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(State or Other Jurisdiction
of Incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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(Address of Principal Executive Offices, and Zip Code)
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Title of each class |
Trading Symbol(s)
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Name of each exchange on which registered
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RADIAN GROUP INC. | |||
(Registrant) | |||
Date: August 7, 2020 | |||
By:
|
/s/ J. Franklin Hall | ||
J. Franklin Hall | |||
Senior Executive Vice President and Chief | |||
Financial Officer |
-- GAAP net loss of $30.0 million, or $0.15 per diluted share, driven by $304.4 million provision expense to increase reserves --
-- New Insurance Written of $25.5 billion, setting company record for quarterly flow mortgage insurance --
-- PMIERs Available Assets of $4.2 billion, or $1.0 billion (or 31% ) in excess of Minimum Required Assets --
-- Total Holding Company Liquidity increases to $1.4 billion --
-- Book value per share grows 13% year-over-year to $20.82 --
PHILADELPHIA--(BUSINESS WIRE)--August 7, 2020--Radian Group Inc. (NYSE: RDN) today reported a net loss for the quarter ended June 30, 2020, of $30.0 million, or $0.15 per diluted share. This compares to net income for the quarter ended June 30, 2019, of $166.7 million, or $0.78 per diluted share. The net loss was driven by an elevated loss provision in response to the increase in the number of new defaults, which include defaults of loans subject to forbearance programs implemented in response to the COVID-19 pandemic.
Key Financial Highlights (dollars in millions, except per-share data)
|
Quarter Ended |
Quarter Ended |
Percent |
Net income (loss) (1) |
$(30.0) |
$166.7 |
(118)% |
Diluted net income (loss) per share |
$(0.15) |
$0.78 |
(119)% |
Consolidated pretax income (loss) |
$(42.2) |
$209.5 |
(120)% |
Adjusted pretax operating income (loss) (2) |
$(88.5) |
$215.8 |
(141)% |
Adjusted diluted net operating income (loss) per share (2) |
$(0.36) |
$0.80 |
(145)% |
Return on equity (1)(3) |
(3.1)% |
17.8% |
(117)% |
Adjusted net operating return on equity (2) |
(7.1)% |
18.2% |
(139)% |
Book value per share (4) |
$20.82 |
$18.42 |
13% |
PMIERs Available Assets (5) |
$4,228.9 |
$3,225.3 |
31% |
PMIERs excess Available Assets (6) |
$1,002.4 |
$659.5 |
52% |
Total Holding Company Liquidity (7) |
$1,403.1 |
$1,146.1 |
22% |
Excess Available Resources to Support PMIERs (8) |
$2,371.0 |
$1,772.0 |
34% |
Total investments |
$6,431.4 |
$5,513.3 |
17% |
New Insurance Written (NIW) - mortgage insurance |
$25,459 |
$18,539 |
37% |
Primary mortgage insurance in force |
$241,306 |
$230,756 |
5% |
Net premiums earned - mortgage insurance (9) |
$247.6 |
$296.3 |
(16)% |
New defaults (10) |
63,005 |
9,338 |
575% |
Percentage of primary loans in default (11) |
6.5% |
1.9% |
242% |
Provision for losses - mortgage insurance |
$304.0 |
$47.2 |
544% |
Mortgage insurance loss reserves |
$735.0 |
$401.3 |
83% |
(1) |
Net loss for the second quarter of 2020 includes a $47.3 million pretax net gain on investments and other financial instruments. Net income for the second quarter of 2019 includes: (i) a $16.8 million loss on extinguishment of debt and (ii) a $12.5 million pretax net gain on investments and other financial instruments. |
|
(2) |
Adjusted results, including adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity, are non-GAAP financial measures. For definitions and a reconciliation of these measures to the comparable GAAP measures, see Exhibits F and G. |
|
(3) |
Calculated by dividing annualized net income by average stockholder's equity, based on the average of the beginning and ending balances for each period presented. |
|
(4) |
Accumulated other comprehensive income (loss) impacted book value per share by $1.11 per share as of June 30, 2020, and $0.43 per share as of June 30, 2019. |
|
(5) |
Represents Radian Guaranty’s Available Assets, calculated in accordance with the Private Mortgage Insurer Eligibility Requirements (PMIERs) financial requirements in effect for each date shown. |
|
(6) |
Represents Radian Guaranty’s excess or "cushion" of Available Assets over its Minimum Required Assets, calculated in accordance with the PMIERs financial requirements in effect for each date shown. |
|
(7) |
Represents Radian Group's total liquidity, including the $35 million minimum liquidity requirement and available capacity under its unsecured revolving credit facility. |
|
(8) |
Represents the sum of: (1) PMIERs excess Available Assets and (2) Total Holding Company Liquidity, net of the $35 million minimum liquidity requirement under the unsecured revolving credit facility. |
|
(9) |
Includes a cumulative adjustment recorded in the second quarter of 2019 related to an update to the amortization rates used to recognize revenue for single premium policies. |
|
(10) |
Represents new defaults in the number of loans reported during the period on loans related to primary mortgage insurance policies. |
|
(11) |
Represents the number of primary loans in default as a percentage of the total number of insured primary loans. |
Adjusted pretax operating loss for the quarter ended June 30, 2020, was $88.5 million, compared to $215.8 million adjusted pretax operating income for the quarter ended June 30, 2019. Adjusted diluted net operating loss per share for the quarter ended June 30, 2020, was $0.36, compared to adjusted diluted net operating income per share of $0.80 for the quarter ended June 30, 2019.
Book value as of June 30, 2020, was $4.0 billion, an increase of 5 percent compared to $3.8 billion as of June 30, 2019. Book value per share as of June 30, 2020 was $20.82, an increase of 13 percent compared to $18.42 as of June 30, 2019.
"Our results for the second quarter reflect the challenging COVID-19 pandemic environment we are operating in today and the resulting impact on our mortgage insurance portfolio," said Radian’s Chief Executive Officer Rick Thornberry. "We continue to be encouraged by the impact of the programs put in place to help ease the burden of the crisis on homeowners, including mortgage forbearance programs and loss mitigation workout options. We are also pleased with the rebound in the housing market, which helped us to write record volume of new primary mortgage insurance business of $25.5 billion dollars in the second quarter."
Thornberry added, "While the ultimate financial impact to our company will depend upon the depth and duration of this economic cycle, we believe we are well prepared with a strong capital position, significant holding company resources, a solid business model, deep customer relationships and a dedicated and talented team. I am very proud of the resilience of our businesses and the strength and commitment of our One Radian unified team."
SECOND QUARTER HIGHLIGHTS
CAPITAL AND LIQUIDITY UPDATE
Radian Group
Radian Guaranty
RECENT EVENTS
Radian Guaranty Operating Statistics for July 2020
The information includes total new primary defaults, which include defaults under forbearance programs in response to the COVID-19 pandemic, as well as cures, claims paid and rescissions/denials. The information regarding new defaults and cures is reported to Radian Guaranty from loan servicers. We consider a loan to be in default for financial statement and internal tracking purposes upon receipt of notification by servicers that a borrower has missed two monthly payments. Default reporting, particularly on a monthly basis, may be affected by several factors, including the date on which the loan servicer’s report is generated and transmitted to Radian Guaranty, the impact of updated information submitted by servicers and the timing of servicing transfers.
|
July 2020 |
June 2020 |
May 2020 |
||||||
Beginning Primary Default Inventory (# of loans) |
69,742 |
|
55,103 |
|
|
22,790 |
|
||
Plus: New Defaults |
8,477 |
|
20,862 |
|
|
35,915 |
|
||
Less: Cures |
10,678 |
|
6,119 |
|
|
3,424 |
|
||
Less: Claims Paid (1) |
92 |
|
107 |
|
|
176 |
|
||
Less: Rescissions and Claim Denials, net (2) |
16 |
|
(3 |
) |
|
2 |
|
||
Ending Defaults |
67,433 |
|
69,742 |
|
|
55,103 |
|
(1) |
Includes those charged to a deductible or captive reinsurance transactions, as well as commutations. |
||
(2) |
Net of any previous Rescissions and Claim Denials that were reinstated during the period. Such reinstated Rescissions and Claim Denials may ultimately result in a paid claim. |
CONFERENCE CALL
Radian will discuss second quarter financial results in a conference call on Monday, August 10, 2020, at 10:00 a.m. Eastern time. The conference call will be broadcast live over the Internet at https://radian.com/who-we-are/for-investors/webcasts or at www.radian.com. The call may also be accessed by dialing 866.436.9172 inside the U.S., or 630.691.2760 for international callers, using passcode 49847107.
A digital replay of the webcast will be available on Radian’s website approximately two hours after the live broadcast ends for a period of two weeks at https://radian.com/who-we-are/for-investors/webcasts, using passcode 49847107.
In addition to the information provided in the company's earnings news release, other statistical and financial information, which is expected to be referred to during the conference call, will be available on Radian's website at www.radian.com, under Investors.
NON-GAAP FINANCIAL MEASURES
Radian believes that adjusted pretax operating income, adjusted diluted net operating income per share and adjusted net operating return on equity (non-GAAP measures) facilitate evaluation of the company’s fundamental financial performance and provide relevant and meaningful information to investors about the ongoing operating results of the company. On a consolidated basis, these measures are not recognized in accordance with accounting principles generally accepted in the United States of America (GAAP) and should not be considered in isolation or viewed as substitutes for GAAP measures of performance. The measures described below have been established in order to increase transparency for the purpose of evaluating the company’s operating trends and enabling more meaningful comparisons with Radian’s competitors.
