Radian Group Inc. (NYSE:RDN) Q4 2021 Earnings Conference Call February 23, 2022 10:00 AM ET Company Participants John Damian - IR Rick Thornberry - CEO Frank Hall - CFO Derek Brummer - President, Radian Mortgage Conference Call Participants Mark DeVries - Barclays Mihir Bhatia - Bank of America Doug Harter - Credit Suisse Bose George - KBW Ryan Gilbert - BTIG Geoffrey Dunn - Dowling Cullen Johnson - B. Riley Securities Operator Good morning, and welcome to Radian's Fourth Quarter 2021 Earnings Call. My name ...

radian Financial Results Q4 2021 NYSE: RDN www.radian.com Safe Harbor Statements 2 All statements in this presentation 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 "antic ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________ FORM 10-Q _____________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-11356 _______________________________ Radian Group Inc. (Exact nam ...

radian Financial Results Q3 2021 NYSE: RDN www.radian.com Safe Harbor Statements 2 All statements in this presentation 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 "antic ...

Radian Group Inc. (NYSE:RDN) Q3 2021 Earnings Conference Call November 3, 2021 11:00 AM ET Company Participants John Damian - Investor Relations Rick Thornberry - Chief Executive Officer Frank Hall - Chief Financial Officer Derek Brummer - President, Radian Mortgage Conference Call Participants Doug Harter - Credit Suisse Cullen Johnson - B. Riley Securities Mark DeVries - Barclays Mihir Bhatia - Bank of America Bose George - KBW Ryan Gilbert - BTIG Operator Welcome to the Radian’s Third Quarter 2021 Earnin ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________ FORM 10-Q _____________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-11356 _______________________________ Radian Group Inc. (Exact name of ...

Financial Data and Key Metrics Changes - The company reported net income of $155 million or $0.80 per share for Q2 2021, with adjusted diluted net operating income per share at $0.75, compared to $0.68 in Q1 2021 and a loss of $0.36 in Q2 2020 [11][34] - Book value per share increased by 11% year-over-year [11][70] - The company returned $100 million in dividends to stockholders over the past year [11] Business Line Data and Key Metrics Changes - The mortgage segment wrote $21.7 billion of new mortgage insurance business in Q2 2021, with primary insurance in force at $237.3 billion [12][37] - Monthly premium insurance in force grew by 8% year-over-year, despite a modest decline in the total mortgage insurance portfolio [13][38] - Homegenius segment revenues reached $33.5 million, a 30% increase from Q1 2021 and a 48% increase year-over-year, driven by a 74% increase in title revenue [25][46] Market Data and Key Metrics Changes - The home purchase market remains strong, with 77% of new mortgage insurance business representing purchase volume in Q2 2021, up from 56% a year ago [19][36] - The Radian home price index indicated a 12% annualized increase in home prices due to strong demand and limited supply [20] - Total mortgage originations for 2021 are projected to be approximately $3.9 trillion, with the private mortgage insurance market expected to be around $550 billion to $600 billion [21][23] Company Strategy and Development Direction - The company aims to maximize economic value and future earnings from its mortgage insurance portfolio while navigating a competitive pricing environment [16][17] - The Homegenius segment is seen as a natural extension of the core mortgage insurance business, with significant potential for value creation [26] - The company is focused on disciplined growth, emphasizing high-quality new business and maintaining a strong capital position [70] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improving credit performance of the portfolio and the overall economy [10][70] - The company noted a 42% year-over-year decline in defaulted loans, with strong cure activity outpacing new defaults [14][15] - Management expects continued growth in the purchase market and a gradual return to normality in the regulatory environment [31][126] Other Important Information - The company maintained a strong capital position with $1.2 billion in total holding company liquidity and $1.9 billion in PMIERs excess available assets [27][61] - The company repurchased 3.9 million shares for $90 million in Q2 2021 and an additional 2.8 million shares for $61.4 million in July [27][66] - The effective tax rate for Q2 2021 was 20.6%, consistent with the statutory rate [60] Q&A Session Summary Question: Insights on sizing the buyback - Management indicated a prudent approach to capital management and returning capital to shareholders, with $39 million remaining in the current repurchase authorization [75][76] Question: Defaulted loans and forbearance - Management acknowledged that while aging defaulted loans may carry higher reserve assumptions, there is potential for higher cure likelihood as borrowers have more time to catch up on payments [81] Question: Homegenius segment growth - The growth in the Homegenius segment was attributed to adding new clients and deepening relationships with existing clients, leading to increased share of business [88] Question: Insurance in force and market share - Management noted a decline in insurance in force but highlighted growth in the monthly book of business, which is expected to drive future earnings [95][96] Question: Operating expenses expectations - Management provided guidance for normalized operating expenses to be around $70 million to $72 million per quarter [109] Question: Impact of eviction moratorium - Management indicated that the eviction moratorium would have minimal impact, with forbearance being the more significant factor [116]

radian Financial Results Q2 2021 NYSE: RDN www.radian.com Safe Harbor Statements 2 All statements in this presentation 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 "antic ...

