Radian(US:RDN)2025-05-02 20:15PART I—FINANCIAL INFORMATION Presents Radian's unaudited condensed consolidated financial statements, management's discussion and analysis, market risk, and control disclosures for Q1 2025 Item 1. Financial Statements (Unaudited) Presents Radian's unaudited condensed consolidated financial statements for Q1 2025, including balance sheets, income statements, cash flows, and detailed notes Condensed Consolidated Financial Statements Radian reported Q1 2025 net income of $144.6 million, or $0.98 per diluted share, with total assets increasing to $8.77 billion Key Financial Highlights (Q1 2025 vs Q1 2024) | Financial Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $318.1 million | $319.4 million | | Net Income | $144.6 million | $152.4 million | | Diluted Net Income Per Share | $0.98 | $0.98 | Condensed Consolidated Balance Sheet Summary | Balance Sheet Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Investments | $6.11 billion | $6.35 billion | | Total Assets | $8.77 billion | $8.66 billion | | Total Liabilities | $4.18 billion | $4.04 billion | | Total Stockholders' Equity | $4.59 billion | $4.62 billion | Note 1: Description of Business Radian's primary business is its Mortgage Insurance segment, providing credit-related insurance, with $274.2 billion in force as of March 31, 2025 - The company's primary business is its Mortgage Insurance segment, providing credit-related insurance coverage through its subsidiary, Radian Guaranty2930 - Total direct primary mortgage insurance in force (IIF) was $274.2 billion and risk in force (RIF) was $72.0 billion as of March 31, 202532 Note 4: Segment Reporting The Mortgage Insurance segment's adjusted pretax operating income decreased in Q1 2025 due to a higher provision for losses, resulting in a 6.6% loss ratio Mortgage Insurance Segment Performance (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Adjusted Pretax Operating Income | $194.3 million | $209.9 million | | Total Revenues | $284.3 million | $285.0 million | | Provision for Losses | $15.3 million | ($6.9 million) | | Loss Ratio | 6.6% | (2.9)% | | Expense Ratio | 24.8% | 25.0% | Note 7: Residential Mortgage Loans Radian's mortgage conduit subsidiary held $279 million in residential mortgage loans for sale and closed its third private label securitization in Q1 2025 - The carrying value of residential mortgage loans held for sale was $279 million at March 31, 2025, down from $520 million at December 31, 202493 - In Q1 2025, the company closed its third private label securitization transaction (RMCT 2025-J1), issuing $368 million of mortgage pass-through certificates, with the special purpose vehicles for these securitizations consolidated as VIEs104105 - Total income from consolidated VIEs was $428,000 for Q1 2025114 Note 8: Reinsurance Radian utilizes Quota Share and Excess-of-Loss reinsurance programs to manage risk, with new QSR agreements for policies written from July 2025 through June 2028 - In April 2025, Radian Guaranty agreed to terms on three new QSR agreements to cede a percentage of NIW over three sequential one-year periods starting July 1, 2025129 RIF Ceded under QSR Program (as of March 31, 2025) | Agreement | RIF Ceded (in millions) | | :--- | :--- | | 2024 QSR | $2,181 | | 2023 QSR | $2,453 | | 2022 QSR | $3,954 | | Single Premium QSR (Combined) | $2,986 | Remaining Coverage under XOL Program (as of March 31, 2025) | Agreement | Remaining Coverage (in millions) | | :--- | :--- | | Eagle Re 2023-1 Ltd. | $312 | | Eagle Re 2021-2 Ltd. | $224 | | Eagle Re 2021-1 Ltd. | $136 | | 2023 XOL Agreement | $150 | Note 11: Losses and LAE The provision for losses increased to $15.2 million in Q1 2025 due to a 6% rise in new primary defaults and less favorable reserve development Provision for Losses (Q1 2025 vs Q1 2024) | Component | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Mortgage Insurance | $15.3 million | ($6.9 million) | | Title Insurance | ($0.2 million) | ($0.1 million) | | Total Provision for Losses | $15.2 million | ($7.0 million) | - New primary default notices increased by 6% to 12,505 in Q1 2025 from 11,756 in Q1 2024, attributed to natural portfolio seasoning163 - Favorable reserve development on prior year defaults continued to positively impact the provision in Q1 2025, but to a lesser extent than in Q1 2024, primarily due to favorable cure trends165 Note 12: Borrowings and Financing Activities Radian's total borrowings were $1.34 billion as of March 31, 2025, with interest expense decreasing due to a lower senior notes balance Borrowings as of March 31, 2025 | Debt Type | Carrying Value (in thousands) | | :--- | :--- | | Senior Notes due 2027 | $447,734 | | Senior Notes due 2029 | $618,231 | | Total Senior Notes | $1,065,965 | | Mortgage loan financing facilities | $240,545 | | FHLB advances | $32,122 | | Total Secured Borrowings | $272,667 | Note 14: Capital Stock In Q1 2025, Radian repurchased 6.5 million shares for $209 million and increased its quarterly dividend to $0.255 per share - The company purchased 6.5 million shares at an average price of $32.07 per share during Q1 2025187 - The quarterly dividend was increased by $0.01 to $0.255 per share, effective with the Q1 2025 payment189 - At the end of Q1 2025, $336 million remained under the $900 million share repurchase authorization187 Note 