Adjusted pretax operating income (loss) is defined as GAAP consolidated pretax income (loss) excluding the effects of: (i) net gains (losses) on investments and other financial instruments; (ii) loss on extinguishment of debt; (iii) amortization and impairment of goodwill and other acquired intangible assets; and (iv) impairment of other long-lived assets and other non-operating items, such as gains (losses) from the sale of lines of business and acquisition-related income and expenses. Adjusted diluted net operating income (loss) per share is calculated by dividing (i) adjusted pretax operating income (loss) attributable to common stockholders, net of taxes computed using the Company’s statutory tax rate, by (ii) the sum of the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. Adjusted net operating return on equity is calculated by dividing annualized adjusted pretax operating income (loss), net of taxes computed using the Company’s statutory tax rate, by average stockholders’ equity, based on the average of the beginning and ending balances for each period presented.
In addition to the above non-GAAP measures for the consolidated company, we also have presented as supplemental information a non-GAAP measure for our Real Estate segment, representing a measure of earnings before interest, income tax provision (benefit), depreciation and amortization (“EBITDA”). We calculate Real Estate adjusted EBITDA by using adjusted pretax operating income as described above, further adjusted to remove the impact of depreciation and corporate allocations for interest and operating expenses. In addition, Real Estate adjusted EBITDA margin is calculated by dividing Real Estate adjusted EBITDA by GAAP total revenue for the Real Estate segment. Real Estate adjusted EBITDA and Real Estate adjusted EBITDA margin are used to facilitate comparisons with other services companies, since they are widely accepted measures of performance in the services industry and are used internally as supplemental measures to evaluate the performance of our Real Estate segment.
See Exhibit F or Radian’s website for a description of these items, as well as Exhibit G for reconciliations to the most comparable consolidated GAAP measures.
ABOUT RADIAN
Radian Group Inc. (NYSE: RDN) is ensuring the American dream of homeownership responsibly and sustainably through products and services that include industry-leading mortgage insurance and a comprehensive suite of mortgage, risk, title, valuation, asset management and other real estate services. We are powered by technology, informed by data and driven to deliver new and better ways to transact and manage risk. Visit www.radian.com to learn more about how Radian is shaping the future of mortgage and real estate services.
FINANCIAL RESULTS AND SUPPLEMENTAL INFORMATION CONTENTS (Unaudited) For historical trend information, refer to Radian’s quarterly financial statistics at http://www.radian.biz/page?name=FinancialReportsCorporate. |
||
Exhibit A: |
Condensed Consolidated Statements of Operations Trend Schedule |
|
Exhibit B: |
Net Income (Loss) Per Share Trend Schedule |
|
Exhibit C: |
Condensed Consolidated Balance Sheets |
|
Exhibit D: |
Net Premiums Earned |
|
Exhibit E: |
Segment Information |
|
Exhibit F: |
Definition of Consolidated Non-GAAP Financial Measures |
|
Exhibit G: |
Consolidated Non-GAAP Financial Measure Reconciliations |
|
Exhibit H: |
Mortgage Supplemental Information |
|
|
New Insurance Written |
|
Exhibit I: |
Mortgage Supplemental Information |
|
|
Primary Insurance in Force and Risk in Force |
|
Exhibit J: |
Mortgage Supplemental Information |
|
|
Claims and Reserves |
|
Exhibit K: |
Mortgage Supplemental Information |
|
|
Default Statistics |
|
Exhibit L: |
Mortgage Supplemental Information |
|
|
Reinsurance Programs |
Radian Group Inc. and Subsidiaries | ||||||||||||||||||||
Condensed Consolidated Statements of Operations Trend Schedule |
||||||||||||||||||||
Exhibit A |
||||||||||||||||||||
|
|
|
||||||||||||||||||
|
2020 |
|
2019 |
|||||||||||||||||
(In thousands, except per-share amounts) |
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|||||||||||
Net premiums earned |
$ |
249,295 |
|
|
$ |
277,415 |
|
|
$ |
301,486 |
|
|
$ |
281,185 |
|
|
$ |
299,166 |
|
|
Services revenue |
28,075 |
|
|
31,927 |
|
|
40,031 |
|
|
42,509 |
|
|
39,303 |
|
||||||
Net investment income |
38,723 |
|
|
40,944 |
|
|
41,432 |
|
|
42,756 |
|
|
43,761 |
|
||||||
Net gains (losses) on investments and other financial instruments |
47,276 |
|
|
(22,027) |
|
|
4,257 |
|
|
13,009 |
|
|
12,540 |
|
||||||
Other income |
1,072 |
|
|
822 |
|
|
818 |
|
|
879 |
|
|
194 |
|
||||||
Total revenues |
364,441 |
|
|
329,081 |
|
|
388,024 |
|
|
380,338 |
|
|
394,964 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|||||||||||
Provision for losses |
304,418 |
|
|
35,951 |
|
|
34,619 |
|
|
29,231 |
|
|
47,427 |
|
||||||
Policy acquisition costs |
6,015 |
|
|
7,413 |
|
|
6,783 |
|
|
6,435 |
|
|
6,203 |
|
||||||
Cost of services |
17,972 |
|
|
22,141 |
|
|
27,278 |
|
|
29,044 |
|
|
27,845 |
|
||||||
Other operating expenses |
60,582 |
|
|
69,110 |
|
|
80,894 |
|
|
76,384 |
|
|
70,046 |
|
||||||
Interest expense |
16,699 |
|
|
12,194 |
|
|
12,160 |
|
|
13,492 |
|
|
14,961 |
|
||||||
Loss on extinguishment of debt |
— |
|
|
— |
|
|
— |
|
|
5,940 |
|
|
16,798 |
|
||||||
Impairment of goodwill |
— |
|
|
— |
|
|
4,828 |
|
|
— |
|
|
— |
|
||||||
Amortization and impairment of other acquired intangible assets |
979 |
|
|
979 |
|
|
15,823 |
|
|
2,139 |
|
|
2,139 |
|
||||||
Total expenses |
406,665 |
|
|
147,788 |
|
|
182,385 |
|
|
162,665 |
|
|
185,419 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Pretax income (loss) |
(42,224) |
|
|
181,293 |
|
|
205,639 |
|
|
217,673 |
|
|
209,545 |
|
||||||
Income tax provision (benefit) |
(12,273) |
|
|
40,832 |
|
|
44,455 |
|
|
44,235 |
|
|
42,815 |
|
||||||
Net income (loss) |
$ |
(29,951) |
|
|
$ |
140,461 |
|
|
$ |
161,184 |
|
|
$ |
173,438 |
|
|
$ |
166,730 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Diluted net income (loss) per share |
$ |
(0.15) |
|
|
$ |
0.70 |
|
|
$ |
0.79 |
|
|
$ |
0.83 |
|
|
$ |
0.78 |
|
Radian Group Inc. and Subsidiaries |
||||||||||||||||||||
Net Income (Loss) Per Share Trend Schedule |
||||||||||||||||||||
Exhibit B |
||||||||||||||||||||
The calculation of basic and diluted net income (loss) per share was as follows: |
||||||||||||||||||||
|
2020 |
|
2019 |
|||||||||||||||||
(In thousands, except per-share amounts) |
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|||||||||||
Net income (loss)—basic and diluted |
$ |
(29,951) |
|
|
$ |
140,461 |
|
|
$ |
161,184 |
|
|
$ |
173,438 |
|
|
$ |
166,730 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Average common shares outstanding—basic (1) |
193,299 |
|
|
200,161 |
|
|
203,431 |
|
|
203,107 |
|
|
208,097 |
|
||||||
Dilutive effect of share-based compensation arrangements (2) |
— |
|
|
1,658 |
|
|
1,734 |
|
|
5,584 |
|
|
5,506 |
|
||||||
Adjusted average common shares outstanding—diluted |
193,299 |
|
|
201,819 |
|
|
205,165 |
|
|
208,691 |
|
|
213,603 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic net income (loss) per share |
$ |
(0.15) |
|
|
$ |
0.70 |
|
|
$ |
0.79 |
|
|
$ |
0.85 |
|
|
$ |
0.80 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Diluted net income (loss) per share |
$ |
(0.15) |
|
|
$ |
0.70 |
|
|
$ |
0.79 |
|
$ |
0.83 |
|
$ |
0.78 |
|
(1) |
Includes the impact of fully vested shares under our share-based compensation programs. |
|
(2) |
