Radian Group Inc. · NYSE:RDN
Radian — Q4 2023 Earnings Presentation
29 slides from Radian's earnings presentation, Feb 8, 2024
Slide 1: Financial Results Q4 2023
Financial Results Q4 2023 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 Our culture is built around a set of core company that maintains two reportable organizational values that we live by, and segments: mortgage insurance and define who we are as an enterprise: homegenius Innovate for the Future Our mortgage ins
Slide 4: Full Year 2023 Summary Financial Metrics
Full Year 2023 Summary Financial Metrics $603 million Compared to $743 million in 2022 14.5% Compared to 18.2% in 2022 Net Income Return on Average Equity 14.9% Compared to 20.3% in 2022 $3.77 Compared to $4.35 in 2022 Adjusted Net Operating Return on Average Equity (1) Diluted Net Income Per Share
Slide 5: Q4 2023 Summary Financial Metrics
Q4 2023 Summary Financial Metrics $143 million Compared to $157 million in Q3 2023 and 13.4% Compared to 15.0% in Q3 2023 and $162 million in Q4 2022 Net Income Return on Average Equity 17.0% in Q4 2022 14.2% Compared to 16.0% in Q3 2023 and Adjusted Net Operating Return 17.6% in Q4 2022 (1) on Aver
Slide 6: Q4 2023 Summary Financial Metrics
Q4 2023 Summary Financial Metrics $270.0 billion Compared to $269.5 billion as of September 30, 2023 and $261.0 billion $329 million Compared to $313 million in Q3 2023 and $315 million in Q4 2022 Primary Insurance In Force as of December 31, 2022 Total Revenues $230 million Compared to $237 million
Slide 7: Financial Highlights
Financial Highlights Radian Group Inc. Consolidated December 31, September 30, June 30, March 31, December 31, (In millions, except per-share amounts) 2023 2023 2023 2023 2022 Primary IIF $269,979 $269,511 $266,859 $261,450 $260,994 Total assets $7,594 $7,379 $7,307 $7,204 $7,064 Total investments $
Slide 8: GAAP Diluted Net Income Per Share
GAAP Diluted Net Income Per Share 2022 to 2023 (1) Q3 2023 to Q4 2023 (2) $5.00 $1.25 $4.35 $0.11 $4.00 $0.16 $3.77 $0.98 $0.23 $1.00 $0.29 $(0.08) $0.01 $0.91 $(0.03) $(0.06) $0.42 $(0.05) $3.00 $0.75 $(1.37) $(0.28) $2.00 $0.50 $1.00 $0.25 $— $— 2022 Provision for losses Net premiums Net gains (lo
Slide 9: 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 December 31, 2023 Unrealized $28.71 gain (loss) $26.23 $26.51 $26.69 Amortized recorded in $24.95 $23.48 $24.28 $23.75 $23.63 $23.80 $ in millions Cost Fair Value AOCI $2
Slide 10: Revenue and Related Drivers
Revenue and Related Drivers 10
Slide 11: Primary Insurance In Force Rollforward and Persistency Rates
Primary Insurance In Force Rollforward and Persistency Rates Persistency Rates Primary IIF Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 (In billions) ò Quarterly, Annualized (1) ò 12 Months Ended Beginning primary IIF $ 269.5 $ 266.9 $ 261.5 $ 261.0 $ 259.1 90.0% NIW 10.6 13.9 16.9 11.3 12.9 85.8% Cancel
Slide 12: Primary Insurance In Force
Primary Insurance In Force Monthly and Single Mix ($ in billions) (1) IIF as of: ò Total $300 ò Monthly / other Vintage written in: December 31, September 30, December 31, ò Single lender-paid ($ in billions) 2023 2023 2022 $250 ò Single borrower-paid 2023 $50.6 18.7 % $40.9 15.2 % $— —% 2022 60.5 2
Slide 13: Net Premiums Earned
Net Premiums Earned Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Average primary IIF ($ in billions) $ 269.7 $ 268.2 $ 264.2 $ 261.2 $ 260.1 (In basis points) In force portfolio premium yield (1) 38.1 38.0 38.2 38.5 38.1 (1) Single premium cancellations 0.3 0.5 0.6 0.8 0.9 Total direct yield 38.4 38.5 38
Slide 14: Services Revenue
