— Fourth quarter net income of $143 million, or
$0.91 per diluted share, and full year net income of $603 million,
or $3.77 per diluted share —
— Full year return on equity of 14.5% —
— Book value per share growth of 15%
year-over-year to $28.71 —
— Full year total revenue growth of 4%
year-over-year to $1.2 billion —
— Primary mortgage insurance in force increased
year-over-year to all-time high $270 billion —
— Returned $279 million of capital to
shareholders during the year via dividends and share repurchases
—
Radian Group Inc. (NYSE: RDN) today reported net income for the
quarter ended December 31, 2023, of $143 million, or $0.91 per
diluted share. This compares with net income for the quarter ended
December 31, 2022, of $162 million, or $1.01 per diluted share.
Net income for the full year 2023 was $603 million, or $3.77 per
diluted share. This compares with net income for the full year 2022
of $743 million, or $4.35 per diluted share.
Key Financial Highlights
Quarter ended
Year ended
($ in millions, except per-share
amounts)
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Total revenues
$329
$313
$315
$1,241
$1,191
Net income
$143
$157
$162
$603
$743
Diluted net income per share
$0.91
$0.98
$1.01
$3.77
$4.35
Consolidated pretax income
$180
$201
$203
$767
$953
Adjusted pretax operating income
(1)
$192
$210
$213
$786
$1,053
Adjusted diluted net operating
income per share (1)(2)
$0.96
$1.04
$1.05
$3.88
$4.87
Return on equity (3)
13.4%
15.0%
17.0%
14.5%
18.2%
Adjusted net operating return on
equity (1)(2)
14.2%
16.0%
17.6%
14.9%
20.3%
New Insurance Written (NIW) -
mortgage insurance
$10,629
$13,922
$12,859
$52,670
$67,954
Net premiums earned - mortgage
insurance
$230
$237
$230
$909
$957
New defaults
12,452
11,156
10,735
44,007
37,738
Provision for losses - mortgage
insurance
$5
($8)
($44)
($42)
($339)
As of
($ in millions, except per-share
amounts)
December 31, 2023
September 30, 2023
December 31, 2022
Book value per share
$28.71
$26.69
$24.95
Accumulated other comprehensive
income (loss) value per share (4)
($2.16)
($3.35)
($2.91)
PMIERs Available Assets (5)
$5,890
$5,758
$5,553
PMIERs excess Available Assets
(6)
$2,260
$1,670
$1,727
Total Holding Company Liquidity
(7)
$1,267
$1,279
$1,178
Total investments
$6,086
$5,886
$5,693
Primary mortgage insurance in
force
$269,979
$269,511
$260,994
Percentage of primary loans in
default (8)
2.2%
2.0%
2.2%
Mortgage insurance loss
reserves
$365
$362
$421
(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 statutory
tax rate of 21%.
(3)
Calculated by dividing annualized net
income by average stockholders’ equity, based on the average of the
beginning and ending balances for each period presented.
(4)
Included in book value per share for each
period presented.
(5)
Represents Radian Guaranty’s Available
Assets, calculated in accordance with the Private Mortgage Insurer
Eligibility Requirements (PMIERs) financial requirements in effect
for each date shown.
(6)
Represents Radian Guaranty’s excess or
“cushion” of Available Assets over its Minimum Required Assets,
calculated in accordance with the PMIERs financial requirements in
effect for each date shown.
(7)
Represents Radian Group’s total liquidity,
including available capacity under its $275 million unsecured
revolving credit facility.
(8)
Represents the number of primary loans in
default as a percentage of the total number of insured primary
loans.
Adjusted pretax operating income for the quarter ended December
31, 2023, was $192 million, or $0.96 per diluted share. This
compares with adjusted pretax operating income for the quarter
ended December 31, 2022, of $213 million, or $1.05 per diluted
share.
Adjusted pretax operating income for the full year 2023 was $786
million, or $3.88 per diluted share. This compares with adjusted
pretax operating income for the full year 2022, of $1.1 billion, or
$4.87 per diluted share.
Book value per share at December 31, 2023, was $28.71, compared
to $26.69 at September 30, 2023, and $24.95 at December 31, 2022.
This represents a 15% growth in book value per share at December
31, 2023, as compared to December 31, 2022, and includes
accumulated other comprehensive income (loss) of $(2.16) per share
as of December 31, 2023, and $(2.91) per share as of December 31,
2022. 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 successful year for Radian in 2023,
increasing book value per share by 15% year-over-year, generating
net income of $603 million and delivering a return on equity of
approximately 15%. Despite a challenging macroeconomic environment,
total revenues grew to $1.2 billion and our primary mortgage
insurance in force, which is the main driver of future earnings for
our company, reached an all-time high of $270 billion,” said
Radian’s Chief Executive Officer Rick Thornberry. “We continue to
strategically manage capital, and in 2023 paid $400 million of
ordinary dividends from Radian Guaranty to Radian Group and
returned $279 million of capital to stockholders through dividends
and share repurchases. We accomplished all of this working together
as a “One Radian” team and look forward to the opportunities ahead
in 2024.”
FOURTH QUARTER AND FULL YEAR HIGHLIGHTS
- NIW was $10.6 billion in the fourth quarter of 2023, compared
to $13.9 billion in the third quarter of 2023, and $12.9 billion in
the fourth quarter of 2022. NIW was $52.7 billion for the full year
2023, compared to $68.0 billion for the prior year.
- Purchase NIW decreased 24% in the fourth quarter of 2023
compared to the third quarter of 2023 and decreased 17% compared to
the fourth quarter of 2022.
- Refinances accounted for 1% of total NIW in the fourth quarter
of 2023, compared to 1% in the third quarter of 2023, and 2% in the
fourth quarter of 2022.
- Total primary mortgage insurance in force of $270.0 billion as
of December 31, 2023, increased slightly as compared to $269.5
billion as of September 30, 2023, and increased 3% compared to
$261.0 billion as of December 31, 2022.
- The year-over-year change reflects a 6% increase in monthly
premium policy insurance in force and a 10% decline in single
premium policy insurance in force.
- Persistency, which is the percentage of mortgage insurance that
remains in force after a twelve-month period, was 84% for the
twelve months ended December 31, 2023, compared to 84% for the
twelve months ended September 30, 2023, and 80% for the twelve
months ended December 31, 2022.
- Annualized persistency for the three months ended December 31,
2023, was 86%, compared to 84% for the three months ended September
30, 2023, and 84% for the three months ended December 31,
2022.