There were no dilutive shares for the three months ended June 30, 2020, as a result of our net loss for the period. The following number of shares of our common stock equivalents issued under our share-based compensation arrangements were not included in the calculation of diluted net income (loss) per share because they were anti-dilutive: |
|
2020 |
|
2019 |
||||||||||||
(In thousands) |
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
||||||
Shares of common stock equivalents |
2,295 |
|
|
132 |
|
|
— |
|
|
— |
|
|
168 |
|
Radian Group Inc. and Subsidiaries |
||||||||||||||||||||
Condensed Consolidated Balance Sheets |
||||||||||||||||||||
Exhibit C |
||||||||||||||||||||
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|||||||||||
(In thousands, except per-share amounts) |
2020 |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|||||||||||
Investments |
$ |
6,431,350 |
|
|
$ |
5,608,627 |
|
|
$ |
5,658,747 |
|
|
$ |
5,533,724 |
|
|
$ |
5,513,319 |
|
|
Cash |
68,387 |
|
|
54,108 |
|
|
92,729 |
|
|
49,393 |
|
|
74,111 |
|
||||||
Restricted cash |
16,279 |
|
|
7,817 |
|
|
3,545 |
|
|
2,853 |
|
|
5,007 |
|
||||||
Accounts and notes receivable |
110,722 |
|
|
123,381 |
|
|
93,630 |
|
|
144,113 |
|
|
122,104 |
|
||||||
Deferred income taxes, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6,872 |
|
||||||
Goodwill and other acquired intangible assets, net |
26,229 |
|
|
27,208 |
|
|
28,187 |
|
|
52,533 |
|
|
54,672 |
|
||||||
Prepaid reinsurance premium |
330,476 |
|
|
356,104 |
|
|
363,856 |
|
|
374,339 |
|
|
385,805 |
|
||||||
Other assets |
585,866 |
|
|
513,187 |
|
|
567,619 |
|
|
513,647 |
|
|
430,236 |
|
||||||
Total assets |
$ |
7,569,309 |
|
|
$ |
6,690,432 |
|
|
$ |
6,808,313 |
|
|
$ |
6,670,602 |
|
|
$ |
6,592,126 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities and stockholders’ equity: |
|
|
|
|
|
|
|
|
|
|||||||||||
Unearned premiums |
$ |
561,280 |
|
|
$ |
605,045 |
|
|
$ |
626,822 |
|
|
$ |
647,856 |
|
|
$ |
666,354 |
|
|
Reserve for losses and loss adjustment expense |
738,885 |
|
|
418,202 |
|
|
404,765 |
|
|
398,141 |
|
|
405,278 |
|
||||||
Senior notes |
1,403,857 |
|
|
887,584 |
|
|
887,110 |
|
|
886,643 |
|
|
982,890 |
|
||||||
FHLB advances |
175,122 |
|
|
173,760 |
|
|
134,875 |
|
|
104,492 |
|
|
106,382 |
|
||||||
Reinsurance funds withheld |
312,350 |
|
|
302,551 |
|
|
291,829 |
|
|
352,532 |
|
|
339,641 |
|
||||||
Other liabilities |
391,810 |
|
|
438,782 |
|
|
414,189 |
|
|
358,431 |
|
|
308,337 |
|
||||||
Total liabilities |
3,583,304 |
|
|
2,825,924 |
|
|
2,759,590 |
|
|
2,748,095 |
|
|
2,808,882 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Common stock |
210 |
|
|
208 |
|
|
219 |
|
|
220 |
|
|
223 |
|
||||||
Treasury stock |
(909,738) |
|
|
(902,024) |
|
|
(901,657) |
|
|
(901,556) |
|
|
(901,419) |
|
||||||
Additional paid-in capital |
2,232,949 |
|
|
2,231,670 |
|
|
2,449,884 |
|
|
2,469,097 |
|
|
2,539,803 |
|
||||||
Retained earnings |
2,450,423 |
|
|
2,504,853 |
|
|
2,389,789 |
|
|
2,229,107 |
|
|
2,056,175 |
|
||||||
Accumulated other comprehensive income |
212,161 |
|
|
29,801 |
|
|
110,488 |
|
|
125,639 |
|
|
88,462 |
|
||||||
Total stockholders’ equity |
3,986,005 |
|
|
3,864,508 |
|
|
4,048,723 |
|
|
3,922,507 |
|
|
3,783,244 |
|
||||||
Total liabilities and stockholders’ equity |
$ |
7,569,309 |
|
|
$ |
6,690,432 |
|
|
$ |
6,808,313 |
|
|
$ |
6,670,602 |
|
|
$ |
6,592,126 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Shares outstanding |
191,492 |
|
|
190,387 |
|
|
201,164 |
|
|
202,219 |
|
|
205,399 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Book value per share |
$ |
20.82 |
|
|
$ |
20.30 |
|
|
$ |
20.13 |
|
|
$ |
19.40 |
|
|
$ |
18.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Debt to capital ratio (1) |
26.0 |
% |
|
18.7 |
% |
|
18.0 |
% |
|
18.4 |
% |
|
20.6 |
% |
||||||
Risk to capital ratio-Radian Guaranty only |
13.3:1 |
|
13.8:1 |
|
13.6:1 |
|
14.2:1 |
|
14.6:1 |
(1) |
Calculated as senior notes divided by senior notes and stockholders’ equity. |
Radian Group Inc. and Subsidiaries |
|||||||||||||||||||||
Net Premiums Earned |
|||||||||||||||||||||
Exhibit D |
|||||||||||||||||||||
|
2020 |
|
2019 |
|
|||||||||||||||||
(In thousands) |
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Premiums earned: |
|
|
|
|
|
|
|
|
|
|
|||||||||||
Direct - Mortgage: |
|
|
|
|
|
|
|
|
|
|
|||||||||||
Premiums earned, excluding revenue from cancellations |
$ |
263,468 |
|
|
$ |
274,647 |
|
|
$ |
295,845 |
|
(1) |
$ |
274,595 |
|
|
$ |
315,109 |
|
(2) |
|
Single Premium Policy cancellations |
50,023 |
|
|
24,133 |
|
|
26,479 |
|
|
27,254 |
|
|
15,793 |
|
|
||||||
Total direct - Mortgage |
313,491 |
|
|
298,780 |
|
|
322,324 |
|
(1) |
301,849 |
|
|
330,902 |
|
(2) |
||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Assumed - Mortgage: (1) (3) |
3,197 |
|
|
3,456 |
|
|
2,837 |
|
|
2,614 |
|
|
2,481 |
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ceded - Mortgage: |
|
|
|
|
|
|
|
|
|
|
|||||||||||
Premiums earned, excluding revenue from cancellations |
(26,493) |
|
|
(28,609) |
|
|
(28,055) |
|
|
(28,457) |
|
|
(53,948) |
|
(2) |
||||||
Single Premium Policy cancellations (4) |
(14,424) |
|
|
(7,183) |
|
|
(7,843) |
|
|
(8,137) |
|
|
(4,833) |
|
|
||||||
Profit commission - other (5) |
(28,175) |
|
|
8,555 |
|
|
9,241 |
|
|
9,729 |
|
|
21,732 |
|
(2) |
||||||
Total ceded premiums, net of profit commission - Mortgage (6) |
(69,092) |
|
|
(27,237) |
|
|
(26,657) |
|
|
(26,865) |
|
|
(37,049) |
|
(2) |
||||||
Net premiums earned - Mortgage |
247,596 |
|
|
274,999 |
|
|
298,504 |
|
(1) |
277,598 |
|
|
296,334 |
|
(2) |
||||||
Net premiums earned - Real Estate |
1,699 |
|
|
2,416 |
|
|
2,982 |
|
|
3,587 |
|
|
2,832 |
|
|
||||||
Net premiums earned |
$ |
249,295 |
|
|
$ |
277,415 |
|
|
$ |
301,486 |
|
(1) |
$ |
281,185 |
|
|
$ |
299,166 |
|
(2) |
(1) |
Includes a cumulative impact related to the recognition of deferred initial premiums on monthly policies. |
|
(2) |
Includes a cumulative adjustment to unearned premiums related to an update to the amortization rates used to recognize revenue for Single Premium Policies. |
|
(3) |
Includes premiums earned from our participation in certain credit risk transfer programs. |
|
(4) |
Includes the impact of related profit commissions. |
|
(5) |
The amounts represent the profit commission on the Single Premium QSR Program, excluding the impact of Single Premium Policy cancellations. |
|
(6) |
See Exhibit L for additional information on ceded premiums for our various reinsurance programs. |
Radian Group Inc. and Subsidiaries | ||||||||||||||||
Segment Information |
||||||||||||||||
Exhibit E (page 1 of 3) |
||||||||||||||||
Summarized financial information concerning our reportable operating segments and all other activities as of and for the periods indicated is as follows. For a definition of adjusted pretax operating income (loss) and Real Estate adjusted EBITDA, along with reconciliations to consolidated GAAP measures, see Exhibits F and G. |
||||||||||||||||
|
Mortgage |
|||||||||||||||
|
2020 |
|
2019 |
|||||||||||||
(In thousands) |
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|||||||
Net premiums written (1) |
$ |
229,458 |
$ |
260,974 |
$ |
287,952 |
(2) |
$ |
270,567 |
$ |
265,345 |
|||||
(Increase) decrease in unearned premiums |
18,138 |
14,025 |
10,552 |
|
7,031 |
|
30,989 |
(3) |
||||||||
Net premiums earned |
247,596 |
274,999 |
298,504 |
|
277,598 |
|
296,334 |
|||||||||
Services revenue (4) |
3,918 |
3,216 |
2,936 |
|
2,375 |
|
1,895 |
|||||||||
Net investment income (4) |
34,708 |
36,198 |
37,818 |
|
37,032 |
|
37,871 |
|||||||||
Other income (4) |
721 |
671 |
719 |
|
641 |
|
544 |
|||||||||
Total (4) |
286,943 |
315,084 |
339,977 |
|
317,646 |
|
336,644 |
|||||||||
|
|
|
|
|
||||||||||||
Provision for losses |
304,021 |
