Radian Group Inc. · NYSE:RDN
Radian — Q1 2022 Earnings Presentation
32 slides from Radian's earnings presentation, 2022
Slide 1: Financial Results Q1 2022
Financial Results Q1 2022 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 ▪ the effects of the Enterprise Regulatory Capital Framework which, as finalized, increases the ▪ the possibility that we may fail to estimate accurately, especially in the event of an ext
Slide 3: About Us
About Us Radian Group Inc. is a diversified mortgage and Our culture is built around a set of core real estate business that maintains two reportable organizational values that we live by, and segments: mortgage and homegenius define who we are as an enterprise: Innovate for the Future Our mortgage
Slide 4: Q1 2022 Summary Financial Metrics
Q1 2022 Summary Financial Metrics $181.1 million Compared to $193.4 million in Q4 2021 and $125.6 million in Q1 2021 17.2% Compared to 18.2% in Q4 2021 and 11.8% in Q1 2021 Net Income Return on Average Equity $1.01 Compared to $1.07 in Q4 2021 and $0.64 19.9% Compared to 18.2% in Q4 2021 and Diluted
Slide 5: Q1 2022 Summary Financial Metrics
Q1 2022 Summary Financial Metrics $249.0 billion Compared to $246.0 billion as of December 31, 2021 and $238.9 billion $(83.8) million Compared to $(46.2) million in Q4 2021 and $46.1 million in Q1 2021. Primary Insurance In Force as of March 31, 2021, reflecting a year- Provision for Losses The dec
Slide 6: GAAP Diluted Net Income Per Share
GAAP Diluted Net Income Per Share (1) Q4 2021 to Q1 2022 1) All diluted net income (loss) per share $0.16 items are calculated based on 181.1 $1.25 million weighted-average diluted shares outstanding for the quarter ended $1.07 December 31, 2021, except for the $(0.14) $1.01 March 31, 2022 diluted n
Slide 7: GAAP Book Value Per Share
GAAP Book Value Per Share (1) December 31, 2021 to March 31, 2022 1) All book value per share items are $26.00 calculated based on 175.4 million $1.03 shares outstanding as of December 31, 2021, except for the March 31, 2022 book value per share, which was calculated based on 174.6 million $24.28 sh
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) 2022 2021 2021 2021 2021 Primary Insurance In Force $248,951 $245,972 $241,575 $237,302 $238,921 Total Assets $7,616 $7,839 $8,042 $8,009 $7,921 Total I
Slide 9: Mortgage
Mortgage radian
Slide 10: Primary Insurance In Force
Primary Insurance In Force Monthly and Single Mix ($ in billions) (1) Insurance in Force as of: ò Total $250 ò Monthly / Other Vintage written in: March 31, 2022 December 31, March 31, 2021 2021 ò Single Lender-paid ($ in billions) ò Single Borrower-paid $200 2022 $18.6 7.5 % $— —% $— —% 2021 $84.9
Slide 11: In Force Portfolio Premium Yield
In Force Portfolio Premium Yield (in basis points, except as otherwise indicated) Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 (1) In Force Portfolio Premium Yield 39.6 41.0 40.3 41.1 42.7 Single Premium Cancellations (2) 2.4 3.4 4.3 5.3 6.4 Total Direct Yield 42.0 44.4 44.6 46.4 49.1 Ceded Earned Premiu
Slide 12: First-lien Mortgage Insurance: 2022 Performance by Vintage
First-lien Mortgage Insurance 2022 Performance by Vintage ($ in millions) Three Months Ended March 31, 2022 (1) Vintage Premiums Earned Incurred Losses (1) Net 2008 & Prior $11.8 ($7.6) $19.4 2009 - 2016 $31.5 ($24.8) $56.3 2017 $18.0 ($15.0) $33.0 2018 $19.2 ($22.9) $42.1 2019 $24.9 ($22.8) $47.7 2
Slide 13: Primary Mortgage Insurance Cumulative Incurred Loss Ratio
Primary Mortgage Insurance Cumulative Incurred Loss Ratio by Development Year (1) Vintage Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 (2) Dec-21 (2) Mar-22 (2) 2013 2.5 % 4.0 % 3.4 % 3.7 % 3.5 % 3.4 % 3.3 % 4.2 % 4.1 % 3.8 % 2014 2.7 % 4.1 % 4.9 % 5.0 % 5.1 % 5.2 % 6.9 % 6.8 % 6.2 % 2015
Slide 14: Components of Mortgage Provision for Losses
Components of Mortgage Provision for Losses Three Months Ended ($ in millions) Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 (1) Current period defaults $40.7 $39.4 $33.3 $34.3 $50.3 Prior period defaults (2) (124.9) (85.9) (16.5) (31.0) (4.5) Second-lien premium deficiency reserv
Slide 15: Default Rollforward
Default Rollforward Primary Insurance in Force Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 (number of loans) Beginning Default Inventory 29,061 33,795 40,464 50,106 55,537 Total New Defaults (1) 9,393 9,342 8,132 8,145 11,851 Cures (12,789) (13,677) (14,475) (17,681) (17,137) Claims Paid (125) (375) (32
Slide 16: Primary Loans In Default
Primary Loans In Default March 31, 2022 Foreclosure Stage Total Cure % During Q1 Reserve for Losses % of Reserve ($ in millions) Defaulted Loans Missed Payments # % # % $ % 3 Payments or Fewer 7,042 27.6 % 35 41.5 % $65.3 9.4 % 4 to 11 Payments 7,599 29.8 % 116 27.7 % $138.1 20.0 % 12 Payments or Mo
Slide 17: COVID-19 Forbearance Program Summary
COVID-19 Forbearance Program Summary The FHFA, in coordination with the GSEs, have enacted a payment forbearance program with broad availability ▪ Borrowers experiencing a financial hardship relating to COVID-19 may request a forbearance to suspend or reduce their mortgage payments for up to 12 mont
Slide 18: Financial Strength and Risk Distribution Overview
Financial Strength and Risk Distribution Overview 18
Slide 19: Capital & Ratings
Capital & Ratings Total Capitalization as of March 31, 2022 ($ in millions) Stockholders’ Equity ($ in billions) % of Total Coupon Description Carrying Value Principal Capitalization (1) $4.2 $4.3 $4.1 4.500 % Senior Notes due October 2024 $447 $450 8.1 % 6.625 % Senior Notes due March 2025 $519 $52
Slide 20: Investment Portfolio
Investment Portfolio (1) Investment Portfolio Scheduled Maturity Investment Portfolio Diversification Investment Portfolio by Rating As of March 31, 2022 As of March 31, 2022 As of March 31, 2022 $ in millions Fair Value Percent $ in millions Fair Value Percent $ in millions Fair Value Percent Short
Slide 21: Statutory Capital - Radian Guaranty Inc.