- Net mortgage insurance premiums earned were $230 million for
the fourth quarter of 2023, compared to $237 million for the third
quarter of 2023, and $230 million for the fourth quarter of 2022.
- Mortgage insurance in force portfolio premium yield was 38.1
basis points in the fourth quarter of 2023. This compares to 38.0
basis points in the third quarter of 2023, and 38.1 basis points in
the fourth quarter of 2022.
- The impact of single premium policy cancellations before
consideration of reinsurance represented 0.3 basis points of direct
premium yield in the fourth quarter of 2023, 0.5 basis points in
the third quarter of 2023, and 0.9 basis points in the fourth
quarter of 2022.
- Total net mortgage insurance premium yield, which includes the
impact of ceded premiums earned and accrued profit commission, was
34.2 basis points in the fourth quarter of 2023. This compares to
35.3 basis points in the third quarter of 2023, and 35.4 basis
points in the fourth quarter of 2022.
- Details regarding premiums earned may be found in Exhibit
D.
- The mortgage insurance provision for losses was $5 million in
the fourth quarter of 2023, compared to benefits of $8 million and
$44 million in the third quarter of 2023 and fourth quarter of
2022, respectively.
- Favorable reserve development on prior period defaults was $49
million in the fourth quarter of 2023, compared to $55 million in
the third quarter of 2023 and $90 million in the fourth quarter of
2022.
- The number of primary delinquent loans was 22,021 as of
December 31, 2023, compared to 20,406 as of September 30, 2023, and
21,913 as of December 31, 2022.
- The loss ratio in the fourth quarter of 2023 was 2.0%, compared
to (3.5)% in the third quarter of 2023, and (18.9)% in the fourth
quarter of 2022.
- Total mortgage insurance claims paid were $3 million in the
fourth quarter of 2023, compared to $5 million in the third quarter
of 2023, and $8 million in the fourth quarter of 2022. For the full
year 2023, total net claims paid, which includes the impact of
settlements and commutations, were $14 million, compared to $21
million for the full year 2022.
- Radian’s homegenius segment offers an array of title, real
estate and real estate technology products and services to
consumers, mortgage lenders, mortgage and real estate investors,
GSEs, real estate brokers and agents and corporations for their
employees.
- Total homegenius segment revenues for the fourth quarter of
2023 were $15 million, compared to $15 million for the third
quarter of 2023, and $19 million for the fourth quarter of 2022.
Total homegenius segment revenues for the full year of 2023 were
$58 million, compared to $110 million for the full year of
2022.
- Adjusted pretax operating loss, our primary segment measure of
profitability for the homegenius segment, was $18 million for the
fourth quarter of 2023, compared to $21 million for the third
quarter of 2023, and $31 million for the fourth quarter of 2022.
Adjusted pretax operating loss for the full year 2023 was $86
million, compared to $88 million for the full year 2022.
- Other operating expenses were $95 million in the fourth quarter
of 2023, compared to $79 million in the third quarter of 2023, and
$110 million in the fourth quarter of 2022. Other operating
expenses were $348 million for the full year 2023, compared to $381
million for the full year 2022.
- Other operating expenses increased in the fourth quarter of
2023 as compared to the third quarter of 2023, primarily due to $14
million of impairments of long-lived assets and other non-operating
items recognized in the fourth quarter of 2023, related to our
lease-related assets and internal-use software.
- Additional details regarding other operating expenses may be
found in Exhibit D.
CAPITAL AND LIQUIDITY UPDATE
Radian Group
- As of December 31, 2023, Radian Group maintained $992 million
of available liquidity. Total holding company liquidity, including
the company’s $275 million unsecured revolving credit facility, was
$1.3 billion as of December 31, 2023.
- Radian Group paid a dividend on its common stock in the amount
of $0.225 per share, totaling $34 million on December 12, 2023. For
the full year 2023, the company paid total dividends of $146
million.
- During the fourth quarter of 2023, the company repurchased 2.4
million shares of Radian Group common stock at a total cost of $63
million, including commissions. For the full year 2023, the company
repurchased 5.3 million shares of Radian Group common stock at a
total cost of $133 million, including commissions. As of December
31, 2023, purchase authority of up to $167 million remained
available under the existing program.
Radian Guaranty
- In the fourth quarter of 2023, Radian Guaranty paid an ordinary
dividend to Radian Group of $100 million, bringing the total
ordinary dividends paid from Radian Guaranty to Radian Group during
the year to $400 million.
- At December 31, 2023, Radian Guaranty’s Available Assets under
PMIERs totaled approximately $5.9 billion, resulting in PMIERs
excess Available Assets of $2.3 billion, compared to $1.7 billion
as of September 30, 2023.
- As previously announced, in October 2023, Radian Guaranty
improved its capital position and enhanced its risk distribution
program with the closing of two risk distribution transactions.
- A fully collateralized mortgage insurance-linked-note
reinsurance transaction, in which the company obtained $353 million
of aggregate excess-of-loss reinsurance coverage from Eagle Re
2023-1 Ltd. on mortgage insurance losses on an existing portfolio
of eligible policies with RIF of $8.8 billion that were issued
between April 1, 2022, and December 31, 2022.
- A traditional excess-of-loss reinsurance agreement, in which
the company obtained $246 million of aggregate excess-of-loss
reinsurance coverage from a panel of third-party reinsurers on
mortgage insurance losses on an existing portfolio of eligible
policies with RIF of $8.0 billion that were issued between October
1, 2021, and March 31, 2022.
RECENT EVENTS
- On January 8, 2024, S&P Global Ratings (“S&P”) upgraded
the insurance financial strength (IFS) rating of Radian Guaranty to
A- from BBB+. In the same rating action, S&P also upgraded the
senior unsecured debt rating of Radian Group Inc. to BBB- from BB+.
The outlook for the ratings is stable.
