Radian Group Inc. · NYSE:RDN
Radian — Q3 2024 Earnings Presentation
29 slides from Radian's earnings presentation, Nov 7, 2024
Slide 1: Financial Results Q3 2024
Financial Results Q3 2024 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 expect or • competition in the private mortgage insurance industry generally, and more specifically: price anticipate may occur in the future are “forward-looking statements” within the me
Slide 3: About Us
About Us Radian Group Inc. is a mortgage and real estate company, providing mortgage insurance and other products and services: • Mortgage Insurance is our one reportable segment. This business provides credit- related insurance coverage for the benefit of mortgage lending institutions and mortgage
Slide 4: Q3 2024 Summary Financial Metrics
Q3 2024 Summary Financial Metrics Compared to $152 million in Q2 2024 $152 million and $157 million in Q3 2023 13.2% Compared to 13.6% in Q2 2024 and Net Income Return on Average 15.0% in Q3 2023 Equity 13.7% Compared to 13.6% in Q2 2024 and Adjusted Net 16.0% in Q3 2023 (1) $0.99 Compared to $0.98
Slide 5: Q3 2024 Summary Financial Metrics
Q3 2024 Summary Financial Metrics Compared to $272.8 billion as of $274.7 billion June 30, 2024 and $269.5 billion as of $334 million Compared to $321 million in Q2 2024 Primary Insurance In September 30, 2023 Total Revenues and $313 million in Q3 2023 Force $235 million Compared to $235 million in
Slide 6: Financial Highlights
Financial Highlights Radian Group Inc. Consolidated September 30, December 31, March 31, June 30, September 30, (In millions, except per-share amounts) 2023 2023 2024 2024 2024 Primary IIF . $269,511 $269,979 $270,986 $272,827 $274,721 Total assets $7,379 $7,594 $7,760 $8,130 $8,420 Total investment
Slide 7: GAAP Diluted Net Income Per Share
GAAP Diluted Net Income Per Share Q2 2024 to Q3 2024 (1) (1) All diluted net income (loss) per share items are calculated based on 154.4 million weighted-average diluted shares outstanding for the quarter ended June 30, 2024, except for the September 30, 2024 diluted net income (loss) per share, whi
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, 2024 Unrealized gain (loss) Amortized recorded in $ in millions Cost Fair Value AOCI Due in one year or less $112 $111 ($1) Due after one year through five
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 Primary IIF Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Persistency Rates (In billions) Beginning primary IIF $266.9 $269.5 $270.0 $271.0 $272.8 • Quarterly, Annualized (1) • 12 Months Ended NIW 13.9 10.6 11.5 13.9 13.5 Cancellations and (11.3
Slide 11: Primary Insurance In Force
Primary Insurance In Force IIF as of: Vintage written in: September 30, June 30, September 30, ($ in billions) 2023 2024 2024 2024 $— —% $24.9 9.1% $37.6 13.7% 2023 40.9 15.2% 48.4 17.8% 47.2 17.2% 2022 61.5 22.8% 57.6 21.1% 56.0 20.4% 2021 68.7 25.5% 59.5 21.8% 56.6 20.6% 2020 47.7 17.7% 39.2 14.4%
Slide 12: Net Premiums Earned
Net Premiums Earned Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Average primary IIF ($ in billions) $268.2 $269.7 $270.5 $271.9 $273.8 (In basis points) In force portfolio premium yield (1) 38.0 38.1 38.2 38.2 38.2 Single premium cancellations (1) 0.5 0.3 0.3 0.3 0.3 Total direct yield 38.5 38.4 38.5 38
Slide 13: Investment Portfolio
Investment Portfolio Investment Portfolio Scheduled Maturity Investment Diversification Investment Portfolio by Rating As of September 30, 2024 As of September 30, 2024 As of September 30, 2024 $ in millions Fair Value Percent $ in millions Fair Value Percent $ in millions Fair Value Percent Short-t
Slide 14: Net Investment Income
Net Investment Income Net Investment Income (in millions) Average Investments (2) (in millions) ▪ Mortgage loans held for sale (1) ▪ Mortgage loans held for sale ▪ Total investments, excluding mortgage loans held for sale ▪ Total investments, excluding mortgage loans held for sale Investment Yield (