35,246 |
34,411 |
|
29,053 |
|
47,165 |
|||||||||
Policy acquisition costs |
6,015 |
7,413 |
6,783 |
|
6,435 |
|
6,203 |
|||||||||
Cost of services (4) |
2,133 |
1,757 |
1,713 |
|
1,621 |
|
1,128 |
|||||||||
Other operating expenses before corporate allocations (4) (5) |
18,705 |
23,733 |
32,604 |
|
30,773 |
|
28,089 |
|||||||||
Interest expense before corporate allocations (6) |
3,064 |
680 |
688 |
|
682 |
|
625 |
|||||||||
Total (4) (7) |
333,938 |
68,829 |
76,199 |
|
68,564 |
|
83,210 |
|||||||||
Adjusted pretax operating income (loss) before corporate allocations (4) |
(46,995) |
246,255 |
263,778 |
|
249,082 |
|
253,434 |
|||||||||
Allocation of corporate operating expenses |
25,191 |
29,074 |
27,394 |
|
26,671 |
|
24,388 |
|||||||||
Allocation of corporate interest expense |
16,135 |
11,514 |
11,472 |
|
12,810 |
|
14,336 |
|||||||||
Adjusted pretax operating income (loss) (4) |
$ |
(88,321) |
$ |
205,667 |
$ |
224,912 |
$ |
209,601 |
$ |
214,710 |
||||||
|
Real Estate |
|||||||||||||||
|
2020 |
|
2019 |
|||||||||||||
(In thousands) |
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|||||||
Net premiums earned |
$ |
1,699 |
$ |
2,416 |
$ |
2,982 |
$ |
3,587 |
|
$ |
2,832 |
|||||
Services revenue (4) (7) |
24,267 |
26,042 |
23,826 |
|
26,375 |
|
|
25,026 |
||||||||
Net investment income |
126 |
125 |
144 |
|
177 |
|
|
177 |
||||||||
Other income |
— |
— |
— |
|
— |
|
|
(408) |
||||||||
Total (4) |
26,092 |
28,583 |
26,952 |
|
30,139 |
|
|
27,627 |
||||||||
|
|
|
|
|
|
|
||||||||||
Provision for losses |
426 |
743 |
238 |
|
211 |
|
|
318 |
||||||||
Cost of services (4) |
15,893 |
17,933 |
16,275 |
|
18,155 |
|
|
17,773 |
||||||||
Other operating expenses before corporate allocations (4) (5) |
11,251 |
10,938 |
11,972 |
|
11,404 |
|
|
10,649 |
||||||||
Total (4) |
27,570 |
29,614 |
28,485 |
|
29,770 |
|
|
28,740 |
||||||||
Adjusted pretax operating income (loss) before corporate allocations (4) (8) |
(1,478) |
(1,031) |
(1,533) |
|
369 |
|
|
(1,113) |
||||||||
Allocation of corporate operating expenses (4) |
3,339 |
3,836 |
2,987 |
|
2,910 |
|
|
2,659 |
||||||||
Adjusted pretax operating income (loss) (4) |
$ |
(4,817) |
$ |
(4,867) |
$ |
(4,520) |
$ |
(2,541) |
|
$ |
(3,772) |
Radian Group Inc. and Subsidiaries Segment Information |
||||||||||||||||||||
Exhibit E (page 2 of 3) |
||||||||||||||||||||
|
All Other (4) (9) |
|||||||||||||||||||
|
2020 |
|
2019 |
|||||||||||||||||
(In thousands) |
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|||||||||||
Services revenue (7) |
$ |
— |
|
|
$ |
2,861 |
|
|
$ |
13,559 |
|
|
$ |
14,027 |
|
|
$ |
12,748 |
|
|
Net investment income |
6,389 |
|
|
4,621 |
|
|
3,470 |
|
|
5,547 |
|
|
5,713 |
|
||||||
Other income |
104 |
|
|
151 |
|
|
99 |
|
|
238 |
|
|
58 |
|
||||||
Total |
6,493 |
|
|
7,633 |
|
|
17,128 |
|
|
19,812 |
|
|
18,519 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cost of services |
(35) |
|
|
2,556 |
|
|
9,500 |
|
|
9,387 |
|
|
9,113 |
|
||||||
Other operating expenses |
1,889 |
|
|
1,278 |
|
|
4,037 |
|
|
4,742 |
|
|
4,505 |
|
||||||
Adjusted pretax operating income |
$ |
4,639 |
|
|
$ |
3,799 |
|
|
$ |
3,591 |
|
|
$ |
5,683 |
|
|
$ |
4,901 |
|
(1) |
Net of ceded premiums written under the QSR Programs and the Excess-of-Loss Program. See Exhibit L for additional information. |
|
(2) |
Includes a cumulative impact related to the recognition of deferred initial premiums on monthly policies. |
|
(3) |
Includes a cumulative adjustment to unearned premiums related to an update to the amortization rates used to recognize revenue for Single Premium Policies. |
|
(4) |
Certain organizational changes implemented in the first quarter of 2020 caused the composition of our reportable segments to change. These changes to our reportable segments have been reflected in our segment operating results for all periods presented. |
|
(5) |
Does not include impairment of other long-lived assets and other non-operating items, which are not considered components of adjusted pretax operating income (loss). |
|
(6) |
Primarily relates to FHLB borrowings made by our mortgage insurance subsidiaries. Prior to March 31, 2020, this amount had been presented in allocation of corporate interest expense. All prior periods have been restated to reflect the current presentation. |
|
(7) |
Inter-segment information: |
|
2020 |
|
2019 |
|||||||||||||||||
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|||||||||||
Inter-segment revenue included in: |
|
|
|
|
|
|
|
|
|
|||||||||||
Mortgage |
$ |
— |
|
|
$ |
83 |
|
|
$ |
160 |
|
|
$ |
35 |
|
|
$ |
23 |
|
|
Real Estate |
110 |
|
|
109 |
|
|
88 |
|
|
111 |
|
|
133 |
|
||||||
All Other |
2,500 |
|
(a) |
— |
|
|
42 |
|
|
122 |
|
|
210 |
|
||||||
Total inter-segment revenue |
$ |
2,610 |
|
|
$ |
192 |
|
|
$ |
290 |
|
|
$ |
268 |
|
|
$ |
366 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Inter-segment expense included in: |
|
|
|
|
|
|
|
|
|
|||||||||||
Mortgage |
$ |
2,591 |
|
(a) |
$ |
87 |
|
|
$ |
79 |
|
|
$ |
150 |
|
|
$ |
196 |
|
|
Real Estate |
19 |
|
|
22 |
|
|
16 |
|
|
(1) |
|
|
(18) |
|
||||||
All Other |
— |
|
|
83 |
|
|
195 |
|
|
119 |
|
|
188 |
|
||||||
Total inter-segment expense |
$ |
2,610 |
|
|
$ |
192 |
|
|
$ |
290 |
|
|
$ |
268 |
|
|
$ |
366 |
|
(a) |
Primarily relates to interest on the $200.0 million 3% intercompany surplus note issued by Radian Guaranty to Radian Group. |
(8) |
Supplemental information for Real Estate adjusted EBITDA (see definition in Exhibit F): |
|
2020 |
|
2019 |
|||||||||||||||||
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|||||||||||
Adjusted pretax operating income (loss) before corporate allocations |
$ |
(1,478) |
|
|
$ |
(1,031) |
|
|
$ |
(1,533) |
|
|
$ |
369 |
|
|
$ |
(1,113) |
|
|
Depreciation and amortization |
776 |
|
|
666 |
|
|
553 |
|
|
560 |
|
|
616 |
|
||||||
Real Estate adjusted EBITDA |
$ |
(702) |
|
|
$ |
(365) |
|
|
$ |
(980) |
|
|
$ |
929 |
|
|
$ |
(497) |
|
(9) |
All Other activities include income (losses) from assets held by our holding company, related general corporate operating expenses not attributable or allocated to our reportable segments and, for all periods through the first quarter of 2020, income and expenses related to Clayton prior to its sale on January 21, 2020. |
Radian Group Inc. and Subsidiaries |
|||||||||||||||
Segment Information |
|||||||||||||||
Exhibit E (page 3 of 3) |
|||||||||||||||
Selected Mortgage Key Ratios |
|||||||||||||||
|
|
|
|||||||||||||
|
2020 |
|
2019 |
||||||||||||
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
||||||
|
|
|
|
|
|
|
|
|
|
||||||
Loss ratio (1) |
122.8 |
% |
|
12.8 |
% |
|
11.5 |
% |
|
10.5 |
% |
|
15.9 |
% |
|
Expense ratio (1) |
20.2 |
% |
|
21.9 |
% |
|
22.4 |
% |
|
23.0 |
% |
|
19.8 |
% |
(1) |
Calculated on a GAAP basis using net premiums earned. |
Radian Group Inc. and Subsidiaries | ||
Definition of Consolidated Non-GAAP Financial Measures | ||
Exhibit F (page 1 of 2) | ||
|
||
Use of Non-GAAP Financial Measures | ||
In addition to the traditional GAAP financial measures, we have presented “adjusted pretax operating income (loss),” “adjusted diluted net operating income (loss) per share” and “adjusted net operating return on equity,” which are non-GAAP financial measures for the consolidated company, among our key performance indicators to evaluate our fundamental financial performance. These non-GAAP financial measures align with the way the Company’s business performance is evaluated by both management and the board of directors. These measures have been established in order to increase transparency for the purposes of evaluating our operating trends and enabling more meaningful comparisons with our peers. Although on a consolidated basis “adjusted pretax operating income (loss),” “adjusted diluted net operating income (loss) per share” and “adjusted net operating return on equity” are non-GAAP financial measures, we believe these measures aid in understanding the underlying performance of our operations. Our senior management, including our Chief Executive Officer (Radian’s chief operating decision maker), uses adjusted pretax operating income (loss) as our primary measure to evaluate the fundamental financial performance of the Company’s business segments and to allocate resources to the segments. | ||
