Radian Group Inc. · NYSE:RDN
Radian — Q2 2023 Earnings Presentation
32 slides from Radian's earnings presentation, Aug 3, 2023
Slide 1: Financial Results Q2 2023
Financial Results Q2 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 we ▪ changes in the current housing finance system in the United States, including the roles of the ▪ volatility in our financial results caused by changes in the fair value of our assets and
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: Q2 2023 Summary Financial Metrics
Q2 2023 Summary Financial Metrics $146 million Compared to $158 million in Q1 2023 and $201 million in Q2 2022 14.1% Compared to 15.7% in Q1 2023 and 19.9% in Q2 2022 Net Income Return on Average Equity $0.91 14.1% Compared to 15.7% in Q1 2023 and Compared to $0.98 in Q1 2023 and $1.15 Adjusted Net
Slide 5: Q2 2023 Summary Financial Metrics
Q2 2023 Summary Financial Metrics $266.9 billion Compared to $261.5 billion as of March 31, 2023 and $254.2 billion as $290 million (1) Compared to $311 million in Q1 2023 and $287 million in Q2 2022 Primary Insurance In Force of June 30, 2022, reflecting a year- Total Revenues over-year 8% increase
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) 2023 2023 2022 2022 2022 Primary Insurance In Force $266,859 $261,450 $260,994 $259,121 $254,226 Total Assets $7,307 $7,204 $7,064 $6,986 $7,274 Total In
Slide 7: GAAP Diluted Net Income Per Share
GAAP Diluted Net Income Per Share Q1 2023 to Q2 2023 (1) $1.25 (1) All diluted net income (loss) per share items are calculated based on 161.3 $0.02 million weighted-average diluted shares $0.98 $0.02 outstanding for the quarter ended $1.00 March 31, 2023, except for the June 30, $0.05 $0.91 2023 di
Slide 8: GAAP Book Value Per Share
GAAP Book Value Per Share (1) March 31, 2023 to June 30, 2023 $28.00 1) All book value per share items are calculated based on 156.5 million shares outstanding as of March 31, $0.93 2023, except for the June 30, 2023 book value per share, which was calculated $27.00 based on 157.4 million shares $(0
Slide 9: Investment Portfolio
Investment Portfolio Investment Portfolio Scheduled Maturity Investment Portfolio Diversification Investment Portfolio by Rating As of June 30, 2023 As of June 30, 2023 As of June 30, 2023 $ in millions Fair Value Percent $ in millions Fair Value Percent $ in millions Fair Value Percent Short-term i
Slide 10: 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, 2023 $26.23 $26.51 Unrealized $24.28 $23.75 $23.63 $23.80 $24.95 $22.36 $22.14 $23.02 $23.48 gain (loss) $20.82 $21.52 Amortized recorded in $ in millions Cost F
Slide 11: Mortgage
1 Mortgage radian
Slide 12: Primary Insurance In Force
Primary Insurance In Force Monthly and Single Mix ($ in billions) (1) Insurance in Force as of: ò Total $300 ò Monthly / Other Vintage written in: June 30, 2023 December 31, June 30, 2022 2022 ò Single Lender-paid ($ in billions) $250 ò Single Borrower-paid 2023 $27.8 10.4 % $— —% $— —% 2022 $62.6 2
Slide 13: In Force Portfolio Premium Yield
In Force Portfolio Premium Yield (in basis points, except as otherwise indicated) Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 (1) In Force Portfolio Premium Yield 38.2 38.5 38.1 39.2 40.0 Single Premium Cancellations (2) 0.6 0.8 0.9 1.0 1.1 Total Direct Yield 38.8 39.3 39.0 40.2 41.1 Ceded Premiums Earn
Slide 14: First-lien Mortgage Insurance 2023 Performance by Vintage
First-lien Mortgage Insurance 2023 Performance by Vintage ($ in millions) Three Months Ended June 30, 2023 (1) Vintage Premiums Earned Incurred Losses (1) Net 2008 & Prior $9 ($7) $16 2009 - 2017 25 (11) 36 2018 (7) (2) (6) (1) 2019 13 (2) (4) 17 2020 49 (4) 53 2021 64 3 61 2022 45 7 38 2023 12 0 12
Slide 15: Primary Mortgage Insurance Cumulative Incurred Loss Ratio
Primary Mortgage Insurance Cumulative Incurred Loss Ratio by Development Year (1) Vintage Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 (2) Dec-21 (2) Dec-22 Jun-23 2014 2.7 % 4.1 % 4.9 % 5.0 % 5.1 % 5.2 % 6.9% 6.8 % 4.5 % 4.1 % 2015 2.1 % 4.8 % 5.2 % 5.0 % 4.7 % 7.4% 6.8 % 3.8 % 3.2 % 2016 2.9 %
Slide 16: Components of Mortgage Provision for Losses
Components of Mortgage Provision for Losses Three Months Ended ($ in millions, except reserve per new default) Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 (1) Current period defaults $ 41 $ 50 $ 46 $ 39 $ 34 Prior period defaults (2) (63) (67) (90) (136) (148) Provision for loss
Slide 17: Default Rollforward
Default Rollforward Primary Insurance in Force Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 (number of loans) Beginning Default Inventory 20,748 21,913 21,077 21,861 25,510 Total New Defaults (1) 9,775 10,624 10,735 9,601 8,009 Cures (10,518) (11,686) (9,573) (10,222) (11,552) Claims Paid (2) (91) (80) (
Slide 18: Primary Loans In Default
Primary Loans In Default June 30, 2023 Foreclosure Stage Total Cure % During Q2 Reserve for Losses % of Reserve ($ in millions) Defaulted Loans Missed Payments # % # % $ % 3 Payments or Fewer 8,989 45.2 % 21 40.1 % $80 22.7 % 4 to 11 Payments 6,522 32.8 201 30.6 121 34.2 12 Payments or More (1) 4,02
Slide 19: Financial Strength and Risk Distribution Overview
Financial Strength and Risk Distribution Overview 19
Slide 20: Capital & Ratings
Capital & Ratings Total Capitalization as of June 30, 2023 ($ in millions) Stockholders’ Equity ($ in billions) % of Total Coupon Description Carrying Value Principal Capitalization (1) $4.1 $4.2 $3.9 4.500 % Senior Notes due October 2024 $448 $450 8.0 % 6.625 % Senior Notes due March 2025 $521 $525
Slide 21: Statutory Capital - Radian Guaranty Inc.
