Radian Group Inc. · NYSE:RDN

Radian — Q1 2019 Earnings Presentation

26 slides from Radian's earnings presentation, 2019

  1. Slide 1: Financial Results Q1 2019

    Financial Results Q1 2019 NYSE: RDN www.radian.biz

  2. Slide 2: Safe Harbor Statements

    Safe Harbor Statements All statements in this presentation that address events, developments or  our ability to successfully execute and implement our capital plans, including our  legal and regulatory claims, assertions, actions, reviews, audits, inquiries and results that we expect or anticipate

  3. Slide 3: About Us

    About Us NYSE: RDN Radian Mortgage Insurance promotes responsible and sustainable homeownership and allows lenders to offer Mortgage affordable mortgage financing options to prospective homeowners. Our products also facilitate the sale of low-down payment mortgages in the secondary market and enable

  4. Slide 4: Q1 Highlights

    Q1 Highlights $171.0 million Compared to $114.5 million in Q1 19.0% Compared to 15.1% return on equity Net Income 2018 Return on Equity in Q1 2018 $0.78 50% increase compared to diluted net 17.7% Compared to 17.1% adjusted net Diluted Net Income Per Share income per share of $0.52 in Q1 2018 Adjuste

  5. Slide 5: Q1 Highlights

    Q1 Highlights 10% increase $223.7 billion as of March 31, 2019, compared to $204.0 billion as of $20.8 million 44% improvement compared to $37.4 million in Q1 2018 In Primary Insurance In Force March 31, 2018 MI Provision for Losses 8.0% loss ratio in Q1 2019, compared $10.9 billion of new insurance

  6. Slide 6: GAAP Diluted Net Income Per Share

    GAAP Diluted Net Income Per Share Q4 2018 to Q1 2019 $0.80 $0.02 $0.01 $0.01 $0.78 $0.12 $0.02 $0.64 $0.60 $0.40 $0.20 $- Changes in gains Provision for losses Net premiums earned Services gross profit Other Q4 2018 (losses) on Q1 2019 investments 6

  7. Slide 7: GAAP Book Value Per Share

    GAAP Book Value Per Share (1) Q4 2018 to Q1 2019 1) All book value per share items are $18 calculated based on 213.5 million $0.37 $17.49 shares outstanding as of December 31, $0.80 $0.02 2018 except for the March 31, 2019 $17 book value per share, which was $16.34 calculated based on 212.1 million

  8. Slide 8: Financial Highlights

    Financial Highlights Radian Group Inc. Consolidated March 31, 2019 December 31, 2018 March 31, 2018 ($ in millions, except per-share amounts) Primary Insurance In Force $223,734 $221,443 $204,025 Total Assets $6,600 $6,315 $6,010 Total Investments $5,476 $5,153 $4,668 Loss Reserves $389 $401 $489 De

  9. Slide 9: MI Portfolio Composition

    MI Portfolio Composition 2006-2007 Other Vintages 2006-2007 (HARP) (HARP) (Non-HARP) 2.1% 1.8% 2.9% Other Vintages (Non-HARP) 2.8% As of March 31, 2019, 94% of mortgage insurance primary risk in force consists $57.4 Billion of new business written after 2008, Risk in Force including HARP volume 2009

  10. Slide 10: Premium Yields

    Premium Yields (in basis points) Mortgage Insurance Premium Yield Trends Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 In Force Portfolio Yield (1) 48.6 49.0 48.6 48.4 48.7 Single Premium Cancellations (2) 1.8 1.7 2.1 2.8 2.4 Total Direct Yield 50.4 50.7 50.7 51.2 51.1 Ceded Earned Premiums, Incl. Profit

  11. Slide 11: First-lien Mortgage Insurance

    First-lien Mortgage Insurance 2019 Performance by Vintage Three Months Ended March 31, 2019 ($ in millions) Vintage Premiums Earned (1) Incurred Losses (1) Net 2008 & Prior $24.8 $8.4 $16.4 2009 $1.0 $0.1 $0.9 2010 $0.5 $0.1 $0.4 2011 $1.3 $0.3 $1.0 2012 $6.0 $0.0 $6.0 2013 $13.6 $0.6 $13.0 2014 $16

  12. Slide 12: Primary Insurance in Force

    Primary Insurance In Force (1) Primary Insurance in Force ($ in billions) $250 1) Policy years represent the original policy years, and have not been adjusted to reflect $223.7 subsequent HARP refinancing activity. $204.0 4.8% Written in 2019 2) If adjusted to reflect subsequent HARP $200 5.7% refin