Statutory Capital - Radian Guaranty Inc. As of: Scheduled March 31, December 31, September 30, June 30, March 31, Contingency ($ in millions) 2022 2021 2021 2021 2021 Reserve ($ in millions) Releases (3) Statutory Financial Information: 2023 $10 Risk-to-capital ratio 12.1:1 11.1:1 11.4:1 11.4:1 11.9
Slide 22: Eagle Re Mortgage Insurance-Linked Notes Reinsurance Key Metrics
Eagle Re Mortgage Insurance-Linked Notes Reinsurance Key Metrics (1) Eagle Re Eagle Re Eagle Re Eagle Re Eagle Re Eagle Re 1) Through March 31, 2022, Radian Guaranty has entered into six fully collateralized 2021-2 2021-1 2020-2 2020-1 2019-1 2018-1 reinsurance arrangements with the Eagle Re Issuers
Slide 23: Quota Share Reinsurance (QSR) Key Summary Metrics
Quota Share Reinsurance (QSR) Key Summary Metrics (1) ($ in millions) Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 2016 Single Premium QSR Agreement NIW Policy Dates 2012 – 2017 Quota Share — 20% - 65% (2) Ceded Risk in Force $1,698 $1,913 $2,115 $2,366 $2,683 (3) Ceding / Profit Commission — 25% / Up to
Slide 24: homegenius
24 homegenius radian
Slide 25: homegenius Highlights
homegenius Highlights ($ in millions) Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Revenue Title $15.4 $21.6 $25.2 $17.1 $15.3 Real estate (1) 16.1 20.9 17.7 13.8 8.0 Technology (2) 2.4 2.2 2.2 2.6 2.5 Total Revenue $33.9 $44.7 $45.1 $33.5 $25.8 Adjusted Gross Profit (3) $12.1 $19.7 $17.9 $11.7 $8.5 Adju
Slide 26: Consolidated Non-GAAP Financial Measures Reconciliations
Consolidated Non-GAAP Financial Measures Reconciliations 26
Slide 27: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures In addition to the traditional GAAP financial measures, we have presented “adjusted 1) Net gains (losses) on investments and other financial instruments. The recognition In addition to the above non-GAAP measures for the consolidated company, we also pretax operati
Slide 28: Reconciliation of Consolidated Pretax Income to Adjusted Pretax Operating Income
Reconciliation of Consolidated Pretax Income to Adjusted Pretax Operating Income 2022 2021 ($ in millions) Q1 Q4 Q3 Q2 Q1 Consolidated pretax income $234.1 $246.5 $161.6 $195.5 $161.2 Less reconciling income (expense) items: Net gains (losses) on investments and other financial instruments (1) (29.5
Slide 29: 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 2022 2021 Q1 Q4 Q3 Q2 Q1 Diluted net income per share $1.01 $1.07 $0.67 $0.80 $0.64 Less per-share impact of reconciling income (expense) items: Net gains (losses) on investments and other financial ins
Slide 30: Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity
Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity 2022 2021 Q1 Q4 Q3 Q2 Q1 Return on equity (1) 17.2 % 18.2 % 11.8 % 14.5 % 11.8 % Less impact of reconciling income (expense) items: (2) Net gains (losses) on investments and other financial instruments (2.8) 0.1 0.2 1.5 (0
Slide 31: Reconciliation of homegenius Adjusted Pretax Operating Income (Loss) to Adjusted Gross Profit
Reconciliation of homegenius Adjusted Pretax Operating Income (Loss) to homegenius Adjusted Gross Profit 2022 2021 ($ in millions) Q1 Q4 Q3 Q2 Q1 homegenius adjusted pretax operating income (loss) $(13.5) $(2.1) $(5.5) $(9.2) $(10.5) Less reconciling income (expense) items: Allocation of corporate o
Slide 32: radian
radian ensuring the American dream