Radian Group Inc. · NYSE:RDN
Radian — Q4 2021 Earnings Presentation
31 slides from Radian's earnings presentation, 2022
Slide 1: Financial Results Q4 2021
Financial Results Q4 2021 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 ▪ changes in the charters or business practices of, or rules or regulations imposed by or applicable ▪ legal and regulatory claims, assertions, actions, reviews, audits, inquiries and inve
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: Full Year 2021 Summary Financial Metrics
Full Year 2021 Summary Financial Metrics $600.7 million Compared to $393.6 million in 2020 14.1% Compared to 9.4% return on average equity in 2020 Net Income Return on Average Equity $3.16 Compared to diluted net income per 14.0% Compared to 8.2% adjusted net operating return on average equity in sh
Slide 5: Q4 2021 Summary Financial Metrics
Q4 2021 Summary Financial Metrics $193.4 million Compared to $126.4 million in Q3 2021 and $148.0 million in Q4 2020 18.2% Compared to 11.8% in Q3 2021 and 14.1% in Q4 2020 Net Income Return on Average Equity 18.2% Compared to 11.8% in Q3 2021 and Adjusted Net Operating Return 12.9% in Q4 2020 (1) $
Slide 6: Q4 2021 Summary Financial Metrics
Q4 2021 Summary Financial Metrics $246.0 billion Compared to $241.6 billion as of September 30, 2021 and $246.1 billion $(46.2) million Compared to $17.3 million in Q3 2021 and $56.7 million in Q4 2020. Primary Insurance In Force as of December 31, 2020, reflecting a Provision for Losses The decreas
Slide 7: GAAP Diluted Net Income Per Share
GAAP Diluted Net Income Per Share (1) 2020 to 2021 $4.00 $1.87 1) All diluted net income (loss) per share items are calculated based on 196.6 million weighted-average diluted shares $(0.38) $0.10 $3.16 outstanding for the year ended $(0.18) December 31, 2020, except for the $3.00 $(0.17) $(0.08) Dec
Slide 8: GAAP Book Value Per Share
GAAP Book Value Per Share (1) December 30, 2020 to December 31, 2021 1) All book value per share items are $26.00 calculated based on 191.6 million $3.13 shares outstanding as of December 31, 2020, except for the December 31, 2021 book value per share, which was calculated based on 175.4 million $(0
Slide 9: Financial Highlights
Financial Highlights Radian Group Inc. Consolidated December 31, September 30, June 30, March 31, December 31, (In millions, except per-share amounts) 2021 2021 2021 2021 2020 Primary Insurance In Force $245,972 $241,575 $237,302 $238,921 $246,144 Total Assets $7,839 $8,042 $8,009 $7,921 $7,948 Tota
Slide 10: Primary Insurance In Force
Primary Insurance In Force Monthly and Single Mix ($ in billions) (1) Insurance in Force as of: ò Total $250 ò Monthly / Other Vintage written in: December 31, September 30, December 31, 2021 2021 2020 ò Single Lender-paid ($ in billions) ò Single Borrower-paid $200 2021 $87.4 35.5 % $66.1 27.4 % $—
Slide 11: In Force Portfolio Premium Yield
In Force Portfolio Premium Yield (in basis points, except as otherwise indicated) Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 (1) In Force Portfolio Premium Yield (2) 41.0 40.3 41.1 42.7 42.8 Single Premium Cancellations (3) 3.4 4.3 5.3 6.4 8.7 Total Direct Yield 44.4 44.6 46.4 49.1 51.5 Ceded Earned Pr
Slide 12: First-lien Mortgage Insurance
First-lien Mortgage Insurance 2021 Performance by Vintage ($ in millions) Three Months Ended December 31, 2021 (1) Vintage Premiums Earned Incurred Losses (1) Net 2008 & Prior $12.7 ($5.2) $17.9 2009 - 2015 $14.4 ($7.3) $21.7 2016 $14.8 ($7.3) $22.1 2017 $17.5 ($10.0) $27.5 2018 $21.9 ($9.9) $31.8 2
Slide 13: Primary Mortgage Insurance
Primary Mortgage Insurance Cumulative Incurred Loss Ratio by Development Year (1) Vintage Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 (2) Dec-21 (2) 2012 2.0 % 3.2 % 3.6 % 2.7 % 2.9 % 2.8 % 2.8 % 2.8 % 3.2 % 3.0 % 2013 2.5 % 4.0 % 3.4 % 3.7 % 3.5 % 3.4 % 3.3 % 4.2 % 4.1 % 2014 2.7
Slide 14: Components of Mortgage Provision for Losses
Components of Mortgage Provision for Losses Three Months Ended ($ in millions) Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 (1) Current period defaults $39.4 $33.3 $34.3 $50.3 $63.9 Prior period defaults (2) (85.8) (16.5) (31.0) (4.5) (7.7) Second-lien premium deficiency reserve
Slide 15: Default Rollforward
Default Rollforward Primary Insurance in Force Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 (number of loans) Beginning Default Inventory 33,795 40,464 50,106 55,537 62,737 Total New Defaults (1) 9,342 8,132 8,145 11,851 14,552 Cures (13,677) (14,475) (17,681) (17,137) (21,567) Claims Paid (375) (321) (9
Slide 16: Primary Loans In Default
Primary Loans In Default December 31, 2021 Foreclosure Stage Total Cure % During Q4 Reserve for Losses % of Reserve ($ in thousands) Defaulted Loans Missed Payments # % # % $ % 3 Payments or Fewer 7,267 25.0 % 47 39.4 % $62,103 7.9 % 4 to 11 Payments 8,088 27.8 % 84 27.6 % $146,872 18.6 % 12 Payment
Slide 17: COVID-19 Forbearance Program Summary
COVID-19 Forbearance Program Summary (as of December 31, 2021) The FHFA, in coordination with the GSEs, have enacted a payment forbearance program with broad availability ▪ Borrowers experiencing a financial hardship relating to COVID-19 may request a forbearance to suspend or reduce their mortgage
Slide 18: Financial Strength and Risk Distribution Overview
Financial Strength and Risk Distribution Overview 18
Slide 19: Capital, Investments & Ratings
Capital, Investments & Ratings Total Capitalization as of December 31, 2021 Stockholders’ Equity Carrying Value Principal % of Total Coupon Description ($ in billions) ($’000) ($’000) Capitalization (1) $4.3 $4.3 4.500 % Senior Notes due October 2024 $446,631 $450,000 7.9 % $4.0 6.625 % Senior Notes
Slide 20: Statutory Capital - Radian Guaranty Inc.
