Radian Group Inc. · NYSE:RDN
Radian — Q2 2024 Earnings Presentation
29 slides from Radian's earnings presentation, Aug 1, 2024
Slide 1: Financial Results Q2 2024
Financial Results Q2 2024 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 ▪ changes in the current housing finance system in the United States, including the roles of ▪ volatility in our financial results caused by changes in the fair value of our assets and we exp
Slide 3: About Us
About Us Radian Group Inc. is a mortgage and real estate company, providing mortgage insurance and other products and services: • Mortgage Insurance is our one reportable segment. This business provides credit-related insurance coverage for the benefit of mortgage lending institutions and mortgage c
Slide 4: Q2 2024 Summary Financial Metrics
Q2 2024 Summary Financial Metrics $152 million Compared to $152 million in Q1 2024 and 13.6% Compared to 13.8% in Q1 2024 and $146 million in Q2 2023 Net Income Return on Average Equity 14.1% in Q2 2023 13.6% Compared to 14.5% in Q1 2024 and $0.98 Compared to $0.98 in Q1 2024 and $0.91 Adjusted Net
Slide 5: Q2 2024 Summary Financial Metrics
Q2 2024 Summary Financial Metrics $272.8 billion Compared to $271.0 billion as of March 31, 2024 and $266.9 billion as $321 million Compared to $319 million in Q1 2024 and $290 million in Q2 2023 Primary Insurance In Force of June 30, 2023 Total Revenues $235 million Compared to $234 million in Q1 2
Slide 6: Financial Highlights
Financial Highlights Radian Group Inc. Consolidated June 30, March 31, December 31, September 30, June 30, (In millions, except per-share amounts) 2024 2024 2023 2023 2023 Primary IIF $272,827 $270,986 $269,979 $269,511 $266,859 Total assets $8,130 $7,760 $7,594 $7,379 $7,307 Total investments $6,58
Slide 7: GAAP Diluted Net Income Per Share
GAAP Diluted Net Income Per Share Q1 2024 to Q2 2024 (1) $1.25 (1) All diluted net income (loss) per share $0.05 items are calculated based on 156.0 $0.98 $0.06 $0.98 million weighted-average diluted shares $1.00 outstanding for the quarter ended $(0.05) March 31, 2024, except for the June 30, $(0.0
Slide 8: AOCI Impact to Book Value Per Share
AOCI Impact to Book Value Per Share GAAP Book Value Per Share Contractual Maturities of Fixed-Maturities Available for Sale As of June 30, 2024 Unrealized $28.71 $29.30 $29.66 gain (loss) $26.23 $26.51 $26.69 Amortized recorded in $24.95 $23.02 $23.48 $24.28 $23.75 $23.63 $23.80 $ in millions Cost F
Slide 9: Revenue and Related Drivers
Revenue and Related Drivers 9
Slide 10: Primary Insurance In Force Rollforward and Persistency Rates
Primary Insurance In Force Rollforward and Persistency Rates Persistency Rates Primary IIF Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 (In billions) ò Quarterly, Annualized (1) ò 12 Months Ended Beginning primary IIF $ 271.0 $ 270.0 $ 269.5 $ 266.9 $ 261.5 90.0% NIW 13.9 11.5 10.6 13.9 16.9 Cancellation
Slide 11: Primary Insurance In Force
Primary Insurance In Force Monthly and Single Mix ($ in billions) (1) ò Total IIF as of: $300 ò Monthly / other Vintage written in: June 30, March 31, June 30, ò Single lender-paid ($ in billions) 2024 2024 2023 ò Single borrower-paid $250 2024 $24.9 9.1 % $11.4 4.2 % $— —% 2023 48.4 17.8 49.5 18.3
Slide 12: Net Premiums Earned
Net Premiums Earned Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 Average primary IIF ($ in billions) $ 271.9 $ 270.5 $ 269.7 $ 268.2 $ 264.2 (In basis points) In force portfolio premium yield (1) 38.2 38.2 38.1 38.0 38.2 (1) Single premium cancellations 0.3 0.3 0.3 0.5 0.6 Total direct yield 38.5 38.5 38
Slide 13: Investment Portfolio
Investment Portfolio Investment Portfolio Scheduled Maturity Investment Portfolio Diversification Investment Portfolio by Rating As of June 30, 2024 As of June 30, 2024 As of June 30, 2024 $ in millions Fair Value Percent $ in millions Fair Value Percent $ in millions Fair Value Percent Short-term i
Slide 14: Net Investment Income
Net Investment Income Net Investment Income (1) (In millions) Investment Yield (2) $74 4.2% $69 4.1% 4.1% 4.1% $68 $69 $63 3.9% Average Investments (3) (In millions) $7,072 $6,819 $6,721 $6,630 $6,508 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 (1) Includes income