[Glossary of Abbreviations and Acronyms](index=4&type=section&id=Glossary%20of%20Abbreviations%20and%20Acronyms) This section provides definitions for key abbreviations and acronyms used throughout the report [Cautionary Note Regarding Forward-Looking Statements—Safe Harbor Provisions](index=8&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements%E2%80%94Safe%20Harbor%20Provisions) This section outlines the inherent **risks and uncertainties** associated with forward-looking statements, emphasizing their speculative nature - Forward-looking statements are subject to **risks and uncertainties**, including the COVID-19 pandemic, economic and political conditions, regulatory changes (PMIERs, Enterprise Regulatory Capital Framework, QM Rule), capital plans, LIBOR discontinuance, servicer performance, persistency rates, competition, legal/regulatory claims, tax examinations, loss reserve estimation, financial volatility, GAAP/SAP changes, IT systems, and key employee retention[14](index=14&type=chunk)[15](index=15&type=chunk)[18](index=18&type=chunk) [PART I—FINANCIAL INFORMATION](index=10&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=10&type=section&id=Item%201%20Financial%20Statements%20%28Unaudited%29) This item includes the unaudited condensed consolidated financial statements, comprising balance sheets, statements of operations, comprehensive income (loss), changes in common stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, segment reporting, fair value measurements, investments, and other financial details [Condensed Consolidated Balance Sheets](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity at specific reporting dates Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | March 31, 2021 | December 31, 2020 | | :-------------------- | :------------- | :---------------- | | Total assets | $7,920,861 | $7,948,021 | | Total liabilities | $3,685,569 | $3,663,668 | | Total stockholders' equity | $4,235,292 | $4,284,353 | [Condensed Consolidated Statements of Operations](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net income over specific reporting periods Condensed Consolidated Statements of Operations (in thousands, except per-share) | Metric (in thousands, except per-share) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Total revenues | $328,813 | $329,081 | | Total expenses | $167,624 | $147,788 | | Pretax income | $161,189 | $181,293 | | Income tax provision | $35,581 | $40,832 | | Net income | $125,608 | $140,461 | | Basic EPS | $0.65 | $0.70 | | Diluted EPS | $0.64 | $0.70 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This section presents the company's net income and other comprehensive income (loss) components, leading to total comprehensive income (loss) Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net income | $125,608 | $140,461 | | Other comprehensive income (loss), net of tax | $(146,990) | $(80,687) | | Comprehensive income (loss) | $(21,382) | $59,774 | [Condensed Consolidated Statements of Changes in Common Stockholders' Equity](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Common%20Stockholders%27%20Equity) This section details changes in the company's common stockholders' equity, including net income, dividends, and other comprehensive income Condensed Consolidated Statements of Changes in Common Stockholders' Equity (in thousands) | Metric (in thousands) | March 31, 2021 | March 31, 2020 (for 3 months ended) | | :-------------------- | :------------- | :---------------------------------- | | Total Stockholders' Equity (End of Period) | $4,235,292 | $3,864,508 | | Net income | $125,608 | $140,461 | | Dividends and dividend equivalents declared | $(24,500) | $(25,397) | | Net unrealized gains (losses) on investments, net of tax | $(146,990) | $(80,687) | [Condensed Consolidated Statements of Cash Flows](index=14&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by (used in) operating activities | $153,029 | $155,800 | | Net cash provided by (used in) investing activities | $(81,938) | $31,993 | | Net cash provided by (used in) financing activities | $(41,474) | $(222,142) | | Increase (decrease) in cash and restricted cash | $29,617 | $(34,349) | [Notes to Unaudited Condensed Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the unaudited condensed consolidated financial statements [Note 1 - Description of Business](index=15&type=section&id=Note%201%20-%20Description%20of%20Business) This note describes Radian's diversified mortgage and real estate business segments and the impact of the COVID-19 pandemic - Radian is a diversified mortgage and real estate business with two segments: **Mortgage** (private mortgage insurance, credit risk management) and **Real Estate** (title, valuation, asset management)[27](index=27&type=chunk)[28](index=28&type=chunk)[30](index=30&type=chunk) - The COVID-19 pandemic has **negatively impacted** the business, leading to an **increase in provision for losses** and **Minimum Required Assets under PMIERs**, although **new defaults have subsequently trended down** from their peak in Q2 2020[33](index=33&type=chunk)[34](index=34&type=chunk) Key Mortgage Insurance Metrics | Metric | March 31, 2021 | December 31, 2020 | | :-------------------------------- | :------------- | :---------------- | | Total direct primary IIF | $238.9 billion | $246.1 billion | | Total direct primary RIF | $58.5 billion | $60.7 billion | | Additional RIF under credit risk transfer transactions | $428.8 million | $392.0 million | [Note 2 - Significant Accounting Policies](index=17&type=section&id=Note%202%20-%20Significant%20Accounting%20Policies) This note outlines the accounting principles, estimates, and recent accounting standard adoptions and evaluations