Services Revenue (In millions) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Services revenue (1) Real estate (2) $ 9 $ 8 $ 9 $ 8 $ 12 Title 3 3 3 3 3 Total services revenue $ 12 $ 11 $ 12 $ 11 $ 15 (1) Does not include immaterial service revenue amounts related to real estate technology and the Mortgage
Slide 15: Investment Portfolio
Investment Portfolio Investment Portfolio Scheduled Maturity Investment Portfolio Diversification Investment Portfolio by Rating As of December 31, 2023 As of December 31, 2023 As of December 31, 2023 $ in millions Fair Value Percent $ in millions Fair Value Percent $ in millions Fair Value Percent
Slide 16: Investment Portfolio Performance
Investment Portfolio Performance Investment Portfolio (In millions) Net Investment Income (In millions) $7,000 4.15% 4.15% Investment 3.92% Yield (2) 3.69% 3.64% $6,800 $68 $69 $6,634 Average Investments (1) $63 Net Investment $59 $58 Income $6,600 $6,531 (In millions) $6,469 $6,431 $6,400 $6,400 $6
Slide 17: Defaults and Other Loss Reserve-Related Details
Defaults and Other Loss Reserve- Related Details
Slide 18: Mortgage Insurance Default Rollforward
Mortgage Insurance Default Rollforward Primary Insurance In Force Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 (number of loans) Beginning default inventory 20,406 19,880 20,748 21,913 21,077 Total new defaults (1) 12,452 11,156 9,775 10,624 10,735 Cures (2) (10,683) (10,467) (10,518) (11,686) (9,573) Cl
Slide 19: Reserve Related Activity
Reserve Related Activity ($ in millions, except otherwise indicated) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 (1) Provision for losses Current period defaults (2) $ 54 $ 47 $ 41 $ 50 $ 46 (3) Prior period defaults (49) (55) (63) (67) (90) Total provision for losses (1) $ 5 $ (8) $ (22) $ (17) $ (44)
Slide 20: Capital and Risk Distribution
Capital and Risk Distribution 20
Slide 21: Capital & Ratings
Capital & Ratings Total Holding Company Capitalization as of December 31, 2023 Holding Company Debt-to-Capital Ratio (2) ($ in millions) Carrying % of Total Coupon Description Value Principal Capitalization (1) 26.5% 25.6% 25.3% 25.4% 4.500 % Senior Notes due October 2024 $449 $450 7.7 % 24.4% 6.625
Slide 22: Statutory Capital - Radian Guaranty Inc.
Statutory Capital - Radian Guaranty Inc. December 31, September 30, June 30, March 31, December 31, Scheduled ($ in millions) 2023 2023 2023 2023 2022 Contingency Reserve Statutory Financial Information (In millions) Releases (3) Risk-to-capital ratio 10.4:1 10.6:1 10.8:1 10.6:1 10.7:1 2024 $433 Com
Slide 23: Reinsurance Key Metrics
Reinsurance Key Metrics Current Current Current RIF Subject to Current PMIERs Radian’s Current Attachment Detachment Delinquency ($ in millions) Vintage Agreement MRA Reduction (1) Retention Layer % (2) % (2) % (2) Mortgage Insurance-linked Notes Eagle Re 2023-1 Apr 2022 - Dec 2022 $8,659 $335 $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 2023 2022 Year Ended December 31, Q4 Q3 Q2 Q1 Q4 2023 2022 (In millions) Consolidated pretax income $180 $201 $183 $204 $203 $767 $953 Less reconciling income (expense) items Net gains (losses) on investments and other
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 2023 2022 Year Ended December 31, Q4 Q3 Q2 Q1 Q4 2023 2022 Diluted net income per share $0.91 $0.98 $0.91 $0.98 $1.01 $3.77 $4.35 Less per-share impact of reconciling income (expense) items Net gains (l
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 2023 2022 Year Ended December 31, Q4 Q3 Q2 Q1 Q4 2023 2022 Return on equity (1) 13.4% 15.0% 14.1% 15.7% 17.0% 14.5% 18.2% Less impact of reconciling income (expense) items (2) Net gains (losses) on investments and other fi
Slide 29: radian
radian ensuring the American dream