CONFERENCE CALL
Radian will discuss fourth quarter 2023 financial results in a
conference call tomorrow, Thursday, February 8, 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 segments and 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 and
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:
Net Premiums Earned and Other Operating
Expenses
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 Exhibit A (page 1 of
2)
2023
2022
(In thousands, except per-share
amounts)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Revenues
Net premiums earned
$
232,649
$
240,262
$
213,429
$
233,238
$
232,827
Services revenue
12,419
10,892
11,797
10,984
15,441
Net investment income (1)
68,824
67,805
63,348
58,453
59,091
Net gains (losses) on investments and
other financial instruments
13,447
(8,555
)
(236
)
5,585
6,845
Other income
1,305
2,109
1,241
1,592
520
Total revenues
328,644
312,513
289,579
309,852
314,724
Expenses
Provision for losses
4,170
(8,135
)
(21,632
)
(16,929
)
(43,599
)
Policy acquisition costs
6,147
6,920
5,218
6,293
5,931
Cost of services
8,950
8,886
10,257
10,398
16,128
Other operating expenses
95,218
79,206
89,885
83,269
109,785
Interest expense (1)
23,169
23,282
21,805
21,439
21,594
Impairment of goodwill
9,802
—
—
—
—
Amortization of other acquired intangible
assets
1,371
1,371
1,370
1,371
1,587
Total expenses
148,827
111,530
106,903
105,841
111,426
Pretax income
179,817
200,983
182,676
204,011
203,298
Income tax provision
37,124
44,401
36,589
46,254
40,968
Net income
$
142,693
$
156,582
$
146,087
$
157,757
$
162,330
Diluted net income per share
$
0.91
$
0.98
$
0.91
$
0.98
$
1.01
(1)
Effective in the fourth quarter of 2023,
expenses associated with securities lending transactions that had
previously been reported as a component of interest expense are now
included in net investment income, along with the applicable
income. Net investment income and interest expense, including
allocated interest expense, for prior periods in 2023 have been
restated to reflect this reclassification, which totaled $2.6
million for the first three quarters of 2023.
Radian Group Inc. and Subsidiaries Condensed
Consolidated Statements of Operations Exhibit A (page 2 of
2)
Years Ended December
31,
(In thousands, except per-share
amounts)
2023
2022
Revenues:
Net premiums earned
$
919,578
$
981,131
Services revenue
46,092
92,216
Net investment income
258,430
195,658
Net gains (losses) on investments and
other financial instruments
10,241
(80,733
)
Other income
6,247
2,454
Total revenues
1,240,588
1,190,726
Expenses:
Provision for losses
(42,526
)
(338,239
)
Policy acquisition costs
24,578
23,918
Cost of services
38,491
82,358
Other operating expenses
347,578
381,148
Interest expense
89,695
84,454
Impairment of goodwill
9,802
—
Amortization of other acquired intangible
assets
5,483
4,308
Total expenses
473,101
237,947
Pretax income
767,487
952,779
Income tax provision
164,368
209,845
Net income
$
603,119
$
742,934
Diluted net income per share
$
3.77
$
4.35
Radian Group Inc. and Subsidiaries Net Income Per
Share Exhibit B
The calculation of basic and diluted net
income per share is as follows.
2023
2022
(In thousands, except per-share
amounts)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Net income—basic and diluted
$
142,693
$
156,582
$
146,087
$
157,757
$
162,330
Average common shares
outstanding—basic
155,318
158,461
159,010
158,304
158,357
Dilutive effect of share-based
compensation arrangements (1)
1,909
1,686
1,734
3,045
2,450
Adjusted average common shares
outstanding—diluted
157,227
160,147
160,744
161,349
160,807
Basic net income per share
$
0.92
$
0.99
$
0.92
$
1.00
$
1.03
Diluted net income per share
$
0.91
$
0.98
$
0.91
$
0.98
$
1.01
(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.
2023
2022
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Shares of common stock equivalents
—
—
112
25
—
Years Ended December
31,
(In thousands, except per-share
amounts)
2023
2022
Net income - basic and diluted
$
603,119
$
742,934
Average common shares
outstanding—basic
158,140
167,930
Dilutive effect of stock-based
compensation arrangements (1)
1,993
2,734
Adjusted average common shares
outstanding—diluted
160,133
170,664
Basic net income per share
$
3.81
$
4.42
Diluted net income per share
$
3.77
$
4.35
(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 per share because they would be anti-dilutive:
Years Ended December
31,
(In thousands)
2023
2022
Shares of common stock equivalents
14
—
Radian Group Inc. and Subsidiaries Condensed
Consolidated Balance Sheets Exhibit C
December 31,
September 30,
June 30,
March 31,
December 31,
(In thousands, except per-share
amounts)
2023
2023
2023
2023
2022
Assets
Investments
$
6,085,654
$
5,885,652
$
5,895,871
$
5,837,892
$
5,693,491
Cash
18,999
55,489
61,142
50,167
56,183
Restricted cash
1,066
1,305
1,317
577
377
Accrued investment income
45,783
45,623
42,650
42,567
40,093
Accounts and notes receivable
123,857
144,614
138,432
129,565
119,834
Reinsurance recoverable
25,909
24,148
22,979
24,396
25,633
Deferred policy acquisition costs
18,718
18,817
19,272
18,236
18,460
Property and equipment, net
63,822
74,558
73,885
72,111
70,981
Goodwill and other acquired intangible
assets, net
—
11,173
12,543
13,914
15,285
Prepaid federal income taxes
750,320
696,820
663,320
596,368
596,368
Other assets
459,805
420,483
375,132
418,609
427,024
Total assets
$
7,593,933
$
7,378,682
$
7,306,543
$
7,204,402
$
7,063,729
Liabilities and stockholders’ equity
Unearned premiums
$
225,396
$
236,400
$
246,666
$
257,735
$
271,479
Reserve for losses and loss adjustment
expense
370,148
367,568