Adjusted pretax operating income (loss) is defined as GAAP consolidated pretax income (loss) excluding the effects of: (i) net gains (losses) on investments and other financial instruments; (ii) loss on extinguishment of debt; (iii) amortization and impairment of goodwill and other acquired intangible assets; and (iv) impairment of other long-lived assets and other non-operating items, such as gains (losses) from the sale of lines of business and acquisition-related income and expenses. Adjusted diluted net operating income (loss) per share is calculated by dividing (i) adjusted pretax operating income (loss) attributable to common stockholders, net of taxes computed using the Company’s statutory tax rate, by (ii) the sum of the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. Adjusted net operating return on equity is calculated by dividing annualized adjusted pretax operating income (loss), net of taxes computed using the Company’s statutory tax rate, by average stockholders’ equity, based on the average of the beginning and ending balances for each period presented. | ||
Although adjusted pretax operating income (loss) excludes certain items that have occurred in the past and are expected to occur in the future, the excluded items represent those that are: (i) not viewed as part of the operating performance of our primary activities or (ii) not expected to result in an economic impact equal to the amount reflected in pretax income (loss). These adjustments, along with the reasons for their treatment, are described below. | ||
(1) |
Net gains (losses) on investments and other financial instruments. The recognition of realized investment gains or losses can vary significantly across periods as the activity is highly discretionary based on the timing of individual securities sales due to such factors as market opportunities, our tax and capital profile and overall market cycles. Unrealized gains and losses arise primarily from changes in the market value of our investments that are classified as trading or equity securities. These valuation adjustments may not necessarily result in realized economic gains or losses. |
|
Trends in the profitability of our fundamental operating activities can be more clearly identified without the fluctuations of these realized and unrealized gains or losses and changes in fair value of other financial instruments. We do not view them to be indicative of our fundamental operating activities. |
||
(2) |
Loss on extinguishment of debt. Gains or losses on early extinguishment of debt and losses incurred to purchase our debt prior to maturity are discretionary activities that are undertaken in order to take advantage of market opportunities to strengthen our financial and capital positions; therefore, we do not view these activities as part of our operating performance. Such transactions do not reflect expected future operations and do not provide meaningful insight regarding our current or past operating trends. |
|
(3) |
Amortization and impairment of goodwill and other acquired intangible assets. Amortization of acquired intangible assets represents the periodic expense required to amortize the cost of acquired intangible assets over their estimated useful lives. Acquired intangible assets are also periodically reviewed for potential impairment, and impairment adjustments are made whenever appropriate. We do not view these charges as part of the operating performance of our primary activities. |
|
(4) |
Impairment of other long-lived assets and other non-operating items. Includes activities that we do not view to be indicative of our fundamental operating activities, such as: (i) gains (losses) from the sale of lines of business and (ii) acquisition-related expenses. |
|
Radian Group Inc. and Subsidiaries |
Definition of Consolidated Non-GAAP Financial Measures |
Exhibit F (page 2 of 2) |
In addition to the above non-GAAP measures for the consolidated company, we also have presented as supplemental information a non-GAAP measure for our Real Estate segment, representing a measure of earnings before interest, income tax provision (benefit), depreciation and amortization (“EBITDA”). We calculate Real Estate adjusted EBITDA by using adjusted pretax operating income (loss) as described above, further adjusted to remove the impact of depreciation and corporate allocations for interest and operating expenses. In addition, Real Estate adjusted EBITDA margin is calculated by dividing Real Estate adjusted EBITDA by GAAP total revenue for the Real Estate segment. Real Estate adjusted EBITDA and Real Estate adjusted EBITDA margin are used to facilitate comparisons with other services companies, since they are widely accepted measures of performance in the services industry and are used internally as supplemental measures to evaluate the performance of our Real Estate segment. |
See Exhibit G for the reconciliation of the most comparable GAAP measures, consolidated pretax income (loss), diluted net income (loss) per share, return on equity and book value per share, to our non-GAAP financial measures for the consolidated company, adjusted pretax operating income (loss) , adjusted diluted net operating income (loss) per share and adjusted net operating return on equity, respectively. Exhibit G also contains the reconciliation of the most comparable GAAP measure, net income (loss), to Real Estate adjusted EBITDA. |
Total adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share, adjusted net operating return on equity, Real Estate adjusted EBITDA and Real Estate adjusted EBITDA margin should not be considered in isolation or viewed as substitutes for GAAP pretax income (loss), diluted net income (loss) per share, return on equity, book value per share or net income (loss). Our definitions of adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share, adjusted net operating return on equity, Real Estate adjusted EBITDA or Real Estate adjusted EBITDA margin may not be comparable to similarly-named measures reported by other companies. |
Radian Group Inc. and Subsidiaries | ||||||||||||||||||||
Consolidated Non-GAAP Financial Measure Reconciliations |
||||||||||||||||||||
Exhibit G (page 1 of 3) |
||||||||||||||||||||
Reconciliation of Consolidated Pretax Income (Loss) to Adjusted Pretax Operating Income (Loss) |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
2020 |
|
2019 |
|||||||||||||||||
(In thousands) |
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|||||||||||
Consolidated pretax income (loss) |
$ |
(42,224) |
|
|
$ |
181,293 |
|
|
$ |
205,639 |
|
|
$ |
217,673 |
|
|
$ |
209,545 |
|
|
Less reconciling income (expense) items: |
|
|
|
|
|
|
|
|
|
|||||||||||
Net gains (losses) on investments and other financial instruments |
47,276 |
|
|
(22,027) |
|
|
4,257 |
|
|
13,009 |
|
|
12,540 |
|
||||||
Loss on extinguishment of debt |
— |
|
|
— |
|
|
— |
|
|
(5,940) |
|
|
(16,798) |
|
||||||
Impairment of goodwill |
— |
|
|
— |
|
|
(4,828) |
|
|
— |
|
|
— |
|
||||||
Amortization and impairment of other acquired intangible assets |