impacting the financial statements - Financial statements are prepared under **GAAP**, with interim period condensations. Management uses **estimates and assumptions**, which may lead to **material variations** in actual results[36](index=36&type=chunk)[38](index=38&type=chunk)[41](index=41&type=chunk) - Adopted ASU 2019-12 (Income Taxes) and ASU 2020-08 (Receivables—Nonrefundable Fees and Other Costs) effective January 1, 2021, with **no material impact** on financial statements[43](index=43&type=chunk)[44](index=44&type=chunk) - **Evaluating the impact** of ASU 2018-12 (Financial Services—Insurance) and ASU 2020-04 (Reference Rate Reform), effective for fiscal years beginning after December 15, 2022, and optionally through December 31, 2022, respectively[45](index=45&type=chunk)[46](index=46&type=chunk) [Note 3 - Net Income Per Share](index=18&type=section&id=Note%203%20-%20Net%20Income%20Per%20Share) This note provides a detailed calculation of basic and diluted net income per share for the reported periods Net Income Per Share Calculation (in thousands, except per-share) | Metric (in thousands, except per-share) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income—basic and diluted | $125,608 | $140,461 | | Average common shares outstanding—basic | 193,439 | 200,161 | | Dilutive effect of share-based compensation arrangements | 1,764 | 1,658 | | Adjusted average common shares outstanding—diluted | 195,203 | 201,819 | | Basic EPS | $0.65 | $0.70 | | Diluted EPS | $0.64 | $0.70 | [Note 4 - Segment Reporting](index=19&type=section&id=Note%204%20-%20Segment%20Reporting) This note details the financial performance and resource allocation across Radian's Mortgage, Real Estate, and All Other operating segments - Radian has two reportable segments: **Mortgage** (mortgage insurance, risk services) and **Real Estate** (title, valuation, asset management, other real estate services), plus "All Other" activities[52](index=52&type=chunk) - **Adjusted pretax operating income (loss)** is the **primary measure** for evaluating segment financial performance and resource allocation[56](index=56&type=chunk) - Corporate operating expenses are **allocated** based on each segment's forecasted annual percentage of total revenue, while all corporate interest expense is allocated to the **Mortgage segment** due to its **capital-intensive nature**[54](index=54&type=chunk) Adjusted Pretax Operating Income (Loss) by Segment (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Mortgage | $174,287 | $205,667 | | Real Estate | $(10,453) | $(3,153) | | All Other | $3,482 | $2,085 | | Consolidated pretax income | $161,189 | $181,293 | Services Revenue by Type (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Title services | $8,057 | $6,565 | | Asset management services | $5,534 | $8,690 | | Valuation services | $4,886 | $7,233 | | Other real estate services | $14 | $653 | | Mortgage services | $4,351 | $3,133 | | All Other services | $53 | $5,653 | | Total services revenue | $22,895 | $31,927 | [Note 5 - Fair Value of Financial Instruments](index=21&type=section&id=Note%205%20-%20Fair%20Value%20of%20Financial%20Instruments) This note describes the company's fair value measurements for financial instruments, categorized by input levels, and related activity - The company measures financial assets and liabilities at **fair value**, categorized into **Level I** (quoted prices), **Level II** (observable inputs), and **Level III** (unobservable inputs)[66](index=66&type=chunk) - As of March 31, 2021, total assets at fair value were **$6.81 billion**, with the majority (**$6.11 billion**) in Level II, **$693.8 million** in Level I, and **$9.1 million** in Level III[67](index=67&type=chunk) - There were **no transfers** to or from Level III for the three months ended March 31, 2021, or the year ended December 31, 2020, and activity related to Level III assets and liabilities was **immaterial**[73](index=73&type=chunk) Fair Value of Certain Financial Instruments (in thousands) | Metric (in thousands) | March 31, 2021 Carrying Amount | March 31, 2021 Estimated Fair Value | December 31, 2020 Carrying Amount | December 31, 2020 Estimated Fair Value | | :-------------------- | :------------------------------- | :---------------------------------- | :-------------------------------- | :----------------------------------- | | Senior notes | $1,406,603 | $1,528,311 | $1,405,674 | $1,563,503 | | FHLB advances | $138,833 | $141,299 | $176,483 | $179,578 | [Note 6 - Investments](index=24&type=section&id=Note%206%20-%20Investments) This note provides detailed information on the company's investment portfolio, including fair values, credit loss allowances, and realized gains or losses Fixed-Maturities Available for Sale (in thousands) | Type (in thousands) | Amortized Cost | Allowance for Credit Losses | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | | :------------------ | :------------- | :-------------------------- | :--------------------- | :---------------------- | :--------- | | U.S. government and agency securities | $172,927 | $— | $323 | $(8,681) | $164,569 | | State and municipal obligations | $151,222 | $— | $11,326 | $(1,510) | $161,038 | | Corporate bonds and notes | $2,938,328 | $(638) | $145,509 | $(47,600) | $3,035,599 | | RMBS | $752,109 | $— | $25,667 | $(3,666) | $774,110 | | CMBS | $685,914 | $— | $27,763 | $(5,330) | $708,347 | | CLO | $561,013 | $— | $2,183 | $(608) | $562,588 | | Other ABS | $236,464 | $— | $2,334 | $(461) | $238,337 | | Foreign government and agency securities | $5,102 | $— | $291 | $— | $5,393 | | Total fixed-maturities available for sale | $5,404,119 | | | | $5,553,711 | Allowance for Credit Losses on Corporate Bonds and Notes (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2021 | | :-------------------- | :-------------------------------- | | Beginning balance | $948 | | Net increases (decreases) in allowance on previously impaired securities | $(310) | | Ending balance | $638 | Net Gains (Losses) on Investments (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Net realized gains (losses) on investments | $(182) | $11,639 | | Impairment losses due to intent to sell | $— | $(622) | | Net decrease (increase) in expected credit losses | $310 | $— | | Net unrealized gains (losses) on investments | $(2,519) | $(26,845) | | Total net gains (losses) on investments | $(2,391) | $(15,828) | - The contractual maturities of fixed-maturities available for sale show that **$133.4 million** is due in one year or less, **$1,204.0 million** after one year through five years, **$1,278.9 million** after five years through 10 years, and **$750.4 million** after 10 years, with asset-backed and mortgage-backed securities totaling **$2,283.4 million**[94](index=94&type=chunk) [Note 7 - Goodwill and Other Acquired Intangible Assets, Net](index=29&type=section&id=Note%207%20-%20Goodwill%20and%20Other%20Acquired%20Intangible%20Assets%2C%20Net) This note provides information on the company's goodwill and other acquired intangible assets, primarily within the Real Estate segment - All goodwill and other acquired intangible assets are attributed to the **Real Estate segment**[98](index=98&type=chunk) - Goodwill balance remained unchanged at **$9.8 million** during the three months ended March 31, 2021[98](index=98&type=chunk) Other Acquired Intangible Assets, Net (in thousands) | Type | March 31, 2021 Net Carrying Amount | December 31, 2020 Net Carrying Amount | | :------------------ | :------------------------------- | :------------------------------------ | | Client relationships | $11,226 | $11,991 | | Technology | $839 | $915 | | Licenses | $314 | $335 | | Total | $12,379 | $13,241 | [Note 8 - Reinsurance](index=30&type=section&id=Note%208%20-%20Reinsurance) This note explains the company's use of reinsurance to manage capital and risk in its mortgage and title insurance operations - Reinsurance is used to **manage capital and risk** in mortgage and title insurance, including the **Single Premium QSR Program** and **Excess-of-Loss Program**[100](index=100&type=chunk) - Reinsurance arrangements **reduce earned premiums** but also **reduce required capital** and **enhance return on capital**[100](index=100&type=chunk) Reinsurance Impact on Premiums and Losses (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net premiums written | $254,082 | $263,390 | | Net premiums earned | $271,872 | $277,415 | | Ceding commissions earned | $10,407 | $9,966 | | Ceded losses | $3,746 | $1,962 | - The Eagle Re Issuers, providing excess-of-loss reinsurance, are **not consolidated** as Radian does not control their economic performance or benefits/losses[114](index=114&type=chunk) - In April 2021, Radian Guaranty entered into a new reinsurance agreement with Eagle Re 2021-1 Ltd., providing **$497.7 million** of excess-of-loss coverage for **$11.1 billion** RIF, expected to reduce PMIERs Minimum Required Assets[120](index=120&type=chunk) [Note 9 - Other Assets](index=34&type=section&id=Note%209%20-%20Other%20Assets) This note provides a breakdown of the company's other assets, including prepaid reinsurance premiums and federal income taxes Other Assets (in thousands) | Metric | March 31, 2021 | December 31, 2020 | | :-------------------------- | :------------- | :---------------- | | Prepaid reinsurance premiums | $243,326 | $267,638 | | Prepaid federal income taxes | $210,889 | $210,889 | | Loaned securities | $134,304 | $57,499 | | Company-owned life insurance | $109,681 | $115,586 | | Right-of-use assets | $31,265 | $32,985 | | Other | $34,037 | $30,488 | | Total other assets | $763,502 | $715,085 | [Note 10 - Income Taxes](index=34&type=section&id=Note%2010%20-%20Income%20Taxes) This note details the company's income tax liabilities, deferred tax assets, and tax-related investments - Current income tax liability was **$17.3 million** at March 31, 2021, similar to **$17.5 million** at December 31, 2020[127](index=127&type=chunk) - A **valuation allowance of $82.4 million** was retained against deferred tax assets for state and local NOL carryforwards, as certain entities may not fully utilize them[128](index=128&type=chunk) - The company holds **$210.9 million** in non-interest bearing U.S. Mortgage Guaranty Tax and Loss Bonds, which enable a tax deduction for statutory contingency reserves[129](index=129&type=chunk) [Note 11 - Losses and LAE](index=35&type=section&id=Note%2011%20-%20Losses%20and%20LAE) This note provides details on the company's loss and loss adjustment expense reserves, including the impact of COVID-19 on mortgage insurance defaults and claims Reserve for Losses and Loss Adjustment Expenses (in thousands) | Metric | March 31, 2021 | December 31, 2020 | | :-------------------------- | :------------- | :---------------- | | Mortgage insurance loss reserves | $882,838 | $844,107 | | Title insurance loss reserves | $4,517 | $4,306 | | Total reserve for losses and LAE | $887,355 | $848,413 | - Mortgage insurance provision for losses increased by **$10.7 million** for the three months ended March 31, 2021, compared to the same period in 2020, primarily due to an increase in new primary default notices related to COVID-19 forbearance programs[138](index=138&type=chunk)[260](index=260&type=chunk) - The provision for losses benefited from **favorable reserve development** on prior period defaults due to **higher Cures** than previously estimated, but modest adjustments were made due