Radian Group Inc. · NYSE:RDN
Radian — Q3 2023 Earnings Presentation
29 slides from Radian's earnings presentation, Nov 2, 2023
Slide 1: Financial Results Q3 2023
Financial Results Q3 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 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: Q3 2023 Summary Financial Metrics
Q3 2023 Summary Financial Metrics $157 million Compared to $146 million in Q2 2023 and $198 million in Q3 2022 15.0% Compared to 14.1% in Q2 2023 and 20.7% in Q3 2022 Net Income Return on Average Equity $0.98 Compared to $0.91 in Q2 2023 and $1.20 16.0% Compared to 14.1% in Q2 2023 and in Q3 2022 Ad
Slide 5: Q3 2023 Summary Financial Metrics
Q3 2023 Summary Financial Metrics $269.5 billion Compared to $266.9 billion as of June 30, 2023 and $259.1 billion as of $314 million Compared to $290 million in Q2 2023 and $296 million in Q3 2022 Primary Insurance In Force September 30, 2022, reflecting a year- Total Revenues over-year 7% increase
Slide 6: Financial Highlights
Financial Highlights Radian Group Inc. Consolidated September 30, June 30, March 31, December 31, September 30, (In millions, except per-share amounts) 2023 2023 2023 2022 2022 Primary Insurance In Force $269,511 $266,859 $261,450 $260,994 $259,121 Total Assets $7,379 $7,307 $7,204 $7,064 $6,986 Tot
Slide 7: GAAP Diluted Net Income Per Share
GAAP Diluted Net Income Per Share Q2 2023 to Q3 2023 (1) $1.25 $0.05 $0.02 (1) All diluted net income (loss) per share $0.13 items are calculated based on 160.7 $0.98 million weighted-average diluted shares $1.00 $(0.07) outstanding for the quarter ended $0.91 $(0.04) $(0.02) June 30, 2023, except f
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 September 30, 2023 $26.23 $26.51 $26.69 Unrealized $24.28 $23.75 $23.63 $23.80 $24.95 $23.02 $23.48 gain (loss) $21.52 $22.36 $22.14 Amortized recorded in $ in millions C
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 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 (In billions) ò Quarterly, Annualized (1) ò 12 Months Ended Beginning Primary IIF $ 266.9 $ 261.5 $ 261.0 $ 259.1 $ 254.2 90.0% New Insurance Written 13.9 16.9 11.3 12.9
Slide 11: Primary Insurance In Force
Primary Insurance In Force Monthly and Single Mix ($ in billions) (1) IIF as of: ò Total $300 ò Monthly / Other Vintage written in: September 30, December 31, September 30, 2023 2022 2022 ò Single Lender-paid ($ in billions) $250 ò Single Borrower-paid 2023 $40.9 15.2 % $— —% $— —% 2022 $61.5 22.8 %
Slide 12: Net Premiums Earned
Net Premiums Earned Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Average Primary IIF ($ in billions) $ 268.2 $ 264.2 $ 261.2 $ 260.1 $ 256.7 (In basis points) In Force Portfolio Premium Yield (1) (2) 38.0 38.2 38.5 38.1 39.2 Single Premium Cancellations (1) 0.5 0.6 0.8 0.9 1.0 Total Direct Yield 38.5 38.
