Radian Group Inc. · NYSE:RDN
Radian — Q1 2021 Earnings Presentation
27 slides from Radian's earnings presentation, 2021
Slide 1: Financial Results Q1 2021
Financial Results Q1 2021 NYSE: RDN www.radian.com
Slide 2: Safe Harbor Statements
Safe Harbor Statements All statements in this presentation that address events, developments or results that we ▪ changes in the charters or business practices of, or rules or regulations imposed by or applicable ▪ the amount and timing of potential payments or adjustments associated with federal or
Slide 3: About Us
About Us Radian maintains two strategic business units: At Radian, our culture is built around a set of Mortgage and Real Estate. core organizational values that we live by, and define who we are as an enterprise: Our Mortgage business derives its revenue from mortgage insurance and other mortgage a
Slide 4: Q1 2021 Summary Financial Metrics
Q1 2021 Summary Financial Metrics $125.6 million Compared to $148.0 million in Q4 2020 11.8% Compared to 14.1% in Q4 2020 and and $140.5 million in Q1 2020 14.2% in Q1 2020 Net Income Return on Average Equity $0.64 Compared to $0.76 in Q4 2020 and $0.70 12.4% Compared to 12.9% in Q4 2020 and in Q1 2
Slide 5: Q1 2021 Summary Financial Metrics
Q1 2021 Summary Financial Metrics $238.9 billion Compared to $246.1 billion as of December 31, 2020 and $241.6 billion $6.7 billion Compared to $6.8 billion as of December 31, 2020 and $5.6 billion as Primary Insurance In Force as of March 31, 2020 Investment Portfolio of March 31, 2020 $1.5 billion
Slide 6: GAAP Diluted Net Income Per Share
GAAP Diluted Net Income Per Share (1) Q4 2020 to Q1 2021 1) All diluted net income (loss) per share items are calculated based on 194.7 $0.80 $0.76 million weighted-average diluted shares outstanding for the quarter ended December 31, 2020, except for the $0.04 $0.64 March 31, 2021 diluted net incom
Slide 7: GAAP Book Value Per Share
GAAP Book Value Per Share (1) December 31, 2020 to March 31, 2021 1) All book value per share items are $24.00 calculated based on 191.6 million shares outstanding as of December 31, $22.36 2020, except for the March 31, 2021 $0.66 $0.02 $22.14 book value per share, which was $22.00 calculated based
Slide 8: Financial Highlights
Financial Highlights Radian Group Inc. Consolidated March 31, December 31, September 30, June 30, March 31, ($ in millions, except per-share amounts) 2021 2020 2020 2020 2020 Primary Insurance In Force $238,921 $246,144 $245,467 $241,306 $241,586 Total Assets $7,921 $7,948 $7,777 $7,569 $6,690 Total
Slide 9: Primary Insurance In Force
Primary Insurance In Force (1) Monthly and Single Mix ($ in billions) Insurance in Force as of: ò Total $250 Vintage written in: December 31, ò Monthly / Other March 31, 2021 March 31, 2020 ($ in billions) 2020 ò Single Lender-paid 2021 $20.0 8.4 % $— —% $— —% $200 ò Single Borrower-paid 2020 $92.3
Slide 10: In Force Portfolio Premium Yield
In Force Portfolio Premium Yield (in basis points) Q1 2021 Q4 2020 (1) Q3 2020 Q2 2020 Q1 2020 (2) In Force Portfolio Premium Yield 42.7 42.8 43.2 44.3 46.1 Single Premium Cancellations (3) 6.4 8.7 10.7 8.2 4.0 Total Direct Yield 49.1 51.5 53.9 52.5 50.1 Ceded Earned Premiums - QSR (4) (6.1) (7.8) (
Slide 11: First-lien Mortgage Insurance
First-lien Mortgage Insurance 2021 Performance by Vintage ($ in millions) Three Months Ended March 31, 2021 (1) Vintage Premiums Earned Incurred Losses (1) Net 2008 & Prior $16.5 $7.9 $8.6 2009 - 2015 $26.5 $3.8 $22.7 2016 $23.8 $2.5 $21.3 2017 $28.7 $4.3 $24.4 2018 $32.9 $5.5 $27.4 2019 $44.5 $9.9
Slide 12: Primary Mortgage Insurance
Primary Mortgage Insurance Cumulative Incurred Loss Ratio by Development Year (1) Vintage Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 (2) Mar-21 (2) 2011 1.7 % 4.4 % 5.5 % 5.6 % 5.0 % 4.9 % 5.0 % 4.9 % 5.0 % 5.2 % 5.2 % 2012 2.0 % 3.2 % 3.6 % 2.7 % 2.9 % 2.8 % 2.8 % 2.8 % 3
Slide 13: Components of Mortgage Provision for Losses
Components of Mortgage Provision for Losses Three Months Ended ($ in millions) Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 (1) Current period defaults $50.3 $63.9 $96.0 $309.2 $41.2 Prior period defaults (2) (4.5) (7.7) (8.2) (5.3) (5.9) Second-lien premium deficiency reserve &