379,434
405,651
426,843
Senior notes
1,417,781
1,416,687
1,415,610
1,414,549
1,413,504
Secured borrowings
119,476
241,753
178,762
121,642
155,822
Reinsurance funds withheld
130,564
156,114
154,354
153,099
152,067
Net deferred tax liability
589,564
497,560
479,754
455,517
391,083
Other liabilities
343,199
309,701
281,127
289,731
333,604
Total liabilities
3,196,128
3,225,783
3,135,707
3,097,924
3,144,402
Common stock
173
175
177
176
176
Treasury stock
(945,870
)
(945,504
)
(945,032
)
(931,313
)
(930,643
)
Additional paid-in capital
1,430,594
1,482,712
1,522,895
1,515,852
1,519,641
Retained earnings
4,243,759
4,136,598
4,016,482
3,908,396
3,786,952
Accumulated other comprehensive income
(loss)
(330,851
)
(521,082
)
(423,686
)
(386,633
)
(456,799
)
Total stockholders’ equity
4,397,805
4,152,899
4,170,836
4,106,478
3,919,327
Total liabilities and stockholders’
equity
$
7,593,933
$
7,378,682
$
7,306,543
$
7,204,402
$
7,063,729
Shares outstanding
153,179
155,582
157,350
156,547
157,056
Book value per share
$
28.71
$
26.69
$
26.51
$
26.23
$
24.95
Holding company debt-to-capital ratio
(1)
24.4
%
25.4
%
25.3
%
25.6
%
26.5
%
(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 Net Premiums Earned
and Other Operating Expenses Exhibit D (page 1 of 2)
Net Premiums Earned
2023
2022
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Premiums earned
Direct - Mortgage Insurance
Premiums earned, excluding revenue from
cancellations
$
256,632
$
254,903
$
252,537
$
251,166
$
247,880
Single Premium Policy cancellations
2,058
3,304
3,980
5,361
5,756
Total direct - Mortgage Insurance
258,690
258,207
256,517
256,527
253,636
Assumed - Mortgage Insurance
—
—
—
—
(56
)
Ceded - Mortgage Insurance
Premiums earned, excluding revenue from
cancellations (1)
(40,065
)
(32,363
)
(57,916
)
(35,526
)
(35,773
)
Single Premium Policy cancellations
(2)
(444
)
(873
)
(1,114
)
(1,472
)
(1,676
)
Profit commission - other (3)
12,199
11,830
13,245
11,921
13,802
Total ceded premiums - Mortgage
Insurance
(28,310
)
(21,406
)
(45,785
)
(25,077
)
(23,647
)
Net premiums earned - Mortgage
Insurance
230,380
236,801
210,732
231,450
229,933
Net premiums earned - homegenius
2,269
3,461
2,697
1,788
2,894
Net premiums earned
$
232,649
$
240,262
$
213,429
$
233,238
$
232,827
(1)
The second quarter of 2023 includes the
result of the tender offers by Eagle Re 2019-1 Ltd. and Eagle Re
2020-1 Ltd. to purchase the mortgage insurance-linked notes that
supported their reinsurance agreements with Radian Guaranty. As a
result, Radian Guaranty incurred additional ceded premiums earned
during the second quarter of 2023 of $21 million, consisting of $16
million related to the cost of tender premiums and associated
expenses and $5 million related to the acceleration of deferred
costs from the original executions of these transactions.
(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.
Other Operating
Expenses
Total
2023
2022
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Other operating expenses by type
Salaries and other base employee
expenses
$
34,182
$
33,272
$
39,032
$
35,064
$
47,995
Variable and share-based incentive
20,262
19,546
18,908
18,273
15,321
Other general operating expenses
45,186
(1)
29,812
35,655
33,863
50,488
Ceding commissions
(5,327
)
(5,153
)
(4,824
)
(4,628
)
(5,098
)
Title agent commissions
915
1,729
1,114
697
1,079
Total
$
95,218
$
79,206
$
89,885
$
83,269
$
109,785
(2)
(1)
Includes $14 million of impairment of
long-lived assets, primarily from impairments to our lease-related
assets and internal-use software.
(2)
Includes $12 million of severance and
related expenses, primarily in salaries and other base employee
expenses, and $15 million of impairment of long-lived assets,
primarily in other general operating expenses.
Radian Group Inc. and Subsidiaries Net Premiums
Earned Exhibit D (page 2 of 2)
Net Premiums Earned
Years Ended December
31,
(In thousands)
2023
2022
Premiums earned
Direct - Mortgage Insurance
Premiums earned, excluding revenue from
cancellations
$
1,015,238
$
991,556
Single Premium Policy cancellations
14,703
34,051
Total direct - Mortgage Insurance
1,029,941
1,025,607
Assumed - Mortgage Insurance (1)
—
4,025
Ceded - Mortgage Insurance
Premiums earned, excluding revenue from
cancellations
(165,870
)
(130,556
)
Single Premium Policy cancellations
(2)
(3,903
)
(9,677
)
Profit commission - other (3)
49,195
67,814
Total ceded premiums - Mortgage
Insurance
(120,578
)
(72,419
)
Net premiums earned - Mortgage
Insurance
909,363
957,213
Net premiums earned - homegenius
10,215
23,918
Net premiums earned
$
919,578
$
981,131
(1)
Represents premiums from our participation
in certain credit risk transfer programs. We discontinued our
participation in these programs in December 2022 by novating these
insurance policies to an unrelated third-party reinsurer.
(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.
Other Operating
Expenses
Years Ended December
31,
(In thousands)
2023
2022
Other operating expenses by type
Salaries and other base employee
expenses
$
141,550
$
159,690
Variable and share-based incentive
compensation
76,989
70,868
Other general operating expenses
144,516
(1)
160,927
Ceding commissions
(19,932
)
(16,164
)
Title agent commissions
4,455
5,827
Total
$
347,578
$
381,148
(2)
(1)
Includes $14 million of impairment of
long-lived assets, primarily from impairments to our lease-related
assets and internal-use software.
(2)
Includes $12 million of severance and
related expenses, primarily in salaries and other base employee
expenses, and $15 million of impairment of long-lived assets,
primarily in other general operating expenses.