to continued COVID-19 uncertainty[138](index=138&type=chunk)[261](index=261&type=chunk) - Total claims paid **decreased** for the three months ended March 31, 2021, compared to 2020, primarily due to COVID-19-related hardship forbearance plans and suspensions of foreclosure and evictions[140](index=140&type=chunk)[273](index=273&type=chunk) Mortgage Insurance Default Activity (Number of Defaults) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Beginning default inventory | 55,537 | 21,266 | | New defaults | 11,851 | 9,960 | | Cures | (17,137) | (10,966) | | Claims paid | (143) | (471) | | Ending default inventory | 50,106 | 19,781 | - The aggregate weighted average net Default to Claim Rate assumption for primary loans increased to approximately **28%** at March 31, 2021, from **24%** at December 31, 2020, due to a shift in the mix of defaults[269](index=269&type=chunk) [Note 12 - Borrowings and Financing Activities](index=36&type=section&id=Note%2012%20-%20Borrowings%20and%20Financing%20Activities) This note outlines the company's outstanding senior notes, FHLB advances, and revolving credit facility Borrowings (in thousands) | Metric | March 31, 2021 | December 31, 2020 | | :-------------------- | :------------- | :---------------- | | Senior Notes due 2024 | $445,787 | $445,512 | | Senior Notes due 2025 | $517,065 | $516,634 | | Senior Notes due 2027 | $443,751 | $443,528 | | Total senior notes | $1,406,603 | $1,405,674 | | FHLB advances | $138,833 | $176,483 | - FHLB advances outstanding were **$138.8 million** at March 31, 2021, with a weighted average interest rate of **1.23%**. These advances are collateralized by eligible assets[144](index=144&type=chunk)[145](index=145&type=chunk) - The **$267.5 million** unsecured revolving credit facility remained **undrawn** at March 31, 2021, and the company was **in compliance** with all covenants[146](index=146&type=chunk) [Note 13 - Commitments and Contingencies](index=37&type=section&id=Note%2013%20-%20Commitments%20and%20Contingencies) This note addresses the company's involvement in legal actions, regulatory matters, and other financial commitments - The company is **routinely involved** in legal actions, proceedings, reviews, audits, inquiries, and investigations, which could result in **adverse judgments or significant expenditures**[147](index=147&type=chunk)[149](index=149&type=chunk)[151](index=151&type=chunk) - The Nationstar Mortgage LLC litigation was **settled** effective March 1, 2021, with a cash settlement payment, and **did not have a material impact** on mortgage insurance reserves[148](index=148&type=chunk) - The operating lease liability was **$51.4 million** at March 31, 2021, classified in other liabilities[152](index=152&type=chunk) [Note 14 - Capital Stock](index=38&type=section&id=Note%2014%20-%20Capital%20Stock) This note details the company's share repurchase program and recent dividend authorization - The board authorized a share repurchase program totaling **$475 million**, with **$190.2 million** remaining as of March 31, 2021[155](index=155&type=chunk)[341](index=341&type=chunk) Share Repurchase Activity (in thousands, except per-share amounts) | ($ in thousands, except per-share amounts) | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | | :----------------------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------------- | :------------------------------------------------------------------------------------- | | March 2021 | 423,893 | $20.93 | 413,141 | $190,229 | - The company's board of directors authorized an **increase** in the quarterly dividend from **$0.125** to **$0.14** per share, effective with the Q2 2021 dividend[157](index=157&type=chunk)[194](index=194&type=chunk) [Note 15 - Accumulated Other Comprehensive Income (Loss)](index=39&type=section&id=Note%2015%20-%20Accumulated%20Other%20Comprehensive%20Income%20%28Loss%29) This note presents the components and changes in accumulated other comprehensive income (loss), net of tax, for the reporting periods Accumulated Other Comprehensive Income (Loss) (in thousands, Net of Tax) | Metric | Three Months Ended March 31, 2021 (Net of Tax) | Three Months Ended March 31, 2020 (Net of Tax) | | :-------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Balance at beginning of period | $263,725 | $110,488 | | Unrealized holding gains (losses) on investments arising during the period | $(147,369) | $(72,293) | | Reclassification adjustment for net gains (losses) on investments | $(624) | $8,394 | | Net decrease (increase) in expected credit losses | $245 | $— | | Other comprehensive income (loss) | $(146,990) | $(80,687) | | Balance at end of period | $116,735 | $29,801 | [Note 16 - Statutory Information](index=40&type=section&id=Note%2016%20-%20Statutory%20Information) This note provides statutory financial information for Radian's insurance subsidiaries, including RBC, PMIERs compliance, and dividend restrictions - Radian Guaranty was **in compliance** with all applicable Statutory RBC Requirements and MPP Requirements, with a Risk-to-capital ratio of **11.9:1** at March 31, 2021[165](index=165&type=chunk) - Radian Guaranty is an approved mortgage insurer under PMIERs and was **in compliance** with financial requirements, with Available Assets of approximately **$4.9 billion** and a PMIERs Cushion of **$1.5 billion** (**42%** over Minimum Required Assets) at March 31, 2021[167](index=167&type=chunk)[312](index=312&type=chunk) - Due to negative unassigned surplus and ongoing contingency reserve needs, Radian Guaranty is **not anticipated to pay ordinary dividends** to Radian Group for the foreseeable future **without prior approval** from the Pennsylvania Insurance