Statutory Capital - Radian Guaranty Inc. (1) As of: Scheduled June 30, March 31, December 31, September 30, June 30, Contingency ($ in millions) 2023 2023 2022 2022 2022 Reserve ($ in millions) Releases (4) Statutory Financial Information: 2023 $11 Risk-to-capital ratio 10.8:1 10.6:1 10.7:1 11.1:1 1
Slide 22: Eagle Re Mortgage Insurance-Linked Notes Reinsurance Key Metrics
Eagle Re Mortgage Insurance-Linked Notes Reinsurance Key Metrics (1) Eagle Re Eagle Re Eagle Re Eagle Re Eagle Re 1) Radian Guaranty has entered into six fully collateralized reinsurance arrangements with 2021-2 2021-1 2020-1 2019-1 2018-1 the Eagle Re Issuers, of which four remain active as of June
Slide 23: Quota Share Reinsurance (QSR) Key Summary Metrics
Quota Share Reinsurance (QSR) Key Summary Metrics (1) ($ in millions) Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 2016 Single Premium QSR Agreement NIW Policy Dates 2012 – 2017 Quota Share — 18% - 57% (2) Ceded Risk in Force $1,065 $1,124 $1,124 $1,124 $1,612 Ceding / Profit Commission — 25% / Up to 55%
Slide 24: homegenius
24 homegenius radian
Slide 25: homegenius Highlights
homegenius Highlights ($ in millions) Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Revenue Title $6 $4 $6 $10 $12 Real estate (1) 9 9 13 15 20 Real estate technology (2) 0 0 0 0 — Total Revenue $15 $13 $19 $25 $32 Adjusted Gross Profit (3) $5 $3 $3 $6 $11 Adjusted Pretax Operating Income (Loss) before Al
Slide 26: Consolidated Non-GAAP Financial Measures Reconciliations
Consolidated Non-GAAP Financial Measures Reconciliations 26
Slide 27: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures In addition to the traditional GAAP financial measures, we have presented “adjusted 1) Net gains (losses) on investments and other financial instruments. The recognition In addition to the above non-GAAP measures for the consolidated company, we also pretax operati
Slide 28: Reconciliation of Consolidated Pretax Income to Adjusted Pretax Operating Income
Reconciliation of Consolidated Pretax Income to Adjusted Pretax Operating Income 2023 2022 ($ in millions) Q2 Q1 Q4 Q3 Q2 Consolidated pretax income $183 $204 $203 $256 $260 Less reconciling income (expense) items Net gains (losses) on investments and other financial instruments (1) — 5 7 (16) (42)
Slide 29: 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 Q2 Q1 Q4 Q3 Q2 Diluted net income per share $0.91 $0.98 $1.01 $1.20 $1.15 Less per-share impact of reconciling income (expense) items Net gains (losses) on investments and other financial inst
Slide 30: Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity
Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity 2023 2022 Q2 Q1 Q4 Q3 Q2 Return on equity (1) 14.1 % 15.7 % 17.0 % 20.7 % 19.9 % Less impact of reconciling income (expense) items (2) Net gains (losses) on investments and other financial instruments — 0.5 0.7 (1.7) (4.1)
Slide 31: Reconciliation of homegenius Adjusted Pretax Operating Income (Loss) to Adjusted Gross Profit
Reconciliation of homegenius Adjusted Pretax Operating Income (Loss) to homegenius Adjusted Gross Profit 2023 2022 ($ in millions) Q2 Q1 Q4 Q3 Q2 homegenius adjusted pretax operating income (loss) $(24) $(23) $(31) $(26) $(18) Less reconciling income (expense) items Allocation of corporate operating
Slide 32: radian
radian ensuring the American dream