Radian Group Inc. and Subsidiaries Segment
Information Exhibit E (page 1 of 5)
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 December
31, 2023
(In thousands)
Mortgage Insurance
homegenius
All Other (1)
Inter-segment (2)
Total
Net premiums written (3)
$
225,112
$
2,269
$
—
$
—
$
227,381
(Increase) decrease in unearned
premiums
5,268
—
—
—
5,268
Net premiums earned
230,380
2,269
—
—
232,649
Services revenue
202
12,311
—
(94
)
12,419
Net investment income
51,061
586
17,177
—
68,824
Net gains (losses) on investments and
other financial instruments
—
—
356
—
356
Other income
1,302
—
14
(11
)
1,305
Total
282,945
15,166
17,547
(105
)
315,553
Provision for losses
4,608
(438
)
—
—
4,170
Policy acquisition costs
6,147
—
—
—
6,147
Cost of services
157
8,793
—
—
8,950
Other operating expenses before allocated
corporate operating expenses (4)
15,559
19,757
3,903
(105
)
39,114
Interest expense
21,748
—
1,421
—
23,169
Total
48,219
28,112
5,324
(105
)
81,550
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
234,726
(12,946
)
12,223
—
234,003
Allocation of corporate operating
expenses
36,929
4,930
410
—
42,269
Adjusted pretax operating income
(loss)
$
197,797
$
(17,876
)
$
11,813
$
—
$
191,734
Radian Group Inc. and Subsidiaries Segment
Information Exhibit E (page 2 of 5)
Three Months Ended December
31, 2022
(In thousands)
Mortgage Insurance
homegenius
All Other (1)
Inter-segment (2)
Total
Net premiums written (3)
$
227,791
$
2,894
$
—
$
—
$
230,685
(Increase) decrease in unearned
premiums
2,142
—
—
—
2,142
Net premiums earned
229,933
2,894
—
—
232,827
Services revenue
328
15,207
—
(94
)
15,441
Net investment income
52,165
366
6,560
—
59,091
Net gains (losses) on investments and
other financial instruments
—
—
47
—
47
Other income
512
170
8
(170
)
520
Total
282,938
18,637
6,615
(264
)
307,926
Provision for losses
(43,509
)
(90
)
—
—
(43,599
)
Policy acquisition costs
5,931
—
—
—
5,931
Cost of services
235
15,893
—
—
16,128
Other operating expenses before allocated
corporate operating expenses (4)
20,131
27,998
3,606
(264
)
51,471
Interest expense
21,580
—
14
—
21,594
Total
4,368
43,801
3,620
(264
)
51,525
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
278,570
(25,164
)
2,995
—
256,401
Allocation of corporate operating
expenses
36,663
6,302
420
—
43,385
Adjusted pretax operating income
(loss)
$
241,907
$
(31,466
)
$
2,575
$
—
$
213,016
Year Ended December 31,
2023
(In thousands)
Mortgage Insurance
homegenius
All Other (1)
Inter-segment (2)
Total
Net premiums written (3)
$
904,240
$
10,215
$
—
$
—
$
914,455
Decrease in unearned premiums
5,123
—
—
—
5,123
Net premiums earned
909,363
10,215
—
—
919,578
Services revenue
1,088
45,394
—
(390
)
46,092
Net investment income
195,077
2,031
61,322
—
258,430
Net gains (losses) on investments and
other financial instruments
—
—
814
—
814
Other income
5,372
—
27
(20
)
5,379
Total
1,110,900
57,640
62,163
(410
)
1,230,293
Provision for losses
(42,136
)
(390
)
—
—
(42,526
)
Policy acquisition costs
24,578
—
—
—
24,578
Cost of services
713
37,778
—
—
38,491
Other operating expenses before allocated
corporate operating expenses (4)
71,150
87,739
11,291
(5)
(410
)
169,770
Interest expense
86,188
—
3,507
—
89,695
Total
140,493
125,127
14,798
(410
)
280,008
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
970,407
(67,487
)
47,365
(5)
—
950,285
Allocation of corporate operating
expenses
140,583
18,783
4,492
—
163,858
Adjusted pretax operating income
(loss)
$
829,824
$
(86,270
)
$
42,873
$
—
$
786,427
Radian Group Inc. and Subsidiaries Segment
Information Exhibit E (page 3 of 5)
Year Ended December 31,
2022
(In thousands)
Mortgage Insurance
homegenius
All Other (1)
Inter-segment (2)
Total
Net premiums written (3)
$
959,872
$
23,918
$
—
$
—
$
983,790
Decrease in unearned premiums
(2,659
)
—
—
—
(2,659
)
Net premiums earned
957,213
23,918
—
—
981,131
Services revenue
7,390
85,158
—
(332
)
92,216
Net investment income
171,221
729
23,708
—
195,658
Net gains (losses) on investments and
other financial instruments
—
—
47
—
47
Other income
2,376
170
78
(170
)
2,454
Total
1,138,200
109,975
23,833
(502
)
1,271,506
Provision for losses
(339,374
)
1,135
—
—
(338,239
)
Policy acquisition costs
23,918
—
—
—
23,918
Cost of services
5,951
76,407
—
—
82,358
Other operating expenses before allocated
corporate operating expenses (4)
92,756
97,775
13,269
(502
)
203,298
Interest expense
84,440
—
14
—
84,454
Total
(132,309
)
175,317
13,283
(502
)
55,789
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
1,270,509
(65,342
)
10,550
—
1,215,717
Allocation of corporate operating
expenses
138,566
22,856
1,578
—
163,000
Adjusted pretax operating income
(loss)
$
1,131,943
$
(88,198
)
$
8,972
$
—
$
1,052,717
(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) certain investments in new
business opportunities, including activities and investments
associated with Radian Mortgage Capital, and other immaterial
activities.
(2)
Includes immaterial inter-segment revenue
for our homegenius segment and immaterial inter-segment expenses
for our Mortgage Insurance segment and All Other activities.
(3)
Net of ceded premiums written under our
quota share and excess-of-loss reinsurance agreements.
(4)
Does not include impairment of long-lived
assets and other non-operating items, which are not considered
components of adjusted pretax operating income (loss).
(5)
In the first quarter of 2023, as a
one-time adjustment, we reclassified $2.9 million in cumulative
expenses previously reflected in the All Other results as direct
other operating expenses to allocated corporate operating
expenses.
Radian Group Inc. and Subsidiaries Segment
Information Exhibit E (page 4 of 5)
Mortgage Insurance
2023
2022
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Net premiums written (1)
$
225,112
$
235,169
$
214,540
$
229,419
$
227,791
(Increase) decrease in unearned
premiums
5,268
1,632
(3,808
)
2,031
2,142
Net premiums earned
230,380
236,801
210,732
231,450
229,933
Services revenue
202
266
284
336
328
Net investment income (2)
51,061
49,953
48,070
45,993
52,165
Other income
1,302
1,237
1,246
1,587
512
Total
282,945
288,257
260,332
279,366
282,938
Provision for losses
4,608
(8,257
)
(21,623
)
(16,864
)
(43,509
)
Policy acquisition costs
6,147
6,920
5,218
6,293
5,931
Cost of services
157
172
143
241
235
Other operating expenses before allocated
corporate operating expenses (3) (4)
15,559
16,776
20,009
18,806
20,131
Interest expense (2)
21,748
21,673
21,405
21,362
21,580
Total
48,219
37,284
25,152
29,838
4,368
Adjusted pretax operating income before
allocated corporate operating expenses
234,726
250,973
235,180
249,528
278,570
Allocation of corporate operating
expenses
36,929
31,744
37,081
34,829
36,663
Adjusted pretax operating income
$
197,797
$
219,229
$
198,099
$
214,699
$
241,907
homegenius
2023
2022
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Net premiums earned
$
2,269
$
3,461
$
2,697
$
1,788
$
2,894
Services revenue (3)
12,311
10,723
11,617
10,743
15,207
Net investment income
586
523
492
430
366
Other income (3)
—
—
—
—
170
Total
15,166
14,707
14,806
12,961
18,637
Provision for losses
(438
)
122
(9
)
(65
)
(90
)
Cost of services
8,793
8,714
10,114
10,157
15,893
Other operating expenses before allocated
corporate operating expenses (4)
19,757
22,562
24,168
21,252
27,998
Total
28,112
31,398
34,273
31,344
43,801
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
(12,946
)
(16,691
)
(19,467
)
(18,383
)
(25,164
)
Allocation of corporate operating
expenses
4,930
4,241
4,954
4,658
6,302
Adjusted pretax operating income
(loss)
$
(17,876
)
$
(20,932
)
$
(24,421
)
$
(23,041
)
$
(31,466
)
Radian Group Inc. and Subsidiaries Segment
Information Exhibit E (page 5 of 5)
All Other (5)
2023
2022
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Net investment income (2)
$
17,177
$
17,329
$
14,786
$
12,030
$
6,560
Net gains (losses) on investments and
other financial instruments
356
283
95
80
47
Other income
14
9
(1
)
5
8
Total
17,547
17,621
14,880
12,115
6,615
Other operating expenses before allocated
corporate operating expenses (3) (4)
3,903
3,500
3,370
518
(6)
3,606
Interest expense
1,421
1,609
400
77
14
Total (3)
5,324
5,109
3,770
595
3,620
Adjusted pretax operating income before
allocated corporate operating expenses
12,223
12,512
11,110
11,520
2,995
Allocation of corporate operating
expenses
410
354
413
3,315
(6)
420
Adjusted pretax operating income
(loss)
$
11,813
$
12,158
$
10,697
$
8,205
$
2,575
(1)
Net of ceded premiums written under our
quota share and excess-of-loss reinsurance agreements.