Slide 15: Defaults and Other Loss Reserve-Related Details
Defaults and Other Loss Reserve- Related Details
Slide 16: Mortgage Insurance Default Rollforward
Mortgage Insurance Default Rollforward Primary Insurance In Force Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 (number of loans) Beginning default inventory 20,850 22,021 20,406 19,880 20,748 Total new defaults (1) 11,104 11,756 12,452 11,156 9,775 Cures (2) (11,472) (12,808) (10,683) (10,467) (10,518) C
Slide 17: Strong Cure Trends Resulting In ~90% Of Defaults Cured Within One Year
Strong Cure Trends Resulting In ~ 90% Of Defaults Cured Within One Year Of Default Cumulative % of New Defaults That Have Cured Since Original Default Quarter Defaults Defaults # of Quarters Since Original New Default Quarterly Remaining as of Cured as of New Defaults June 30, 2024 (1) June 30, 2024
Slide 18: Reserve Related Activity
Reserve Related Activity ($ in millions, except otherwise indicated) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 (1) Provision for losses Current period defaults (2) $ 48 $ 54 $ 54 $ 47 $ 41 (3) Prior period defaults (50) (61) (49) (55) (63) Total provision for losses (1) $ (2) $ (7) $ 5 $ (8) $ (22) Re
Slide 19: Capital and Risk Distribution
Capital and Risk Distribution 19
Slide 20: Capital & Ratings
Capital & Ratings Pro Forma Total Holding Company Capitalization as of June 30, 2024 Holding Company Debt-to-Capital Ratio (2) ($ in millions) Carrying Pro Coupon Description Principal Value Δ Forma (1) 4.500 % Senior Notes due October 2024 $450 $450 ($450) $— 25.4% 25.4% 25.3% 25.2% 4.875 % Senior
Slide 21: Statutory Capital - Radian Guaranty Inc.
Statutory Capital - Radian Guaranty Inc. June 30, March 31, December 31, September 30, June 30, ($ in millions) 2024 2024 2023 2023 2023 Risk-to-capital ratio 10.3:1 10.2:1 10.4:1 10.6:1 10.8:1 Common stock and paid-in surplus $500 $500 $500 $500 $500 (1) (2) Unassigned funds 186 203 120 174 168 Sta
Slide 22: Ordinary Dividend Capacity Driven By Material Contingency Reserve Releases
Ordinary Dividend Capacity Driven By Material Contingency Reserve Releases Radian Guaranty Ordinary Dividends to Holdco (1) Scheduled Contingency (In millions) Reserve (In millions) Releases (2) $200 2024 (Q3-Q4 2024) $217 2025 466 2026 475 2027 478 2028 520 2029 571 $100 $100 $100 $100 $100 2030 55
Slide 23: Reinsurance Key Metrics
Reinsurance Key Metrics Current Current Current RIF Subject to Current PMIERs Radian’s Current Attachment Detachment Delinquency ($ in millions) Vintage Agreement MRA Reduction (1) Retention Layer % (2) % (2) % (2) Mortgage Insurance-linked Notes Eagle Re 2023-1 Apr 2022 - Dec 2022 $8,338 $316 $287
Slide 24: Consolidated Non-GAAP Financial Measures Reconciliations
Consolidated Non-GAAP Financial Measures Reconciliations 24
Slide 25: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures In addition to the traditional GAAP financial measures, we have presented “adjusted pretax operating 1) Net gains (losses) on investments and other financial instruments. The recognition of realized income (loss),” “adjusted diluted net operating income (loss) per
Slide 26: Reconciliation of Consolidated Pretax Income to Adjusted Pretax Operating Income
Reconciliation of Consolidated Pretax Income to Adjusted Pretax Operating Income 2024 2023 Q2 Q1 Q4 Q3 Q2 (In millions) Consolidated pretax income $188 $199 $180 $201 $183 Less reconciling income (expense) items Net gains (losses) on investments and other financial instruments (1) (5) — 13 (9) — Amo
Slide 27: 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 2024 2023 Q2 Q1 Q4 Q3 Q2 Diluted net income per share $0.98 $0.98 $0.91 $0.98 $0.91 Less per-share impact of reconciling income (expense) items Net gains (losses) on investments and other financial inst
Slide 28: Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity
Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity 2024 2023 Q2 Q1 Q4 Q3 Q2 Return on equity (1) 13.6% 13.8% 13.4% 15.0% 14.1% Less impact of reconciling income (expense) items (2) Net gains (losses) on investments and other financial instruments (0.4) — 1.2 (0.9) — Amorti
Slide 29: Radian
radian ensuring the American dream