16: Statutory Information Radian's insurance subsidiaries maintained compliance with capital requirements, with Radian Guaranty's PMIERs cushion at $2.1 billion and a 10.2:1 risk-to-capital ratio - Radian Guaranty's risk-to-capital ratio was 10.2:1 as of March 31, 2025, well below the typical 25:1 limit197 - The company was in compliance with PMIERs, with Available Assets of $6.0 billion exceeding Minimum Required Assets by $2.1 billion (a 53% cushion) as of March 31, 2025198336 - Radian Guaranty received approval for and paid a $200 million return of capital distribution to Radian Group in Q1 2025201 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's analysis of Radian's financial condition and operating results, including mortgage insurance portfolio metrics, consolidated performance, liquidity, and capital resources Mortgage Insurance Portfolio Metrics New insurance written decreased by 18% in Q1 2025, while primary insurance in force remained stable, and reinsurance programs provided a significant PMIERs benefit New Insurance Written (NIW) | Period | NIW (in billions) | YoY Change | | :--- | :--- | :--- | | Q1 2025 | $9.5 | -18% | | Q1 2024 | $11.5 | N/A | Insurance in Force (IIF) and Persistency | Metric | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Primary IIF | $274.2 billion | $271.0 billion | | 12-Month Persistency Rate | 83.7% | 84.3% | - Reinsurance programs reduced PMIERs Minimum Required Assets by $1.43 billion, or 26.6% of the gross requirement, as of March 31, 2025236 Results of Operations—Consolidated Consolidated net income decreased to $144.6 million in Q1 2025 due to an unfavorable swing in the provision for losses, though diluted EPS remained flat Consolidated Results Summary (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $144.6 million | $152.4 million | | Diluted EPS | $0.98 | $0.98 | | Adjusted Pretax Operating Income | $190.8 million | $202.8 million | | Adjusted Diluted Net Operating EPS | $0.99 | $1.00 | Results of Operations—Mortgage Insurance The Mortgage Insurance segment's adjusted pretax operating income declined due to an increased provision for losses, resulting in a 6.6% loss ratio - Net premiums earned were flat YoY at approximately $234 million, as growth in the in-force portfolio was offset by higher ceded premiums267268 Mortgage Insurance Provision for Losses | Component | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Current Period Defaults | $53.7 million | $53.7 million | | Prior Period Defaults (Favorable Development) | ($38.4 million) | ($60.6 million) | | Total Provision for Losses | $15.3 million | ($6.9 million) | - The expense ratio was stable at 24.8% in Q1 2025 compared to 25.0% in Q1 2024298 Liquidity and Capital Resources Radian Group maintained strong liquidity with $1.1 billion in available funds, while Radian Guaranty's PMIERs cushion remained robust at $2.1 billion - Radian Group (holding company) had available liquidity of $1.1 billion as of March 31, 2025, which includes $834 million in cash and liquid investments and a $275 million undrawn revolving credit facility310 - Key uses of cash in Q1 2025 included $207 million for share repurchases and $38 million for dividends321315 Capital Adequacy (Radian Guaranty) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | PMIERs Cushion | $2.1 billion (53%) | $2.2 billion (56%) | | Risk-to-Capital Ratio | 10.2:1 | 10.2:1 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposures, primarily related to interest rate and credit risk, have not materially changed from prior disclosures - Market risk exposures at March 31, 2025, have not materially changed from those identified in the 2024 Form 10-K346 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective349 - No material changes to internal control over financial reporting occurred in Q1 2025350 PART II—OTHER INFORMATION Covers legal proceedings, risk factors, equity sales, other information, and exhibits for the quarter Item 1. Legal Proceedings The company is routinely involved in legal and regulatory matters, but management expects no material adverse effect on financial condition or operations - The company is involved in routine legal actions and regulatory inquiries, but management does not expect them to have a material adverse effect352180 Item 1A. Risk Factors No material changes to risk factors were reported, though recent executive actions and trade policies could exacerbate existing risks - No material changes to risk factors were reported, but the company highlighted that recent executive orders and trade policies could exacerbate existing risks353 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Radian repurchased 6.5 million shares for $209 million in Q1 2025, with $336 million remaining under the current share repurchase authorization Share Repurchase Activity (Q1 2025) | Month | Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | January 2025 | 2,577,018 | $31.75 | | February 2025 | 2,449,779 | $32.77 | | March 2025 | 1,432,353 | $31.46 | | Total | 6,459,150 | N/A | Item 5. Other Information Two company insiders adopted Rule 10b5-1 trading plans to sell common stock during the quarter - Director Lisa W. Hess and General Counsel Edward J. Hoffman each adopted a Rule 10b5-1 trading plan during Q1 2025361 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data files