Department[164](index=164&type=chunk)[321](index=321&type=chunk) Statutory Net Income (in millions) | Subsidiary | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Radian Guaranty | $166.8 | $195.5 | | Radian Reinsurance | $1.9 | $23.9 | | Other Mortgage Subsidiaries | $— | $0.7 | | Radian Title Insurance | $1.3 | $0.1 | Statutory Capital and Surplus (in millions) | Subsidiary | March 31, 2021 | December 31, 2020 | | :-------------------- | :------------- | :---------------- | | Radian Guaranty | $526.9 | $481.5 | | Radian Reinsurance | $361.0 | $360.7 | | Other Mortgage Subsidiaries | $41.5 | $41.3 | | Radian Title Insurance | $29.7 | $28.8 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed analysis of the company's financial condition and results of operations, covering segment performance, key factors affecting results, mortgage insurance portfolio trends, and liquidity and capital resources, with a focus on the impacts of the COVID-19 pandemic [Overview](index=41&type=section&id=Overview) This overview summarizes Radian's business, the impact of COVID-19, and key trends in new insurance written and persistency rates - Radian is a diversified mortgage and real estate business, with **Mortgage** and **Real Estate** segments[172](index=172&type=chunk) - The COVID-19 pandemic **negatively impacted** business, leading to **increased new defaults** and **Minimum Required Assets under PMIERs**, but new defaults have since **trended down**[174](index=174&type=chunk)[175](index=175&type=chunk)[179](index=179&type=chunk) - The company wrote **$20.2 billion** of NIW in Q1 2021, a **21% increase** YoY, and **$105.0 billion** in 2020, despite the pandemic[176](index=176&type=chunk) - Low interest rates have **increased refinance activity**, **reducing** the **Persistency Rate** and **IIF**, particularly for Single Premium Policies[176](index=176&type=chunk) - As of March 31, 2021, **60%** of primary RIF is subject to risk distribution, increasing to **78%** after the April 2021 Eagle Re 2021-1 Ltd. transaction, which helps **mitigate credit risk and financial volatility**[177](index=177&type=chunk) - The primary default rate **increased** from **1.8%** at March 31, 2020, to **4.9%** at March 31, 2021 (**down from a peak** of **6.5%** at June 30, 2020), driven by COVID-19 impacts[180](index=180&type=chunk) - The COVID-19 Amendment to PMIERs applied a Disaster Related Capital Charge, **reducing Minimum Required Assets** for COVID-19 Defaulted Loans, but this period ended March 31, 2021, with future application **limited to loans in forbearance plans**[181](index=181&type=chunk)[182](index=182&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) [Key Factors Affecting Our Results](index=44&type=section&id=Key%20Factors%20Affecting%20Our%20Results) This section confirms that there have been no material changes to the key factors affecting the company's results since the prior annual report - **No material changes** to key factors affecting results from the 2020 Form 10-K[195](index=195&type=chunk) [Mortgage Insurance Portfolio](index=45&type=section&id=Mortgage%20Insurance%20Portfolio) This section analyzes trends in the mortgage insurance portfolio, including new insurance written, insurance in force, and persistency rates Insurance In Force (IIF) (in billions) | Metric | March 31, 2021 | December 31, 2020 | March 31, 2020 | | :-------------------- | :------------- | :---------------- | :------------- | | Total IIF | $238.9 billion | $246.1 billion | $241.6 billion | - New Insurance Written (NIW) **increased by 20.7%** to **$20.2 billion** in Q1 2021 (vs. **$16.7 billion** in Q1 2020), driven by a **strong mortgage origination market** and **higher refinance activity**[200](index=200&type=chunk)[201](index=201&type=chunk) - IIF **decreased** to **$238.9 billion** at March 31, 2021, from **$246.1 billion** at December 31, 2020, primarily due to a **lower Persistency Rate** (**57.2%** for 12 months ended March 31, 2021 vs. **75.4%** in prior year) caused by **increased refinance activity**[200](index=200&type=chunk)[207](index=207&type=chunk)[214](index=214&type=chunk) New Insurance Written (NIW) Details (in millions, except percentages) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | NIW (in millions) | $20,161 | $16,706 | | Primary risk written (in millions) | $4,524 | $3,900 | | Average coverage percentage | 22.4 % | 23.3 % | | NIW by loan purpose: Purchases | 59.1 % | 66.2 % | | NIW by loan purpose: Refinances | 40.9 % | 33.8 % | | NIW by premium type: Direct Monthly and Other Recurring Premiums | 90.2 % | 81.1 % | | NIW by premium type: Direct single premiums | 9.8 % | 18.9 % | PMIERs Capital Relief from Reinsurance (in thousands, except percentages) | Program | March 31, 2021 | December 31, 2020 | March 31, 2020 | | :-------------------- | :------------- | :---------------- | :------------- | | Excess-of-Loss Program | $673,957 | $912,734 | $1,066,464 | | Single Premium QSR Program | $388,536 | $423,712 | $501,668 | | QSR Program | $19,378 | $22,712 | $31,638 | | Total PMIERs impact | $1,081,871 | $1,359,158 | $1,599,770 | | Percentage of gross Minimum Required Assets | 23.8 % | 28.8 % | 35.3 % | [Results of Operations—Consolidated](index=48&type=section&id=Results%20of%20Operations%E2%80%94Consolidated) This section provides a consolidated overview of the company's financial performance, highlighting key income statement metrics and changes in book value Consolidated Results of Operations (in millions, except per-share and percentages) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Pretax income | $161.2 | $181.3 | | Net income | $125.6 | $140.5 | | Diluted net income per share | $0.64 | $0.70 | | Book value per share at March 31, | $22.14 | $20.30 | | Net