(979) |
|
|
(979) |
|
|
(15,823) |
|
|
(2,139) |
|
|
(2,139) |
|
||||||
Impairment of other long-lived assets and other non-operating items (1) |
(22) |
|
|
(300) |
|
|
(1,950) |
|
|
— |
|
|
103 |
|
||||||
Total adjusted pretax operating income (loss) (2) |
$ |
(88,499) |
|
|
$ |
204,599 |
|
|
$ |
223,983 |
|
|
$ |
212,743 |
|
|
$ |
215,839 |
|
(1) |
The amounts for all the periods are included in other operating expenses on the Condensed Consolidated Statement of Operations in Exhibit A and primarily relate to impairments of other long-lived assets. |
|
(2) |
Total adjusted pretax operating income (loss) consists of adjusted pretax operating income (loss) for each reportable segment and All Other activities as follows: |
|
2020 |
|
2019 |
|||||||||||||||||
(In thousands) |
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|||||||||||
Adjusted pretax operating income (loss): |
|
|
|
|
|
|
|
|
|
|||||||||||
Mortgage segment |
$ |
(88,321) |
|
|
$ |
205,667 |
|
|
$ |
224,912 |
|
|
$ |
209,601 |
|
|
$ |
214,710 |
|
|
Real Estate segment |
(4,817) |
|
|
(4,867) |
|
|
(4,520) |
|
|
(2,541) |
|
|
(3,772) |
|
||||||
All Other activities |
4,639 |
|
|
3,799 |
|
|
3,591 |
|
|
5,683 |
|
|
4,901 |
|
||||||
Total adjusted pretax operating income (loss) |
$ |
(88,499) |
|
|
$ |
204,599 |
|
|
$ |
223,983 |
|
|
$ |
212,743 |
|
|
$ |
215,839 |
|
Radian Group Inc. and Subsidiaries |
||||||||||||||||||||
Consolidated Non-GAAP Financial Measure Reconciliations |
||||||||||||||||||||
Exhibit G (page 2 of 3) |
||||||||||||||||||||
Reconciliation of Diluted Net Income (Loss) Per Share to Adjusted Diluted Net Operating Income (Loss) Per Share |
||||||||||||||||||||
|
2020 |
|
2019 |
|||||||||||||||||
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|||||||||||
Diluted net income (loss) per share |
$ |
(0.15) |
|
|
$ |
0.70 |
|
|
$ |
0.79 |
|
|
$ |
0.83 |
|
|
$ |
0.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Less per-share impact of reconciling income (expense) items: |
|
|
|
|
|
|
|
|
|
|||||||||||
Net gains (losses) on investments and other financial instruments |
0.24 |
|
|
(0.11) |
|
|
0.02 |
|
|
0.06 |
|
|
0.06 |
|
||||||
Loss on extinguishment of debt |
— |
|
|
— |
|
|
— |
|
|
(0.03) |
|
|
(0.08) |
|
||||||
Impairment of goodwill |
— |
|
|
— |
|
|
(0.02) |
|
|
— |
|
|
— |
|
||||||
Amortization and impairment of other acquired intangible assets |
(0.01) |
|
|
— |
|
|
(0.08) |
|
|
(0.01) |
|
|
(0.01) |
|
||||||
Impairment of other long-lived assets and other non-operating items |
— |
|
|
— |
|
|
(0.01) |
|
|
— |
|
|
— |
|
||||||
Income tax (provision) benefit on reconciling income (expense) items (1) |
(0.05) |
|
|
0.02 |
|
|
0.02 |
|
|
— |
|
|
0.01 |
|
||||||
Difference between statutory and effective tax rates |
0.03 |
|
|
(0.01) |
|
|
— |
|
|
— |
|
|
— |
|
||||||
Per-share impact of reconciling income (expense) items |
0.21 |
|
|
(0.10) |
|
|
(0.07) |
|
|
0.02 |
|
|
(0.02) |
|
||||||
Adjusted diluted net operating income (loss) per share (1) |
$ |
(0.36) |
|
|
$ |
0.80 |
|
|
$ |
0.86 |
|
|
$ |
0.81 |
|
|
$ |
0.80 |
|
(1) |
Calculated using the company’s federal statutory tax rate of 21%. Any permanent tax adjustments and state income taxes on these items have been deemed immaterial and are not included. |
Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity (1) |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
2020 |
|
2019 |
||||||||||||
|
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
||||||
Return on equity (1) |
(3.1) |
% |
|
14.2 |
% |
|
16.2 |
% |
|
18.0 |
% |
|
17.8 |
% |
|
Less impact of reconciling income (expense) items: (2) |
|
|
|
|
|
|
|
|
|
||||||
Net gains (losses) on investments and other financial instruments |
4.8 |
|
|
(2.2) |
|
|
0.4 |
|
|
1.4 |
|
|
1.3 |
|
|
Loss on extinguishment of debt |
— |
|
|
— |
|
|
— |
|
|
(0.6) |
|
|
(1.8) |
|
|
Impairment of goodwill |
— |
|
|
— |
|
|
(0.5) |
|
|
— |
|
|
— |
|
|
Amortization and impairment of other acquired intangible assets |
(0.1) |
|
|
(0.1) |
|
|
(1.6) |
|
|
(0.2) |
|
|
(0.2) |
|
|
Impairment of other long-lived assets and other non-operating items |
— |
|
|
— |
|
|
(0.2) |
|
|
— |
|
|
— |
|
|
Income tax (provision) benefit on reconciling income (expense) items (3) |
(1.0) |
|
|
0.5 |
|
|
0.4 |
|
|
(0.1) |
|
|
0.1 |
|
|
Difference between statutory and effective tax rates |
0.3 |
|
|
(0.3) |
|
|
(0.1) |
|
|
0.1 |
|
|
0.2 |
|
|
Impact of reconciling income (expense) items |
4.0 |
|
|
(2.1) |
|
|
(1.6) |
|
|
0.6 |
|
|
(0.4) |
|
|
Adjusted net operating return on equity |
(7.1) |
% |
|
16.3 |
% |
|
17.8 |
% |
|
17.4 |
% |
|
18.2 |
% |
(1) |
Calculated by dividing annualized net income (loss) by average stockholders’ equity, based on the average of the beginning and ending balances for each period presented. |
|
(2) |
Annualized, as a percentage of average stockholders’ equity. |
|
(3) |
Calculated using the company’s federal statutory tax rate of 21%. Any permanent tax adjustments and state income taxes on these items have been deemed immaterial and are not included. |
Radian Group Inc. and Subsidiaries |
||||||||||||||||||||
Consolidated Non-GAAP Financial Measure Reconciliations |
||||||||||||||||||||
Exhibit G (page 3 of 3) |
||||||||||||||||||||
Reconciliation of Net Income (Loss) to Real Estate Adjusted EBITDA |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
2020 |
|
2019 |
|||||||||||||||||
(In thousands) |
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) |
$ |
(29,951) |
|
|
$ |
140,461 |
|
|
$ |
161,184 |
|
|
$ |
173,438 |
|
|
$ |
166,730 |
|
|
Less reconciling income (expense) items: |
|
|
|
|
|
|
|
|
|
|||||||||||
Net gains (losses) on investments and other financial instruments |
47,276 |
|
|
(22,027) |
|
|
4,257 |
|
|
13,009 |
|
|
12,540 |
|
||||||
Loss on extinguishment of debt |
— |
|
|
— |
|
|
— |
|
|
(5,940) |
|
|
(16,798) |
|
||||||
Impairment of goodwill |
— |
|
|
— |
|
|
(4,828) |
|
|
— |
|
|
— |
|
||||||
Amortization and impairment of other acquired intangible assets |
(979) |
|
|
(979) |
|
|
(15,823) |
|
|
(2,139) |
|
|
(2,139) |
|
||||||
Impairment of other long-lived assets and other non-operating items |
(22) |
|
|
(300) |
|
|
(1,950) |
|
|
— |
|
|
103 |
|
||||||
Income tax (provision) benefit |
12,273 |
|
|
(40,832) |
|
|
(44,455) |
|
|
(44,235) |
|
|
(42,815) |
|
||||||
Mortgage adjusted pretax operating income (loss) |
(88,321) |
|
|
205,667 |
|
|
224,912 |
|
|
209,601 |
|
|
214,710 |
|
||||||
All Other adjusted pretax operating income |
4,639 |
|
|
3,799 |
|
|
3,591 |
|
|
5,683 |
|
|
4,901 |
|
||||||
Real Estate adjusted pretax operating income (loss) |
(4,817) |
|
|
(4,867) |
|
|
(4,520) |
|
|
(2,541) |
|
|
(3,772) |
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Less reconciling income (expense) items: |
|
|
|
|
|
|
|
|
|
|||||||||||
Allocation of corporate operating expenses to Real Estate |
(3,339) |
|
|
(3,836) |
|
|
(2,987) |
|
|
(2,910) |
|
|
(2,659) |
|
||||||
Real Estate depreciation and amortization |
(776) |
|
|
(666) |
|
|
(848) |
|
|
(865) |
|
|
(976) |
|
||||||
Real Estate adjusted EBITDA |
$ |
(702) |
|
|
$ |
(365) |
|
|
$ |
(685) |
|
|
$ |
1,234 |
|
|
$ |
(137) |
|
On a consolidated basis, “adjusted pretax operating income (loss),” “adjusted diluted net operating income (loss) per share” and “adjusted net operating return on equity” are measures not determined in accordance with GAAP. “Real Estate adjusted EBITDA” and “Real Estate adjusted EBITDA margin” are also non-GAAP measures. These measures should not be considered in isolation or viewed as substitutes for GAAP pretax income (loss), diluted net income (loss) per share, return on equity, book value per share or net income (loss). Our definitions of adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share, adjusted net operating return on equity, Real Estate adjusted EBITDA or Real Estate adjusted EBITDA margin may not be comparable to similarly-named measures reported by other companies. See Exhibit F for additional information on our consolidated non-GAAP financial measures. |