Slide 15: Defaults and Other Loss Reserve-Related Details
Defaults and Other Loss Reserve- Related Details 15
Slide 16: Mortgage Insurance Default Rollforward
Mortgage Insurance Default Rollforward Primary Insurance In Force Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 (number of loans) Beginning default inventory 19,880 20,406 22,021 20,850 20,276 Total new defaults (1) 11,156 12,452 11,756 11,104 13,708 Cures (2) (10,467) (10,683) (12,808) (11,472) (11,484)
Slide 17: Strong Cure Trends Resulting In ~90% Of Defaults Cured Within One Year
Strong Cure Trends Resulting In ~90% Of Defaults Cured Within One Year Of Default Cumulative % of New Defaults That Have Cured Since Original Default Quarter # of Quarters Since Original New Default Defaults Remaining Defaults Cured Quarterly as of September as of September 0 (2) 1 2 3 4 5 6 7 8 9 1
Slide 18: Reserve Related Activity
Reserve Related Activity ($ in millions, except otherwise indicated) Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Provision for losses (1) Current period defaults (2) $47 $54 $54 $48 $57 Prior period defaults (3) (55) (49) (61) (50) (51) Total provision for losses (1) $(8) $5 $(7) $(2) $6 Reserve for los
Slide 19: Capital and Risk Distribution
Capital and Risk Distribution 19
Slide 20: Capital & Ratings
Capital & Ratings Total Holding Company Capitalization as of September 30, 2024 Holding Company Debt-to-Capital Ratio (1) ($ in millions) Coupon Description Principal Carrying Value 4.875% Senior Notes due 2027 $450 $447 6.200% Senior Notes due 2029 $625 $618 Total $1,075 $1,065 Stockholders’ equity
Slide 21: Statutory Capital - Radian Guaranty Inc.
Statutory Capital - Radian Guaranty Inc. September 30, December 31, March 31, June 30, September 30, ($ in millions) 2023 2023 2024 2024 2024 Risk-to-capital ratio 10.6:1 10.4:1 10.2:1 10.3:1 10.3:1 Common stock and paid-in surplus $500 $500 $500 $500 $500 Unassigned funds (1) (2) 174 120 203 186 19
Slide 22: Ordinary Dividend Capacity Driven By Material Contingency Reserve Releases
Ordinary Dividend Capacity Driven By Material Contingency Reserve Releases Radian Guaranty Ordinary Dividends to Holdco (1) Scheduled (in millions) Contingeny Reserve (In millions) Releases (2) 2024 (Q4 2024) $108 2025 467 2026 475 2027 478 2028 520 2029 571 2030 554 2031 514 2032 497 2033 475 2034
Slide 23: Reinsurance Key Metrics
Reinsurance Key Metrics Current PMIERs Current Current Current RIF Subject to MRA Reduction Radian’s Current Attachment Detachment Delinquency ($ in millions) Vintage Agreement (1) Retention Layer %(2) %(2) %(2) Mortgage Insurance-linked Notes Eagle Re 2023-1 Apr 2022 - Dec 2022 $8,139 $294 $286 3.5
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 (1) Net gains (losses) on investments and other financial instruments. The recognition of operating income (loss),” “adjusted diluted net operating income (loss) per share” a
Slide 26: Reconciliation of Consolidated Pretax Income to Adjusted Pretax Operating Income
Reconciliation of Consolidated Pretax Income to Adjusted Pretax Operating Income 2023 2024 (In millions) Q3 Q4 Q1 Q2 Q3 Consolidated pretax income $201 $180 $199 $188 $195 Less reconciling income (expense) items Net gains (losses) on investments and other financial instruments (1) (9) 13 — (5) 6 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 2024 Q3 Q4 Q1 Q2 Q3 Diluted net income per share $0.98 $0.91 $0.98 $0.98 $0.99 Less per-share impact of reconciling income (expense) items Net gains (losses) on investments and other financial (0.0
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 2024 Q3 Q4 Q1 Q2 Q3 Return on equity (1) 15.0% 13.4% 13.8% 13.6% 13.2% Less impact of reconciling income (expense) items (2) Net gains (losses) on investments and other financial (0.9)% 1.2% —% (0.4)% 0.6% instruments
Slide 29: Radian
radian ensuring the American dream