Statutory Capital - Radian Guaranty Inc. Pro Forma (1) As of: Scheduled December 31, December 31, September 30, June 30, March 31, December 31, Contingency ($ in millions) 2021 2021 2021 2021 2021 2020 Reserve ($ in millions) Releases (4) Statutory Financial Information: 2022 $— Risk-to-capital rati
Slide 21: Eagle Re Mortgage Insurance-Linked Notes Reinsurance Key Metrics
Eagle Re Mortgage Insurance-Linked Notes Reinsurance Key Metrics (1) Eagle Re Eagle Re Eagle Re Eagle Re Eagle Re Eagle Re 1) Through December 31, 2021, Radian Guaranty has entered into six fully 2021-2 2021-1 2020-2 2020-1 2019-1 2018-1 collateralized reinsurance arrangements with the Eagle Re Issu
Slide 22: Quota Share Reinsurance (QSR) Key Summary Metrics
Quota Share Reinsurance (QSR) Key Summary Metrics (1) ($ in millions) Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 2016 Single Premium QSR Agreement NIW Policy Dates 2012 – 2017 Quota Share — 20% - 65% (2) Ceded Risk in Force $1,913 $2,115 $2,366 $2,683 $3,071 (3) Ceding / Profit Commission — 25% / Up to
Slide 23: homegenius
23 homegenius radian
Slide 24: homegenius Highlights
homegenius Highlights ($ in millions) Q4 2021 Q3 2021 Q2 2021 Q1 2021 YTD 2021 Revenue / % of Total Revenue Title $21.6 $25.2 $17.1 $15.3 $79.2 53% (1) Real estate 23.1 19.9 16.4 10.5 69.9 47% Total Revenue $44.7 $45.1 $33.5 $25.8 $149.1 Adjusted Gross Profit / Adjusted Gross Profit % (2) $19.7 $17.
Slide 25: Consolidated Non-GAAP Financial Measures Reconciliations
Consolidated Non-GAAP Financial Measures Reconciliations 25
Slide 26: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures In addition to the traditional GAAP financial measures, we have presented “adjusted 1) Net gains (losses) on investments and other financial instruments. The recognition In addition to the above non-GAAP measures for the consolidated company, we also pretax operati
Slide 27: Reconciliation of Consolidated Pretax Income to Adjusted Pretax Operating Income
Reconciliation of Consolidated Pretax Income to Adjusted Pretax Operating Income 2021 2020 ($ in thousands) Q4 Q3 Q2 Q1 Q4 Consolidated pretax income $246,506 $161,641 $195,496 $161,189 $179,167 Less reconciling income (expense) items: Net gains (losses) on investments and other financial instrument
Slide 28: 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 2021 2020 Q4 Q3 Q2 Q1 Q4 Diluted net income per share $1.07 $0.67 $0.80 $0.64 $0.76 Less per-share impact of reconciling income (expense) items: Net gains (losses) on investments and other financial ins
Slide 29: Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity
Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity 2021 2020 Q4 Q3 Q2 Q1 Q4 (1) Return on equity 18.2 % 11.8 % 14.5 % 11.8 % 14.1 % (2) Less impact of reconciling income (expense) items: Net gains (losses) on investments and other financial instruments 0.1 0.2 1.5 (0.5) 1.
Slide 30: Reconciliation of homegenius Adjusted Pretax Operating Income (Loss) to Adjusted Gross Profit
Reconciliation of homegenius Adjusted Pretax Operating Income (Loss) to homegenius Adjusted Gross Profit 2021 2020 YTD ($ in thousands) Q4 Q3 Q2 Q1 Q4 2021 homegenius adjusted pretax operating income (loss) $(2,116) $(5,557) $(9,198) $(10,453) $(11,132) $(27,324) Less reconciling income (expense) it
Slide 31: radian
radian ensuring the American dream