premiums earned | $271.9 | $277.4 | | Services revenue | $22.9 | $31.9 | | Net investment income | $38.3 | $40.9 | | Net gains (losses) on investments and other financial instruments | $(5.2) | $(22.0) | | Provision for losses | $46.1 | $36.0 | | Interest expense | $21.1 | $12.2 | | Income tax provision | $35.6 | $40.8 | | Adjusted pretax operating income | $167.3 | $204.6 | | Adjusted diluted net operating income per share | $0.68 | $0.80 | | Return on equity | 11.8 % | 14.2 % | | Adjusted net operating return on equity | 12.4 % | 16.3 % | - Net income **decreased** due to **increased provision for losses**, **decreased services revenue** (related to Clayton sale), **increased interest expense**, and **decreased net premiums earned**, partially offset by **decreased net losses on investments**[225](index=225&type=chunk) - Book value per share **decreased** from **$22.36** at December 31, 2020, to **$22.14** at March 31, 2021, primarily due to **$0.77** per share in unrealized losses on available-for-sale securities and **$0.13** per share from dividends, partially offset by net income[227](index=227&type=chunk) - The effective tax rate was **22.1%** for Q1 2021, compared to **22.5%** for Q1 2020, **higher than the statutory rate** of **21%** due to permanent book-to-tax adjustments related to share-based compensation[229](index=229&type=chunk) [Results of Operations—Mortgage](index=52&type=section&id=Results%20of%20Operations%E2%80%94Mortgage) This section analyzes the financial performance of the Mortgage segment, focusing on premiums, investment income, losses, and operating expenses Mortgage Segment Results of Operations (in millions) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Adjusted pretax operating income | $174.3 | $205.7 | | Net premiums written | $246.9 | $261.0 | | Net premiums earned | $264.7 | $275.0 | | Services revenue | $4.4 | $3.2 | | Net investment income | $34.0 | $36.2 | | Provision for losses | $45.9 | $35.2 | | Policy acquisition costs | $9.0 | $7.4 | | Cost of services | $3.2 | $1.8 | | Other operating expenses | $50.3 | $52.8 | | Interest expense | $21.1 | $12.2 | - Adjusted pretax operating income **decreased** primarily due to **increased provision for losses**, **decreased net premiums earned**, and **increased interest expense**[247](index=247&type=chunk) - Net premiums earned **decreased** due to **lower premium rates** on the IIF portfolio and a **lower proportion of Single Premium Policies**, partially offset by **increased Single Premium Policy cancellations** (net of reinsurance) from higher refinance activity[248](index=248&type=chunk)[252](index=252&type=chunk) - Net investment income **decreased** due to **lower investment yields**, despite higher average investment balances[257](index=257&type=chunk) - The loss ratio **increased** to **17.3%** for Q1 2021 from **12.8%** for Q1 2020[259](index=259&type=chunk) - Other operating expenses **decreased** due to **lower technology-related expenses** and **reduced allocated corporate operating expenses** (e.g., travel and entertainment)[277](index=277&type=chunk) [Results of Operations—Real Estate](index=58&type=section&id=Results%20of%20Operations%E2%80%94Real%20Estate) This section reviews the financial performance of the Real Estate segment, focusing on services revenue and operating expenses Real Estate Segment Results of Operations (in millions) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Adjusted pretax operating income (loss) | $(10.5) | $(3.2) | | Net premiums earned | $7.2 | $3.1 | | Services revenue | $18.6 | $23.3 | | Cost of services | $17.0 | $15.0 | | Other operating expenses | $18.9 | $13.9 | - Adjusted pretax operating loss **increased** primarily due to **declines in services revenue** (asset management and valuation, impacted by COVID-19) and **increased expenses** from strategic investments in title and digital real estate businesses[283](index=283&type=chunk) [Results of Operations—All Other](index=58&type=section&id=Results%20of%20Operations%E2%80%94All%20Other) This section examines the financial performance of the "All Other" category, including services revenue and operating expenses All Other Segment Results of Operations (in millions) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Adjusted pretax operating income (loss) | $3.5 | $2.1 | | Services revenue | $0.1 | $5.7 | | Net investment income | $4.2 | $4.6 | | Cost of services | $— | $5.5 | | Other operating expenses | $1.0 | $2.1 | - The **increase** in adjusted pretax operating income was driven by a **decrease in cost of services and other operating expenses**, partially offset by **lower services revenue** due to the sale of Clayton in Q1 2020[284](index=284&type=chunk)[287](index=287&type=chunk) [Liquidity and Capital Resources](index=59&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash flows, holding company liquidity, and capital adequacy of its mortgage insurance subsidiaries Consolidated Cash Flows (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by (used in) operating activities | $153,029 | $155,800 | | Net cash provided by (used in) investing activities | $(81,938) | $31,993 | | Net cash provided by (used in) financing activities | $(41,474) | $(222,142) | - Holding company (Radian Group) had **$1.0 billion** in **unrestricted cash and liquid investments** and **total liquidity of $1.3 billion** (including a **$267.5 million** undrawn revolving credit facility) as of March 31, 2021[293](index=293&type=chunk)[295](index=295&type=chunk) - Mortgage insurance subsidiaries **maintained claims paying resources of $5.4 billion** on a statutory basis and a **PMIERs Cushion of $1.5 billion** (**42%** over Minimum Required Assets) at March 31, 