(2)
Effective in the fourth quarter of 2023,
expenses associated with securities lending transactions that had
previously been reported as a component of interest expense are now
included in net investment income, along with the applicable
income. Net investment income and interest expense, including
allocated interest expense, for prior periods in 2023 have been
restated to reflect this reclassification.
(3)
Includes immaterial inter-segment revenue
for our homegenius segment and immaterial inter-segment expenses
for our Mortgage Insurance segment and All Other activities.
(4)
Does not include impairment of long-lived
assets and other non-operating items, which are not considered
components of adjusted pretax operating income (loss).
(5)
All Other activities include: (i) income
(losses) from assets held by our holding company; (ii) related
general corporate operating expenses not attributable or allocated
to our reportable segments; and (iii) certain investments in new
business opportunities, including activities and investments
associated with Radian Mortgage Capital, and other immaterial
activities.
(6)
In the first quarter of 2023, as a
one-time adjustment, we reclassified $2.9 million in cumulative
expenses previously reflected in the All Other results as direct
other operating expenses to allocated corporate operating
expenses.
Selected Mortgage Insurance
Key Ratios
2023
2022
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Loss ratio (1)
2.0
%
(3.5
)%
(10.3
)%
(7.3
)%
(18.9
)%
Expense ratio (2)
25.5
%
23.4
%
29.6
%
25.9
%
27.3
%
Years Ended December
31,
2023
2022
Loss ratio (1)
(4.6
)%
(35.5
)%
Expense ratio (2)
26.0
%
26.7
%
(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 business
segments and to allocate resources to the segments.
Adjusted pretax operating income (loss) is defined as GAAP
consolidated pretax income (loss) excluding the effects of: (i) net
gains (losses) on investments and other financial instruments,
except for certain investments and other financial instruments
attributable to our reportable segments and 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 and
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 our reportable segments and All Other activities,
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 4)
Reconciliation of Consolidated
Pretax Income to Adjusted Pretax Operating Income
2023
2022
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Consolidated pretax income
$
179,817
$
200,983
$
182,676
$
204,011
$
203,298
Less reconciling income (expense)
items
Net gains (losses) on investments and
other financial instruments (1)
13,091
(8,838
)
(331
)
5,505
6,798
Impairment of goodwill
(9,802
)
—
—
—
—
Amortization of other acquired intangible
assets
(1,371
)
(1,371
)
(1,370
)
(1,371
)
(1,587
)
Impairment of other long-lived assets and
other non-operating items
(13,835
)
(2)
737
2
14
(14,929
)
(2)
Total adjusted pretax operating income
(3)
$
191,734
$
210,455
$
184,375
$
199,863
$
213,016
(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)
These amounts are included in other
operating expenses on the Condensed Consolidated Statement of
Operations in Exhibit A and primarily relate to impairment of other
long-lived assets.
(3)
Total adjusted pretax operating income
consists of adjusted pretax operating income (loss) for each
reportable segment and All Other activities as follows.
2023
2022
(In thousands)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Adjusted pretax operating income
(loss)
Mortgage Insurance segment
$
197,797
$
218,601
$
197,750
$
214,435
$
241,907
homegenius segment
(17,876
)
(20,932
)
(24,421
)
(23,041
)
(31,466
)
All Other activities
11,813
12,786
11,046
8,469
2,575
Total adjusted pretax operating income
$
191,734
$
210,455
$
184,375
$
199,863
$
213,016
Radian Group Inc. and Subsidiaries Consolidated
Non-GAAP Financial Measure Reconciliations Exhibit G (page 2
of 4)
Reconciliation of Diluted Net
Income Per Share to Adjusted Diluted Net Operating Income Per
Share
2023
2022
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Diluted net income per share
$
0.91
$
0.98
$
0.91
$
0.98
$
1.01
Less per-share impact of reconciling
income (expense) items
Net gains (losses) on investments and
other financial instruments
0.08
(0.06
)
—
0.03
0.04
Impairment of goodwill
(0.06
)
—
—
—
—
Amortization of other acquired intangible
assets
(0.01
)
(0.01
)
(0.01
)
(0.01
)
(0.01
)
Impairment of other long-lived assets and
other non-operating items
(0.09
)
0.01
—
—
(0.09
)
Income tax (provision) benefit on
reconciling income (expense) items (1)
0.02
0.01
—
(0.01
)
0.01
Difference between statutory and effective
tax rates
0.01
(0.01
)
0.01
(0.01
)
0.01
Per-share impact of reconciling income
(expense) items
(0.05
)
(0.06
)
—
—
(0.04
)
Adjusted diluted net operating income per
share (1)
$
0.96
$
1.04
$
0.91
$
0.98
$
1.05
(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)
2023
2022
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Return on equity (1)
13.4
%
15.0
%
14.1
%
15.7
%
17.0
%
Less impact of reconciling income
(expense) items (2)
Net gains (losses) on investments and
other financial instruments
1.2
(0.9
)
—
0.5
0.7
Impairment of goodwill
(0.9
)
—
—
—
—
Amortization of other acquired intangible
assets
(0.1
)
(0.2
)
(0.1
)
(0.1
)
(0.2
)
Impairment of other long-lived assets and
other non-operating items
(1.3
)
0.1
—
—
(1.6
)
Income tax (provision) benefit on
reconciling income (expense) items (3)
0.2
0.2
(0.1
)
(0.1
)
0.2
Difference between statutory and effective
tax rates
0.1
(0.2
)
0.2
(0.3
)
0.3
Impact of reconciling income (expense)
items
(0.8
)
(1.0
)
—
—
(0.6
)
Adjusted net operating return on equity
(3)
14.2
%
16.0
%
14.1
%
15.7
%
17.6
%
(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%. 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 4)
Reconciliation of Consolidated
Pretax Income to Adjusted Pretax Operating Income
Years Ended December
31,
(In thousands)
2023
2022
Consolidated pretax income
$
767,487
$
952,779
Less reconciling income (expense)
items:
Net gains (losses) on investments and
other financial instruments (1)
9,427
(80,780
)
Impairment of goodwill
(9,802
)
—
Amortization of other acquired intangible
assets
(5,483
)
(4,308
)
Impairment of other long-lived assets and
other non-operating items (2)
(13,082
)
(14,850
)
Total adjusted pretax operating income
(3)
$
786,427
$
1,052,717
(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)
The amounts primarily relate to
impairments of other long-lived assets that are included in other
operating expenses on the Condensed Consolidated Statement of
Operations in Exhibit A.