Radian Group Inc. and Subsidiaries |
||||||||||||||||||||
Mortgage Supplemental Information - New Insurance Written |
||||||||||||||||||||
Exhibit H |
||||||||||||||||||||
2020 |
|
2019 |
||||||||||||||||||
($ in millions) |
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total primary new insurance written |
$ |
25,459 |
|
|
$ |
16,706 |
|
|
$ |
19,953 |
|
|
$ |
22,037 |
|
|
$ |
18,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Percentage of primary new insurance written by FICO score (1) |
|
|
|
|
|
|
|
|
|
|||||||||||
>=740 |
67.3 |
% |
|
65.7 |
% |
|
66.3 |
% |
|
64.1 |
% |
|
62.2 |
% |
||||||
680-739 |
30.1 |
|
|
31.1 |
|
|
30.5 |
|
|
31.5 |
|
|
32.5 |
|
||||||
620-679 |
2.6 |
|
|
3.2 |
|
|
3.2 |
|
|
4.4 |
|
|
5.3 |
|
||||||
Total primary new insurance written |
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Percentage of primary new insurance written |
|
|
|
|
|
|
|
|
|
|||||||||||
Borrower-paid |
97.8 |
% |
|
96.7 |
% |
|
97.4 |
% |
|
97.1 |
% |
|
96.5 |
% |
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Percentage by premium type |
|
|
|
|
|
|
|
|
|
|||||||||||
Direct monthly and other recurring premiums |
84.7 |
% |
|
81.1 |
% |
|
82.1 |
% |
|
85.0 |
% |
|
83.3 |
% |
||||||
Direct single premiums: (2) |
|
|
|
|
|
|
|
|
|
|||||||||||
Borrower-paid (3) |
13.6 |
|
|
16.5 |
|
|
16.0 |
|
|
13.1 |
|
|
14.2 |
|
||||||
Lender-paid |
1.7 |
|
|
2.4 |
|
|
1.9 |
|
|
1.9 |
|
|
2.5 |
|
||||||
Total primary new insurance written |
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Primary new insurance written for purchases |
56.4 |
% |
|
66.2 |
% |
|
67.5 |
% |
|
80.7 |
% |
|
89.8 |
% |
||||||
Primary new insurance written for refinances |
43.6 |
% |
|
33.8 |
% |
|
32.5 |
% |
|
19.3 |
% |
|
10.2 |
% |
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Percentage by LTV |
|
|
|
|
|
|
|
|
|
|||||||||||
95.01% and above |
8.3 |
% |
|
9.9 |
% |
|
11.5 |
% |
|
16.8 |
% |
|
20.5 |
% |
||||||
90.01% to 95.00% |
36.4 |
|
|
37.6 |
|
|
35.8 |
|
|
37.4 |
|
|
38.1 |
|
||||||
85.01% to 90.00% |
29.8 |
|
|
30.3 |
|
|
30.0 |
|
|
27.4 |
|
|
26.9 |
|
||||||
85.00% and below |
25.5 |
|
|
22.2 |
|
|
22.7 |
|
|
18.4 |
|
|
14.5 |
|
||||||
Total primary new insurance written |
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
(1) |
For loans with multiple borrowers, the percentage of primary new insurance written by FICO score represents the lowest of the borrowers’ FICO scores. |
|
(2) |
Percentages exclude the impact of reinsurance. |
|
(3) |
Borrower-paid Single Premium Policies have lower Minimum Required Assets under PMIERs as compared to lender-paid Single Premium Policies. |
Radian Group Inc. and Subsidiaries |
||||||||||||||||||||
Mortgage Supplemental Information - Primary Insurance in Force and Risk in Force |
||||||||||||||||||||
Exhibit I (page 1 of 2) |
||||||||||||||||||||
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|||||||||||
($ in millions) |
2020 |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
|||||||||||
Primary insurance in force (1) |
|
|
|
|
|
|
|
|
|
|||||||||||
Prime |
$ |
236,835 |
|
|
$ |
236,958 |
|
|
$ |
235,742 |
|
|
$ |
232,086 |
|
|
$ |
225,443 |
|
|
Alt-A and A minus and below |
4,471 |
|
|
4,628 |
|
|
4,816 |
|
|
5,072 |
|
|
5,313 |
|
||||||
Total Primary |
$ |
241,306 |
|
|
$ |
241,586 |
|
|
$ |
240,558 |
|
|
$ |
237,158 |
|
|
$ |
230,756 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Primary risk in force (1) (2) |
|
|
|
|
|
|
|
|
|
|||||||||||
Prime |
$ |
59,253 |
|
|
$ |
59,827 |
|
|
$ |
59,780 |
|
|
$ |
59,217 |
|
|
$ |
57,795 |
|
|
Alt-A and A minus and below |
1,058 |
|
|
1,096 |
|
|
1,141 |
|
|
1,203 |
|
|
1,262 |
|
||||||
Total Primary |
$ |
60,311 |
|
|
$ |
60,923 |
|
|
$ |
60,921 |
|
|
$ |
60,420 |
|
|
$ |
59,057 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Percentage of primary risk in force |
|
|
|
|
|
|
|
|
|
|||||||||||
Direct monthly and other recurring premiums |
73.8 |
% |
|
72.6 |
% |
|
72.4 |
% |
|
72.0 |
% |
|
71.2 |
% |
||||||
Direct single premiums |
26.2 |
% |
|
27.4 |
% |
|
27.6 |
% |
|
28.0 |
% |
|
28.8 |
% |
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Percentage of primary risk in force by FICO score (3) |
|
|
|
|
|
|
|
|
|
|||||||||||
>=740 |
57.4 |
% |
|
57.2 |
% |
|
56.9 |
% |
|
56.2 |
% |
|
55.7 |
% |
||||||
680-739 |
34.3 |
|
|
34.2 |
|
|
34.2 |
|
|
34.5 |
|
|
34.6 |
|
||||||
620-679 |
7.7 |
|
|
8.0 |
|
|
8.2 |
|
|
8.6 |
|
|
8.9 |
|
||||||
<=619 |
0.6 |
|
|
0.6 |
|
|
0.7 |
|
|
0.7 |
|
|
0.8 |
|
||||||
Total Primary |
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Percentage of primary risk in force by LTV |
|
|
|
|
|
|
|
|
|
|||||||||||
95.01% and above |
14.2 |
% |
|
14.3 |
% |
|
14.2 |
% |
|
13.9 |
% |
|
13.2 |
% |
||||||
90.01% to 95.00% |
50.4 |
|
|
51.0 |
|
|
51.3 |
|
|
51.9 |
|
|
52.5 |
|
||||||
85.01% to 90.00% |
28.1 |
|
|
27.9 |
|
|
27.9 |
|
|
27.9 |
|
|
28.2 |
|
||||||
85.00% and below |
7.3 |
|
|
6.8 |
|
|
6.6 |
|
|
6.3 |
|
|
6.1 |
|
||||||
Total |
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Percentage of primary risk in force by policy year |
|
|
|
|
|
|
|
|
|
|||||||||||
2008 and prior |
7.2 |
% |
|
7.5 |
% |
|
7.8 |
% |
|
8.4 |
% |
|
8.9 |
% |
||||||
2009 - 2012 |
2.8 |
|
|
3.0 |
|
|
3.3 |
|
|
3.5 |
|
|
4.1 |
|
||||||
2013 |
3.5 |
|
|
3.9 |
|
|
4.2 |
|
|
4.6 |
|
|
5.2 |
|
||||||
2014 |
3.6 |
|
|
4.0 |
|
|
4.3 |
|
|
4.8 |
|
|
5.3 |
|
||||||
2015 |
6.1 |
|
|
6.9 |
|
|
7.4 |
|
|
8.1 |
|
|
8.9 |
|
||||||
2016 |
10.6 |
|
|
11.7 |
|
|
12.5 |
|
|
13.5 |
|
|
14.8 |
|
||||||
2017 |
13.0 |
|
|
14.8 |
|
|
16.0 |
|
|
17.4 |
|
|
18.9 |
|
||||||
2018 |
14.0 |
|
|
16.4 |
|
|
17.9 |
|
|
19.7 |
|
|
21.8 |
|
||||||
2019 |
23.3 |
|
|
25.4 |
|
|
26.6 |
|
|
20.0 |
|
|
12.1 |
|
||||||
2020 |
15.9 |
|
|
6.4 |
|
|
— |
|
|
— |
|
|
— |
|
||||||
Total |
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Primary risk in force on defaulted loans |
$ |
4,263 |
|
|
$ |
1,001 |
|
|
$ |
1,061 |
|
|
$ |
1,012 |
|
|
$ |
986 |
|
|
Table continued on next page. |
Radian Group Inc. and Subsidiaries |
|||||||||||||||
Mortgage Supplemental Information - Primary Insurance in Force and Risk in Force |
|||||||||||||||
Exhibit I (page 2 of 2) |
|||||||||||||||
|
|||||||||||||||
Table continued from prior page. |
|||||||||||||||
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
||||||
|
2020 |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
||||||
Persistency Rate (12 months ended) |
70.2 |
% |
|
75.4 |
% |
|
78.2 |
% |
|
81.5 |
% |
|
83.4 |
% |
|
Persistency Rate (quarterly, annualized) (4) |
63.8 |
% |
|
76.5 |
% |
|
75.0 |
% |
|
75.5 |
% |
|
80.8 |
% |
(1) |
Excludes the impact of premiums ceded under our reinsurance agreements. |
|
(2) |
Does not include pool risk in force or other risk in force, which combined represent approximately 1.0% of our total risk in force for all periods presented. |
|
(3) |
For loans with multiple borrowers, the percentage of primary risk in force by FICO score represents the lowest of the borrowers’ FICO scores. |
|
(4) |
The Persistency Rate on a quarterly, annualized basis is calculated based on loan-level detail for the quarter ending as of the date shown. It may be impacted by seasonality or other factors, including the level of refinance activity during the applicable periods, and may not be indicative of full-year trends. |
Radian Group Inc. and Subsidiaries |