2021[309](index=309&type=chunk)[312](index=312&type=chunk) - The PMIERs Cushion includes a **$580 million** benefit from the Disaster Related Capital Charge for pandemic-related defaults, which is **expected to diminish over time**[317](index=317&type=chunk) - After considering the April 2021 reinsurance agreement with Eagle Re 2021-1 Ltd., Radian Guaranty's PMIERs Cushion would **increase** from **42%** to **64%**[319](index=319&type=chunk) - Radian Guaranty's Risk-to-capital was **11.9 to 1** as of March 31, 2021[310](index=310&type=chunk) - Radian Group's board authorized an **increase** to the quarterly dividend from **$0.125** to **$0.14** per share, effective Q2 2021[300](index=300&type=chunk) - Stockholders' equity **decreased** by **$49.1 million** from December 31, 2020, to March 31, 2021, primarily due to **$147.0 million** in unrealized investment losses and **$24.5 million** in dividends, partially offset by **$125.6 million** in net income[305](index=305&type=chunk) Capitalization (in thousands, except percentages) | Metric | March 31, 2021 | December 31, 2020 | | :-------------------- | :------------- | :---------------- | | Total Debt | $1,406,603 | $1,405,674 | | Stockholders' equity | $4,235,292 | $4,284,353 | | Total capitalization | $5,641,895 | $5,690,027 | | Debt-to-capital ratio | 24.9 % | 24.7 % | [Critical Accounting Estimates](index=64&type=section&id=Critical%20Accounting%20Estimates) This section states that there have been no significant changes to the company's critical accounting estimates since the previous annual report - **No significant changes** in critical accounting estimates from the 2020 Form 10-K[330](index=330&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=64&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk exposures, primarily related to interest-rate risk and credit-spread risk in its investment portfolio, have not materially changed from those identified in the 2020 Form 10-K - Market risk exposures, mainly interest-rate and credit-spread risk in the investment portfolio, have **not materially changed** from the 2020 Form 10-K[331](index=331&type=chunk)[332](index=332&type=chunk) [Item 4. Controls and Procedures](index=64&type=section&id=Item%204%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2021. There were no material changes in internal control over financial reporting during the period - Disclosure controls and procedures were **effective** as of March 31, 2021, providing **reasonable assurance** that required information is recorded, processed, summarized, and reported timely[334](index=334&type=chunk) - **No material changes** in internal control over financial reporting occurred during the three-month period ended March 31, 2021[335](index=335&type=chunk) [PART II—OTHER INFORMATION](index=65&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This part includes additional information not covered in the financial statements, such as legal proceedings, risk factors, and equity security sales [Item 1. Legal Proceedings](index=65&type=section&id=Item%201%20Legal%20Proceedings) The company is routinely involved in legal actions and regulatory matters, as detailed in Note 13 of the financial statements - The company is **routinely involved** in legal actions and regulatory proceedings[336](index=336&type=chunk) [Item 1A. Risk Factors](index=65&type=section&id=Item%201A%20Risk%20Factors) There have been no material changes to the company's risk factors from those previously disclosed in its 2020 Form 10-K - **No material changes** to risk factors from the 2020 Form 10-K[337](index=337&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=65&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity securities were sold in Q1 2021. The company repurchased 413,141 shares of common stock for $8.6 million under its authorized share repurchase program, with $190.2 million remaining - **No unregistered equity securities were sold** during Q1 2021[338](index=338&type=chunk) Equity Security Repurchases (in thousands, except per-share amounts) | ($ in thousands, except per-share amounts) | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | | :----------------------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------------- | :------------------------------------------------------------------------------------- | | March 2021 | 423,893 | $20.93 | 413,141 | $190,229 | [Item 6. Exhibits](index=66&type=section&id=Item%206%20Exhibits) This section lists the exhibits filed with the 10-Q report, including amendments to employment agreements, equity compensation plans, and XBRL-related documents - Exhibits include Amendment 2021-1 to Employment Agreement for Richard G. Thornberry, Radian Group Inc. Equity Compensation Plan, Rule 13a-14(a) Certifications, Section 1350 Certifications, and Inline XBRL documents[343](index=343&type=chunk) [Signatures](index=67&type=section&id=Signatures) This section provides the official signatures of the company's principal financial and accounting officers, certifying the report's accuracy - The report was signed by **J. Franklin Hall (SVP, CFO)** and **Robert J. Quigley (EVP, Controller and Chief Accounting Officer)** on May 7, 2021[348](index=348&type=chunk)

Radian Group Inc. (NYSE:RDN) Q1 2021 Earnings Conference Call May 5, 2021 10:00 AM ET Company Participants John Damian - Senior Vice President of Investor Relations Rick Thornberry - Chief Executive Officer Frank Hall - Senior Executive Vice President and Chief Financial Officer Derek Brummer - President of Radian Mortgage Conference Call Participants Mark DeVries - Barclays Doug Harter - Credit Suisse Mihir Bhatia - Bank of America Randy Binner - B. Riley Bose George - KBW Ryan Gilbert - BTIG Phil Stefano ...