(3)
Total adjusted pretax operating income
consists of adjusted pretax operating income (loss) for each
reportable segment and All Other activities as follows:
Years Ended December
31,
(In thousands)
2023
2022
Adjusted pretax operating income
(loss):
Mortgage Insurance segment
$
829,824
$
1,131,943
homegenius segment
(86,270
)
(88,198
)
All Other activities
42,873
8,972
Total adjusted pretax operating income
$
786,427
$
1,052,717
Reconciliation of Diluted Net
Income Per Share to Adjusted Diluted Net Operating Income Per
Share
Years Ended December
31,
2023
2022
Diluted net income per share
$
3.77
$
4.35
Less per-share impact of reconciling
income (expense) items:
Net gains (losses) on investments and
other financial instruments
0.06
(0.47
)
Impairment of goodwill
(0.06
)
—
Amortization of other acquired intangible
assets
(0.03
)
(0.03
)
Impairment of other long-lived assets and
other non-operating items
(0.08
)
(0.09
)
Income tax (provision) benefit on
reconciling income (expense) items (1)
0.02
0.12
Difference between statutory and effective
tax rates
(0.02
)
(0.05
)
Per-share impact of reconciling income
(expense) items
(0.11
)
(0.52
)
Adjusted diluted net operating income per
share (1)
$
3.88
$
4.87
(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.
Radian Group Inc. and Subsidiaries Consolidated
Non-GAAP Financial Measure Reconciliations Exhibit G (page 4
of 4)
Reconciliation of Return on
Equity to Adjusted Net Operating Return on Equity (1)
Years Ended December
31,
2023
2022
Return on equity (1)
14.5
%
18.2
%
Less impact of reconciling income
(expense) items: (2)
Net gains (losses) on investments and
other financial instruments
0.2
(2.0
)
Impairment of goodwill
(0.2
)
—
Amortization of other acquired intangible
assets
(0.1
)
(0.1
)
Impairment of other long-lived assets and
other non-operating items
(0.3
)
(0.4
)
Income tax (provision) benefit on
reconciling income (expense) items (3)
0.1
0.5
Difference between statutory and effective
tax rates
(0.1
)
(0.1
)
Impact of reconciling income (expense)
items
(0.4
)
(2.1
)
Adjusted net operating return on equity
(3)
14.9
%
20.3
%
(1)
Calculated by dividing net income by
average stockholders’ equity.
(2)
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.
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
2023
2022
($ in millions)
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Qtr 4
NIW
$
10,629
$
13,922
$
16,946
$
11,261
$
12,859
NIW by premium type
Direct monthly and other recurring
premiums
96.4
%
96.0
%
96.5
%
94.9
%
94.8
%
Direct single premiums
3.6
%
4.0
%
3.5
%
5.1
%
5.2
%
NIW for purchases
98.8
%
98.7
%
98.6
%
97.6
%
98.3
%
NIW for refinances
1.2
%
1.3
%
1.4
%
2.4
%
1.7
%
NIW by FICO score (1)
>=740
66.5
%
67.3
%
66.1
%
60.7
%
59.4
%
680-739
27.9
27.4
28.4
32.8
33.1
620-679
5.6
5.3
5.5
6.5
7.5
<=619
—
—
—
—
—
Total NIW
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
NIW by LTV
95.01% and above
15.4
%
16.5
%
17.9
%
17.7
%
15.5
%
90.01% to 95.00%
40.0
38.6
39.1
40.2
40.8
85.01% to 90.00%
31.3
30.2
29.5
28.7
29.7
85.00% and below
13.3
14.7
13.5
13.4
14.0
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.
Radian Group Inc. and Subsidiaries Mortgage Insurance
Supplemental Information - Primary Insurance in Force and Risk in
Force Exhibit I
December 31,
September 30,
June 30,
March 31,
December 31,
($ in millions)
2023
2023
2023
2023
2022
Primary insurance in force
$
269,979
$
269,511
$
266,859
$
261,450
$
260,994
Primary risk in force (“RIF”)
$
69,710
$
69,298
$
68,323
$
66,580
$
66,094
Primary RIF by premium type
Direct monthly and other recurring
premiums
88.9
%
88.6
%
88.2
%
87.6
%
87.1
%
Direct single premiums
11.1
%
11.4
%
11.8
%
12.4
%
12.9
%
Primary RIF by FICO score (1)
>=740
58.5
%
58.2
%
57.8
%
57.4
%
57.4
%
680-739
33.9
34.0
34.3
34.6
34.6
620-679
7.3
7.4
7.5
7.6
7.6
<=619
0.3
0.4
0.4
0.4
0.4
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Primary RIF by LTV
95.01% and above
18.6
%
18.4
%
18.0
%
17.5
%
17.1
%
90.01% to 95.00%
48.2
48.2
48.4
48.5
48.4
85.01% to 90.00%
27.1
27.0
26.9
27.0
27.2
85.00% and below
6.1
6.4
6.7
7.0
7.3
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Primary RIF by policy year
2008 and prior
2.8
%
2.9
%
3.1
%
3.3
%
3.5
%
2009 - 2017
6.9
7.5
8.2
9.1
10.0
2018
2.8
2.9
3.1
3.3
3.5
2019
5.4
5.6
5.9
6.4
6.7
2020
16.6
17.5
18.7
20.3
21.6
2021
24.5
25.6
26.9
28.6
29.5
2022
22.4
22.8
23.6
24.7
25.2
2023
18.6
15.2
10.5
4.3
—
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Persistency Rate (12 months ended)
84.0
%
83.6
%
82.8
%
81.6
%
79.6
%
Persistency Rate (quarterly, annualized)
(2)
85.8
%
84.2
%
83.5
%
84.4
%
84.1
%
(1)
For loans with multiple borrowers, the
percentage of primary RIF by FICO score represents the lowest of
the borrowers’ FICO scores.
