.1
35.4
37.2
38.2
28.2
2021
27.0
16.5
7.7
—
—
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Primary risk in force on defaulted loans
$
1,928
$
2,345
$
2,910
$
3,250
$
3,747
Table continued on next page.
Radian Group Inc. and Subsidiaries
Mortgage Supplemental Information - Primary Insurance in Force and Risk in Force
Exhibit I (page 2 of 2)
Table continued from prior page.
September 30,
June 30,
March 31,
December 31,
September 30,
2021
2021
2021
2020
2020
Persistency Rate (12 months ended)
60.8
%
57.7
%
(4)
57.2
%
(4)
61.2
%
(4)
65.6
%
(4)
Persistency Rate (quarterly, annualized) (5)
67.5
%
66.3
%
62.5
%
60.4
%
(4)
60.0
%
(4)
(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
Exhibit J
2021
2020
($ in thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Net claims paid: (1)
Total primary claims paid
$
5,330
$
4,870
$
6,611
$
8,353
$
11,331
Total pool and other
991
(649)
(138)
70
(230)
Subtotal
6,321
4,221
6,473
8,423
11,101
Impact of commutations and settlements (2)
3,915
—
4,000
32,170
(267)
Total net claims paid
$
10,236
$
4,221
$
10,473
$
40,593
$
10,834
Total average net primary claims paid (1) (3)
$
42.0
$
46.8
$
43.8
$
46.9
$
46.4
Average direct primary claims paid (3) (4)
$
43.2
$
48.4
$
45.5
$
48.5
$
47.8
(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 and the fourth quarter of 2020, 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.
September 30,
June 30,
March 31,
December 31,
September 30,
($ in thousands, except per default amounts)
2021
2021
2021
2020
2020
Reserve for losses by category (1)
Mortgage reserves
Prime
$
763,071
$
750,699
$
751,100
$
711,245
$
655,754
Alt-A and A minus and below
88,080
90,065
90,455
88,269
88,879
IBNR and other
3,788
5,464
6,626
9,966
43,153
LAE
21,400
21,180
21,212
20,172
18,745
Total primary reserves
876,339
867,408
869,393
829,652
806,531
Total pool reserves
11,413
13,085
13,175
14,163
14,779
Total 1st lien reserves
887,752
880,493
882,568
843,815
821,310
Other
269
270
270
292
398
Total Mortgage reserves
888,021
880,763
882,838
844,107
821,708
homegenius reserves
5,134
4,735
4,517
4,306
4,084
Total reserves
$
893,155
$
885,498
$
887,355
$
848,413
$
825,792
Primary reserve per primary default excluding IBNR and other
$
25,822
$
21,304
$
17,219
$
14,759
$
12,168
(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.
Radian Group Inc. and Subsidiaries
Mortgage Supplemental Information - Default Statistics
Exhibit K
September 30,
June 30,
March 31,
December 31,
September 30,
2021
2021
2021
2020
2020
Default Statistics
Primary Insurance:
Prime
Number of insured loans
975,565
976,344
996,082
1,031,736
1,043,450
Number of loans in default
30,503
36,826
45,929
51,032
58,057
Percentage of loans in default
3.13
%
3.77
%
4.61
%
4.95
%
5.56
%
Alt-A and A minus and below
Number of insured loans
22,843
24,205
25,282
26,208
27,310
Number of loans in default
3,292
3,638
4,177
4,505
4,680
Percentage of loans in default
14.41
%
15.03
%
16.52
%
17.19
%
17.14
%
Total Primary
Number of insured loans
998,408
1,000,549
1,021,364
1,057,944
1,070,760
Number of loans in default
33,795
40,464
50,106
55,537
62,737
Percentage of loans in default
3.38
%
4.04
%
4.91
%
5.25
%
5.86
%
Radian Group Inc. and Subsidiaries
Mortgage Supplemental Information - Reinsurance Programs
Exhibit L
2021
2020
($ in thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Quota Share Reinsurance (“QSR”) and Single Premium QSR Programs
Ceded premiums written (1)
$
(1,304)
$
(7,032)
$
(2,852)
$
(1,117)
$
2,119
% of premiums written
(0.5)
%
(2.8)
%
(1.1)
%
(0.4)
%
0.8
%
Ceded premiums earned
$
13,506
$
13,491
$
20,788
$
29,510
$
36,742
% of premiums earned
4.8
%
4.8
%
6.8
%
8.6
%
11.2
%
Ceding commissions written
$
(7,861)
$
(2,362)
$
(2,949)
$
(3,847)
$
(4,984)
Ceding commissions earned (2)
$
7,087
$
7,920
$
10,407
$
13,197
$
17,038
Profit commission
$
13,630
$
17,935
$
16,350
$
18,406
$
20,425
Ceded losses
$
883
$
(1,007)
$
3,661
$
7,106
$
10,189
Excess-of-Loss Program
Ceded premiums written
$
15,434
$
18,524
$
11,482
$
15,240
$
7,499
% of premiums written
6.1
%
7.4
%
4.4
%
5.2
%
2.8
%
Ceded premiums earned
$
16,581
$
15,601
$
12,154
$
12,037
$
8,290
% of premiums earned
5.9
%
5.5
%
4.0
%
3.7
%
2.5
%
Ceded RIF (3)
Single Premium QSR Program
$
5,439,056
$
5,728,142
$
6,147,808
$
6,646,812
$
7,358,932
Excess-of-Loss Program
1,873,426
1,952,900
1,525,100
1,560,600
1,170,200
QSR Program
232,539
268,337
317,827
381,787
454,585
Total Ceded RIF
$
7,545,021
$
7,949,379
$
7,990,735
$
8,589,199
$
8,983,717
PMIERs impact - reduction in Minimum Required Assets
Excess-of-Loss Program
$
659,151
$
907,112
$
673,957
$
912,734
$
783,842
Single Premium QSR Program
328,339
355,115
388,536
423,712
469,625
QSR Program
14,116
16,545
19,378
22,712
26,213
Total PMIERs impact
$
1,001,606
$
1,278,772
$
1,081,871
$
1,359,158
$
1,279,680
(1)
Net of profit commission.
(2)
Includes amounts reported in policy acquisition costs and other operating expenses. Operating expenses include the following ceding commissions, net of deferred policy acquisition costs, for the periods indicated:
2021
2020
($ in thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Ceding commissions
$
(5,638)
$
(6,501)
$
(7,689)
$
(10,436)
$
(12,337)
(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, including management’s current views regarding the likely impacts of the COVID-19 pandemic. 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, particularly those associated with the COVID-19 pandemic, which has had wide-ranging and continually evolving effects. 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, 2020, 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/20211102006357/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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