Slide 14: Default Rollforward
Default Rollforward Primary Insurance in Force Q1 2021 Q4 2020 Q3 2020 Q2 2020 Q1 2020 (number of loans) Beginning Default Inventory 55,537 62,737 69,742 19,781 21,266 (1) Total New Defaults 11,851 14,552 20,508 63,005 9,960 Cures (17,137) (21,567) (27,283) (12,588) (10,966) Claims Paid (143) (176)
Slide 15: Primary Loans In Default
Primary Loans In Default March 31, 2021 Foreclosure Stage Total Cure % During Q1 Reserve for Losses % of Reserve ($ in thousands) Defaulted Loans Missed Payments # % # % $ % 3 Payments or Fewer 9,428 18.8 % 47 37.9 % 77,756 9.2 % 4 to 11 Payments 25,174 50.3 % 167 21.0 % 370,454 44.0 % 12 Payments o
Slide 16: COVID-19 Forbearance Program Summary
COVID-19 Forbearance Program Summary The FHFA, in coordination with the GSEs, have enacted a payment forbearance program with broad availability ▪ Borrowers experiencing a financial hardship relating to COVID-19 may request a forbearance to suspend or reduce their mortgage payments for up to 12 mont
Slide 17: Financial Strength and Risk Distribution Overview
Financial Strength and Risk Distribution Overview 17
Slide 18: Capital, Investments & Ratings
Capital, Investments & Ratings Total Capitalization as of March 31, 2021 Stockholders’ Equity Carrying Value Principal % of Total ($ in billions) Coupon Description ($’000) ($’000) Capitalization (1) $4.3 $4.2 4.500 % Senior Notes due October 2024 $445,787 $450,000 7.9 % $3.9 6.625 % Senior Notes du
Slide 19: Excess Available Resources to Support PMIERs
Excess Available Resources to Support PMIERs $3,000 $2,708 $2,674 $ in millions (1) March 31, 2021 December 31, 2020 March 31, 2020 Credit $2,500 $268 8% $268 8% $268 9% Facility Radian Group Available Liquidity, $989 29 % $1,068 32 % $613 21 % $2,010 Net (2) $2,000 Value ($ in millions) PMIERs $1,4
Slide 20: Eagle Re Mortgage Insurance-Linked Notes Reinsurance Key Metrics
Eagle Re Mortgage Insurance-Linked Notes Reinsurance Key Metrics (1) Eagle Re Eagle Re Eagle Re Eagle Re Eagle Re 1) Through March 31, 2021, Radian Guaranty has entered into four fully ($ in millions) 2021-1 (2) 2020-2 2020-1 2019-1 2018-1 (3) collateralized reinsurance arrangements with the Eagle R
Slide 21: Quota Share Reinsurance (QSR) Key Summary Metrics
Quota Share Reinsurance (QSR) Key Summary Metrics (1) ($ in millions) Q1 2021 Q4 2020 Q3 2020 Q2 2020 Q1 2020 2016 Single Premium QSR Agreement NIW Policy Dates 2012 – 2017 Quota Share — 20% - 65% (2) Ceded Risk in Force $2,683 $3,071 $3,676 $4,533 $5,080 (3) Ceding / Profit Commission — 25% / Up to
Slide 22: Consolidated Non-GAAP Financial Measures Reconciliations
Consolidated Non-GAAP Financial Measures Reconciliations 22
Slide 23: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures In addition to the traditional GAAP financial measures, we have presented Although adjusted pretax operating income (loss) excludes certain items that 3) Amortization and impairment of goodwill and other acquired intangible “adjusted pretax operating income (loss),
Slide 24: Reconciliation of Consolidated Pretax Income to Adjusted Pretax Operating Income
Reconciliation of Consolidated Pretax Income (Loss) to Adjusted Pretax Operating Income (Loss) 2021 2020 ($ in thousands) Q1 Q4 Q3 Q2 Q1 Consolidated pretax income (loss) $161,189 $179,167 $161,205 $(42,224) $181,293 Less reconciling income (expense) items: Net gains (losses) on investments and othe
Slide 25: Reconciliation of Diluted Net Income Per Share to Adjusted Diluted Net Operating Income
Reconciliation of Diluted Net Income (Loss) Per Share to Adjusted Diluted Net Operating Income (Loss) Per Share 2021 2020 Q1 Q4 Q3 Q2 Q1 Diluted net income (loss) per share $0.64 $0.76 $0.70 $(0.15) $0.70 Less per-share impact of reconciling income (expense) items: Net gains (losses) on investments
Slide 26: Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity
Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity 2021 2020 Q1 Q4 Q3 Q2 Q1 (1) Return on equity 11.8 % 14.1 % 13.3 % (3.1)% 14.2 % (2) Less impact of reconciling income (expense) items: Net gains (losses) on investments and other financial instruments (0.5) 1.7 1.7 4.8 (2
Slide 27: radian
radian ensuring the American dream