Radian Group Inc. · NYSE:RDN
Radian — Goldman Sachs Leveraged Finance Conference (May 2016)
17 slides from Radian's conference presentation, May 17, 2016
Slide 1: Goldman Sachs Leveraged Finance Conference
Goldman Sachs Leveraged Finance Conference Frank Hall, Chief Financial Officer May 17, 2016 NYSE: RDN
Slide 2: Safe Harbor Statements
Safe Harbor Statements All statements in this report that address events, developments or results that we expect or anticipate may occur in the future are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Exchange Act and the U.S. Privat
Slide 3: Safe Harbor Statements (Continued)
Safe Harbor Statements (Continued) • the possibility that we may fail to estimate accurately the likelihood, magnitude and timing of losses in connection with establishing loss reserves for our mortgage insurance business; • volatility in our results of operations caused by changes in the fair value
Slide 4: Who Is Radian?
Who Is Radian? Radian Group Inc., headquartered in Philadelphia, provides private mortgage insurance, risk management products and real estate services to financial institutions through two business segments: Q1 2016 Revenue - Mortgage Insurance, through its principal mortgage insurance subsidiary R
Slide 5: Our History
Our History 2011 Radian continues 2014 2001 2005 2009 to Radian Radian Mortgage Radian expand acquires acquires industry increases sales Clayton, a Enhance veteran S.A. focus and force and mortgage and 1977 Financial Ibrahim joins resources diversify real estate CMAC is Services Radian as on its cor
Slide 6: Radian Business Model
Radian Business Model Two Distinct and Complementary Business Segments MI = Mortgage Insurance 6
Slide 7: What is Private Mortgage Insurance?
What is Private Mortgage Insurance? GSE charters require private mortgage insurance on conforming loans with Loan-to-Value (LTV) ratios in excess of 80%. The Private MI industry provides credit protection to the GSEs, transferring first-loss credit risk from the US taxpayer. MI Coverage Percentage *
Slide 8: Mortgage Origination and Mortgage Insurance Market
Mortgage Origination and Mortgage Insurance Market Mortgage Originations (Dollars in billions, Average of January 2016 Outlook Reports from Fannie Mae, Freddie Mac and the MBA) Industry-wide MI penetration remains $600 $552 70% strong, positioning the MI industry to $487 $500 65% $430 51% 56% $434 6
Slide 9: What is Mortgage and Real Estate Services?
What is Mortgage and Real Estate Services? Clayton provides risk-based analytics, residential loan due diligence, consulting, surveillance and staffing solutions. The company also provides: Advanced AVMs, BPOs and Customized REO asset Appraisal, Title, Closing and technology solutions to monitor loa
Slide 10: Primary Mortgage Insurance: Cumulative Incurred Loss Ratio by Development Year
Primary Mortgage Insurance: Cumulative Incurred Loss Ratio by Development Year 20% Incurred Loss Ratio 18% Vintage Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Mar-16 2009 6.1% 7.0% 13.7% 17.4% 19.0% 18.3% 17.6% 17.6% 16% 2010 1.2% 3.3% 6.5% 7.7% 7.5% 7.2% 7.2% 2011 1.7% 4.4% 5.5% 5.6% 5.0% 5.0%
Slide 11: Private Mortgage Insurer Eligibility Requirements
Private Mortgage Insurer Eligibility Requirements Private Mortgage Insurer Eligibility Requirements (PMIERs) were developed by Fannie Mae and Freddie Mac and became effective on December 31, 2015 Source: www.usmi.org 11
Slide 12: Private Mortgage Insurer Eligibility Requirements
Private Mortgage Insurer Eligibility Requirements • Radian Guaranty is compliant with the PMIERs and does not expect to require any additional capital contributions in order to remain compliant. • The financial requirements of the PMIERs require a mortgage insurer's Available Assets to equal or exce
Slide 13: Mortgage Insurance Pricing
Mortgage Insurance Pricing Today’s pricing environment: increased granularity and risk- based pricing • Radian has moved toward a more granular and risk-based pricing approach over time • Example: Progression of the use of FICO scores in Radian’s Borrower-Paid (BP) Rate Card: 2005 FICO not utilize
Slide 14: Improved Composition of MI Portfolio
(1) Improved Composition of MI Portfolio NIW since 2009 and HARP volume combined now represents 85% of Radian’s mortgage insurance primary risk in force as of Q1 2016 2006-2007 (HARP) 2006-2007 (Non-HARP) 4.5% 7.4% Other Vintages (Non-HARP) 7.6% 2009-2016 Other Vintages (HARP) 4.4% 76.1% (1) Include
Slide 15: Capital Structure
Capital Structure Total capitalization (as of March 31, 2016) Carrying Value Principal % of total (1) Coupon Description ($'000) ($'000) Capitilization 9.00% Senior Notes due 2017 $192,783 $195,501 4.9% 5.50% Senior Notes due 2019 $296,033 $300,000 7.5% 5.25% Senior Notes due 2020 $344,406 $350,000
Slide 16: Strong Holding Company Liquidity
Strong Holding Company Liquidity Liquidity Resources at Radian Group Inc. ($ in millions) Available Holding Company Liquidity as of March 31, 2016 $ 393 Additional Sources of Liquidity for Holding Company Surplus Note(1) — Radian Guaranty expects to be in a position to seek to redeem a portion, or p
Slide 17: Radian
RADIAN Ensuring the American Dream®
Radian Group — Goldman Sachs Leveraged Finance Conference (May 2016) on 6ix