Slide 13: Services Revenue
Services Revenue (In millions) Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Services Revenue (1) Real Estate (2) $ 8 $ 9 $ 8 $ 12 $ 15 Title 3 3 3 3 5 Total Services Revenue $ 11 $ 12 $ 11 $ 15 $ 20 (1) Does not include immaterial service revenue amounts related to real estate technology and the Mortgage
Slide 14: Investment Portfolio
Investment Portfolio Investment Portfolio Scheduled Maturity Investment Portfolio Diversification Investment Portfolio by Rating As of September 30, 2023 As of September 30, 2023 As of September 30, 2023 $ in millions Fair Value Percent $ in millions Fair Value Percent $ in millions Fair Value Perce
Slide 15: Net Investment Income
Net Investment Income Net Investment Income (In millions) 4.2% Investment Yield (1) 4.0% 3.7% 3.7% $69 $64 3.2% $59 $59 $51 Average $6,469 $6,531 Investments (2) $6,407 $6,400 $6,431 (In millions) September 30, December 31, March 31, June 30, September 30, 2022 2022 2023 2023 2023 Q3 2022 Q4 2022 Q1
Slide 16: Defaults and Other Loss Reserve-Related Details
Defaults and Other Loss Reserve- Related Details
Slide 17: Mortgage Default Rollforward
Mortgage Default Rollforward Primary Insurance in Force Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 (number of loans) Beginning Default Inventory 19,880 20,748 21,913 21,077 21,861 Total New Defaults (1) 11,156 9,775 10,624 10,735 9,601 Cures (10,467) (10,518) (11,686) (9,573) (10,222) Claims Paid (2) (
Slide 18: Reserve Related Activity
Reserve Related Activity ($ in millions, except otherwise indicated) Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 (1) Provision for losses Current period defaults (2) $ 47 $ 41 $ 50 $ 46 $ 39 (3) Prior period defaults (55) (63) (67) (90) (136) Total provision for losses (1) $ (8) $ (22) $ (17) $ (44) $ (
Slide 19: Capital and Risk Distribution
Capital and Risk Distribution 19
Slide 20: Capital & Ratings
Capital & Ratings Total Holding Company Capitalization as of September 30, 2023 Holding Company Debt-to-Capital Ratio (2) ($ in millions) Carrying % of Total 27.4% 26.5% Coupon Description Value Principal Capitalization (1) 25.6% 25.3% 25.4% 4.500 % Senior Notes due October 2024 $449 $450 8.0 % 6.62
Slide 21: Statutory Capital - Radian Guaranty Inc.
Statutory Capital - Radian Guaranty Inc. (1) September 30, June 30, March 31, December 31, September 30, Scheduled ($ in millions) 2023 2023 2023 2022 2022 Contingency Statutory Financial Information: Reserve (In millions) Releases (4) Risk-to-capital ratio 10.6:1 10.8:1 10.6:1 10.7:1 11.1:1 2023 $5
Slide 22: Excess-of-loss (XOL) Reinsurance Key Metrics
(1) (2) Excess-of-loss (XOL) Reinsurance Key Metrics (1) Radian Guaranty has four fully collateralized reinsurance arrangements with the Eagle Re Eagle Re Eagle Re Eagle Re Eagle Re Issuers as of September 30, 2023. Based on the accounting guidance that addresses VIEs, ($ in millions) 2021-2 2021-1
Slide 23: Quota Share Reinsurance (QSR) Key Summary Metrics
Quota Share Reinsurance (QSR) Key Summary Metrics (1) (In millions) Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Single Premium QSR Program (2) NIW Policy Dates 2012 – 2021 Ceded Risk in Force $3,605 $3,737 $3,886 $3,993 $4,079 PMIERs MRA Reduction (3) $199 $208 $218 $226 $233 Ceded Premiums Earned $3 $1
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 (In millions) Q3 Q2 Q1 Q4 Q3 Consolidated pretax income $201 $183 $204 $203 $256 Less reconciling income (expense) items Net gains (losses) on investments and other financial instruments (1) (9) — 5 7 (16) 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 2023 2022 Q3 Q2 Q1 Q4 Q3 Diluted net income per share $0.98 $0.91 $0.98 $1.01 $1.20 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 2023 2022 Q3 Q2 Q1 Q4 Q3 Return on equity (1) 15.0% 14.1% 15.7% 17.0% 20.7% Less impact of reconciling income (expense) items (2) Net gains (losses) on investments and other financial instruments (0.9) — 0.5 0.7 (1.7) Amor
Slide 29: radian
radian ensuring the American dream