  13. Slide 13: Primary Mortgage Insurance

    Primary Mortgage Insurance Radian’s stochastic modeling indicates an approximate 20% through-the- Cumulative Incurred Loss Ratio by Development Year (1) cycle loss ratio on newly originated MI business. Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Mar- Vintage 09 10 11 12 13 14 15 16 17 18 19 C

  14. Slide 14: Components of MI Provision for Losses

    Components of MI Provision for Losses ($ in millions) Three Months Ended Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Current period defaults (1) $38.9 $41.4 $40.4 $37.2 $36.5 Prior period defaults (2) (18.2) (13.8) (20.4) (18.1) 0.4 Second-lien premium deficiency reserve & other

  15. Slide 15: Primary Loans In Default

    Primary Loans In Default March 31, 2019 Foreclosure Stage Reserve for Total Cure % During Q1 % Of Reserve ($ in thousands) Defaulted Loans Losses Missed Payments # % # % $ % 3 Payments or Fewer 9,248 46.0% 122 39.0% $82,416 23.4% 4 to 11 Payments 6,051 30.1 444 23.0 90,616 25.7 12 Payments or More (

  16. Slide 16: Default Rollforward

    Default Rollforward Primary Insurance in Force Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 Beginning Default Inventory 21,093 20,770 22,088 24,597 27,922 Pre-2009 New Defaults 4,557 4,999 4,922 4,695 5,013 2009+ New Defaults 5,659 5,307 4,713 3,644 4,076 Total New Defaults (1) (2) 10,216 10,306 9,635 8,

  17. Slide 17: Capital and Debt Structure

    Capital and Debt Structure 17

  18. Slide 18: Capital Structure

    Capital Structure Total Capitalization as of March 31, 2019 Share Repurchase Program: Carrying Value Principal % of Total On March 20, 2019, the Company’s board of directors Coupon Description approved a $150 million increase in authorization for ($’000) ($’000) Capitalization (1) the Company’s exis

  19. Slide 19: Capital Structure

    Capital Structure Debt Maturity Profile: Principal by Year of Maturity Stockholders’ Equity Senior Notes As of March 31, 2019 ($ in billions) ($ in millions) $3.7 $3.5 $500 $3.1 $400 $300 Debt to Capital Ratio 25.2% $200 22.8% $100 21.7% $0 2018 2019 2020 2021 2022 2023 2024 March 31, 2018 December

  20. Slide 20: PMIERs Excess Available Resources

    PMIERs Excess Available Resources 1) Represents Radian Group’s Liquidity, net of the $1,600 $1,514 / 51% $35 million minimum liquidity requirement under $1,439 / 48% the unsecured revolving credit facility. Radian $1,400 Group Liquidity as of March 31, 2019 and $268 / 9% December 31, 2018 includes $

  21. Slide 21: Consolidated Non-GAAP Financial Measures Reconciliations

    Consolidated Non-GAAP Financial Measures Reconciliations 21

  22. Slide 22: Use of Non-GAAP Financial Measures

    Use of Non-GAAP Financial Measures In addition to the traditional GAAP financial measures, we have presented “adjusted in the past and are expected to occur in the future, the excluded items represent they are excluded from our calculation of adjusted pretax operating income pretax operating income”

  23. Slide 23: Reconciliation of Consolidated Pretax Income to Adjusted Pretax Operating Income

    Reconciliation of Consolidated Pretax Income to Adjusted Pretax Operating Income 1) Please see slide 22 for the 2019 2018 definition of this line item and additional information ($ in thousands) Q1 Q4 Q3 Q2 Q1 regarding our use of non- GAAP financial measures. Consolidated pretax income $216,136 $17

  24. Slide 24: Reconciliation of Diluted Net Income Per Share to Adjusted Diluted Net Operating Income Per Share

    Reconciliation of Diluted Net Income Per Share to Adjusted Diluted Net Operating Income Per Share 1) Calculated using the 2019 2018 company's federal statutory Q1 Q4 Q3 Q2 Q1 tax rate of 21%. Any permanent tax adjustments Diluted net income per share $0.78 $0.64 $0.66 $0.96 $0.52 and state income ta

  25. Slide 25: Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity

    Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity 1) Calculated by dividing 2019 2018 annualized net income by Q1 Q4 Q3 Q2 Q1 average stockholders’ equity, based on the average of the Return on equity (1) 19.0% 16.4% 17.4% 26.7% 15.1% beginning and ending balances for eac

  26. Slide 26: Radian

    radian ensuring the American dream

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