(2)
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:
- the health of the U.S. housing market generally and changes in
economic conditions that impact the size of the insurable mortgage
market, the credit performance of our insured mortgage portfolio
and our business prospects, including changes resulting from
inflationary pressures, the higher interest rate environment and
the risk of higher unemployment rates, as well as other
macroeconomic stresses and uncertainties, including potential
impacts resulting from geopolitical events;
- changes in the way customers, investors, ratings agencies,
regulators or legislators perceive our performance, financial
strength and future prospects;
- Radian Guaranty’s ability to remain eligible under the PMIERs
to insure loans purchased by the GSEs;
- our ability to maintain an adequate level of capital in our
insurance subsidiaries to satisfy current and future regulatory
requirements;
- changes in the charters or business practices of, or rules or
regulations imposed by or applicable to, the GSEs or loans
purchased by the GSEs, or changes in the requirements for Radian
Guaranty to remain an approved insurer to the GSEs, such as changes
in the PMIERs or the GSEs’ interpretation and application of the
PMIERs or other applicable requirements;
- the effects of the ERCF, which establishes a new regulatory
capital framework for the GSEs, and which, as finalized, increases
the capital requirements for the GSEs, and among other things,
could impact the GSEs’ operations and pricing as well as the size
of the insurable mortgage market;
- changes in the current housing finance system in the United
States, including the roles of the FHA, the GSEs and private
mortgage insurers in this system;
- our ability to successfully execute and implement our capital
plans, including our risk distribution strategy through the capital
markets and traditional reinsurance markets, and to maintain
sufficient holding company liquidity to meet our liquidity
needs;
- our ability to successfully execute and implement our business
plans and strategies, including plans and strategies that may
require GSE and/or regulatory approvals and licenses, that are
subject to complex compliance requirements that we may be unable to
satisfy, or that may expose us to new risks, including those that
could impact our capital and liquidity positions;
- risks related to the quality of third-party mortgage
underwriting and mortgage servicing;
- a decrease in the Persistency Rates of our mortgage insurance
on Monthly Premium Policies;
- competition in the private mortgage insurance industry
generally, and more specifically: price competition in our mortgage
insurance business, including the prevalence of formulaic, granular
risk-based pricing methodologies that are less transparent than
historical rate-card-based pricing practices; and competition from
the FHA and the VA as well as from other forms of credit
enhancement, such as any potential GSE-sponsored alternatives to
traditional mortgage insurance;
- U.S. political conditions and legislative and regulatory
activity (or inactivity), including adoption of (or failure to
adopt) new laws and regulations, or changes in existing laws and
regulations, or the way they are interpreted or applied;
- legal and regulatory claims, assertions, actions, reviews,
audits, inquiries and investigations that could result in adverse
judgments, settlements, fines, injunctions, restitutions or other
relief that could require significant expenditures, new or
increased reserves or have other effects on our business;
- the amount and timing of potential payments or adjustments
associated with federal or other tax examinations;
- the possibility that we may fail to estimate accurately,
especially in the event of an extended economic downturn or a
period of extreme market volatility and economic uncertainty, the
likelihood, magnitude and timing of losses in establishing loss
reserves for our mortgage insurance business or to accurately
calculate and/or project our Available Assets and Minimum Required
Assets under the PMIERs, which could be impacted by, among other
things, the size and mix of our IIF, future changes to the PMIERs,
the level of defaults in our portfolio, the reported status of
defaults in our portfolio (including whether they are subject to
mortgage forbearance, a repayment plan or a loan modification trial
period), the level of cash flow generated by our insurance
operations and our risk distribution strategies;
- volatility in our financial results caused by changes in the
fair value of our assets and liabilities, including with respect to
our use of derivatives and within our investment portfolio;
- changes in GAAP or SAP rules and guidance, or their
interpretation;
- risks associated with investments to grow our existing
businesses, or to pursue new lines of business or new products and
services, including our ability and related costs to develop,
launch and implement new and innovative technologies and digital
products and services, whether these products and services receive
broad customer acceptance or disrupt existing customer
relationships, and additional financial risks related to these
investments, including required changes in our investment,
financing and hedging strategies, risks associated with our
increased use of financial leverage, which could expose us to
liquidity risks resulting from changes in the fair values of
assets, and the risk that we may fail to achieve forecasted
results, which could result in lower or negative earnings
contribution and/or impairment charges associated with intangible
assets;
- the effectiveness and security of our information technology
systems and digital products and services, including the risk that
these systems, products or services fail to operate as expected or
planned or expose us to cybersecurity or third-party risks,
including due to malware, unauthorized access, cyberattack,
ransomware or other similar events;
- our ability to attract and retain key employees;
- the amount of dividends, if any, that our insurance
subsidiaries may distribute to us, which under applicable
regulatory requirements is based primarily on the financial
performance of our insurance subsidiaries, and therefore, may be
impacted by general economic, competitive and other factors, many
of which are beyond our control; and
- the ability of our operating subsidiaries to distribute amounts
to us under our internal tax- and expense-sharing arrangements,
which for our insurance subsidiaries are subject to regulatory
review and could be terminated at the discretion of such
regulators.
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, 2022, and to subsequent reports and
registration statements filed from time to time with the U.S.
Securities and Exchange Commission. We caution you not to place
undue reliance on these forward-looking statements, which are
current only as of the date on which we issued this press release.
We do not intend to, and we disclaim any duty or obligation to,
update or revise any forward-looking statements to reflect new
information or future events or for any other reason.
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version on businesswire.com: https://www.businesswire.com/news/home/20240202390040/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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