||||||||||||||||||||
Mortgage Supplemental Information - Claims and Reserves |
||||||||||||||||||||
Exhibit J |
||||||||||||||||||||
|
2020 |
|
2019 |
|||||||||||||||||
($ in thousands) |
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net claims paid: (1) |
|
|
|
|
|
|
|
|
|
|||||||||||
Total primary claims paid |
$ |
22,144 |
|
|
$ |
24,358 |
|
|
$ |
24,267 |
|
|
$ |
28,981 |
|
|
$ |
31,940 |
|
|
Total pool and other |
639 |
|
|
(911) |
|
|
559 |
|
|
901 |
|
|
472 |
|
||||||
Subtotal |
22,783 |
|
|
23,447 |
|
|
24,826 |
|
|
29,882 |
|
|
32,412 |
|
||||||
Impact of commutations and settlements (2) |
— |
|
|
(56) |
|
|
3,691 |
|
|
6,812 |
|
|
15 |
|
||||||
Total net claims paid |
$ |
22,783 |
|
|
$ |
23,391 |
|
|
$ |
28,517 |
|
|
$ |
36,694 |
|
|
$ |
32,427 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total average net primary claim paid (1) (3) |
$ |
47.9 |
|
|
$ |
50.3 |
|
|
$ |
50.9 |
|
|
$ |
47.0 |
|
|
$ |
50.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Average direct primary claim paid (3) (4) |
$ |
49.0 |
|
|
$ |
51.4 |
|
|
$ |
52.1 |
|
|
$ |
48.1 |
|
|
$ |
51.1 |
|
(1) |
Net of reinsurance recoveries. |
|
(2) |
Includes payments to commute mortgage insurance coverage on certain performing and non-performing loans. |
|
(3) |
Calculated without giving effect to the impact of captive reinsurance terminations and other commutations. |
|
(4) |
Before reinsurance recoveries. |
($ in thousands, except primary reserve |
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|||||||||||
per primary default amounts) |
2020 |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Reserve for losses by category (1) |
|
|
|
|
|
|
|
|
|
|||||||||||
Mortgage reserves |
|
|
|
|
|
|
|
|
|
|||||||||||
Prime |
$ |
573,463 |
|
|
$ |
264,694 |
|
|
$ |
248,727 |
|
|
$ |
236,382 |
|
|
$ |
242,378 |
|
|
Alt-A and A minus and below |
86,646 |
|
|
88,481 |
|
|
91,093 |
|
|
95,723 |
|
|
104,863 |
|
||||||
IBNR and other (2) |
43,342 |
|
|
40,583 |
|
|
40,920 |
|
|
42,117 |
|
|
33,888 |
|
||||||
LAE |
16,807 |
|
|
9,216 |
|
|
8,918 |
|
|
9,000 |
|
|
9,070 |
|
||||||
Total primary reserves |
720,258 |
|
|
402,974 |
|
|
389,658 |
|
|
383,222 |
|
|
390,199 |
|
||||||
Total pool reserves |
14,398 |
|
|
11,297 |
|
|
11,322 |
|
|
10,605 |
|
|
10,816 |
|
||||||
Total 1st lien reserves |
734,656 |
|
|
414,271 |
|
|
400,980 |
|
|
393,827 |
|
|
401,015 |
|
||||||
Other |
335 |
|
|
407 |
|
|
293 |
|
|
260 |
|
|
279 |
|
||||||
Total Mortgage reserves |
734,991 |
|
|
414,678 |
|
|
401,273 |
|
|
394,087 |
|
|
401,294 |
|
||||||
Real Estate reserves |
3,894 |
|
|
3,524 |
|
|
3,492 |
|
|
4,054 |
|
|
3,984 |
|
||||||
Total reserves |
$ |
738,885 |
|
|
$ |
418,202 |
|
|
$ |
404,765 |
|
|
$ |
398,141 |
|
|
$ |
405,278 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
1st lien reserve per default |
|
|
|
|
|
|
|
|
|
|||||||||||
Primary reserve per primary default excluding IBNR and other |
$ |
9,706 |
|
|
$ |
18,320 |
|
|
$ |
16,399 |
|
|
$ |
16,900 |
|
|
$ |
18,139 |
|
(1) |
Includes ceded losses on reinsurance transactions, which are expected to be recovered and are included in the reinsurance recoverables reported in other assets in our condensed consolidated balance sheets. |
|
(2) |
For the quarters ended September 30, 2019 and June 30, 2019, includes increases of $11.8 million and $19.4 million, respectively, in the Company’s IBNR reserve estimate related to previously disclosed legal proceedings involving challenges from certain servicers regarding loss mitigation activities. |
Radian Group Inc. and Subsidiaries |
|||||||||||||||
Mortgage Supplemental Information - Default Statistics |
|||||||||||||||
Exhibit K |
|||||||||||||||
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
||||||
|
2020 |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
||||||
Default Statistics |
|
|
|
|
|
|
|
|
|
||||||
Primary Insurance: |
|
|
|
|
|
|
|
|
|
||||||
Prime |
|
|
|
|
|
|
|
|
|
||||||
Number of insured loans |
1,040,964 |
|
|
1,049,974 |
|
|
1,049,954 |
|
|
1,040,520 |
|
|
1,018,715 |
|
|
Number of loans in default |
64,648 |
|
|
15,497 |
|
|
16,532 |
|
|
15,345 |
|
|
14,521 |
|
|
Percentage of loans in default |
6.21 |
% |
|
1.48 |
% |
|
1.57 |
% |
|
1.47 |
% |
|
1.43 |
% |
|
|
|
|
|
|
|
|
|
|
|
||||||
Alt-A and A minus and below |
|
|
|
|
|
|
|
|
|
||||||
Number of insured loans |
28,357 |
|
|
29,375 |
|
|
30,439 |
|
|
32,163 |
|
|
33,609 |
|
|
Number of loans in default |
5,094 |
|
|
4,284 |
|
|
4,734 |
|
|
4,839 |
|
|
5,122 |
|
|
Percentage of loans in default |
17.96 |
% |
|
14.58 |
% |
|
15.55 |
% |
|
15.05 |
% |
|
15.24 |
% |
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Primary |
|
|
|
|
|
|
|
|
|
||||||
Number of insured loans |
1,069,321 |
|
|
1,079,349 |
|
|
1,080,393 |
|
|
1,072,683 |
|
|
1,052,324 |
|
|
Number of loans in default |
69,742 |
|
|
19,781 |
|
|
21,266 |
|
|
20,184 |
|
|
19,643 |
|
|
Percentage of loans in default |
6.52 |
% |
|
1.83 |
% |
|
1.97 |
% |
|
1.88 |
% |
|
1.87 |
% |
Radian Group Inc. and Subsidiaries |
|||||||||||||||||||||
Mortgage Supplemental Information - Reinsurance Programs |
|||||||||||||||||||||
Exhibit L |
|||||||||||||||||||||
|
2020 |
|
2019 |
|
|||||||||||||||||
($ in thousands) |
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Quota Share Reinsurance (“QSR”) and Single Premium QSR Programs |
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ceded premiums written (1) |
$ |
35,821 |
|
|
$ |
6,687 |
|
|
$ |
9,217 |
|
|
$ |
8,408 |
|
|
$ |
588 |
|
|
|
% of premiums written |
13.0 |
% |
|
2.4 |
% |
|
3.0 |
% |
|
2.9 |
% |
|
2.2 |
% |
|
||||||
Ceded premiums earned |
$ |
60,652 |
|
|
$ |
18,712 |
|
|
$ |
19,428 |
|
|
$ |
19,295 |
|
|
$ |
29,212 |
|
(2) |
|
% of premiums earned |
19.2 |
% |
|
6.2 |
% |
|
6.1 |
% |
|
6.3 |
% |
|
8.7 |
% |
|
||||||
Ceding commissions written |
$ |
(5,304) |
|
|
$ |
8,413 |
|
|
$ |
6,836 |
|
|
$ |
6,778 |
|
|
$ |
6,861 |
|
|
|
Ceding commissions earned (3) |
$ |
13,453 |
|
|
$ |
9,966 |
|
|
$ |
12,055 |
|
|
$ |
12,153 |
|
|
$ |
16,353 |
|
(2) |
|
Profit commission |
$ |
(10,649) |
|
|
$ |
16,405 |
|
|
$ |
17,792 |
|
|
$ |
18,346 |
|
|
$ |
26,476 |
|
(2) |
|
Ceded losses |
$ |
39,635 |
|
|
$ |
1,962 |
|
|
$ |
1,533 |
|
|
$ |
771 |
|
|
$ |
1,868 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Excess-of-Loss Program |
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ceded premiums written |
$ |
7,525 |
|
|
$ |
12,678 |
|
|
$ |
6,834 |
|
|
$ |
6,878 |
|
|
$ |
13,468 |
|
|
|
% of premiums written |
2.7 |
% |
|
4.5 |
% |
|
2.2 |
% |
|
2.4 |
% |
|
4.8 |
% |
|
||||||
Ceded premiums earned |
$ |
8,321 |
|
|
$ |
8,405 |
|
|
$ |
7,104 |
|
|
$ |
7,452 |
|
|
$ |
7,662 |
|
|
|
% of premiums earned |
2.6 |
% |
|
2.8 |
% |
|
2.2 |
% |
|
2.4 |
% |
|
2.3 |
% |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ceded RIF (4) |
|
|
|
|
|
|
|
|
|
|
|||||||||||
QSR Program |
$ |
532,743 |
|
|
$ |
596,166 |
|
|
$ |
644,512 |
|
|
$ |
702,201 |
|
|
$ |
768,554 |
|
|
|
Single Premium QSR Program |
8,173,756 |
|
|
8,580,047 |
|
|
8,582,067 |
|
|
8,538,363 |
|
|
8,495,651 |
|
|
||||||
Excess-of-Loss Program |
1,170,200 |
|
|
1,230,000 |
|
|
850,800 |
|
|
974,800 |
|
|
1,017,440 |
|
|
||||||
Total Ceded RIF |
$ |
9,876,699 |
|
|
$ |
10,406,213 |
|
|
$ |
10,077,379 |
|
|
$ |
10,215,364 |
|
|
$ |
10,281,645 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
PMIERs impact - reduction in Minimum Required Assets (5) |
|
|
|
|
|
|
|
|
|
|
|||||||||||
QSR Program |
$ |
30,837 |
|
|
$ |
31,638 |
|
|
$ |
35,382 |
|
|
$ |
38,227 |
|
|
$ |
41,873 |
|
|
|
Single Premium QSR Program |
517,028 |
|
|
501,668 |
|
|
511,695 |
|
|
513,832 |
|
|
516,468 |
|
|
||||||
Excess-of-Loss Program |
970,294 |
|
|
1,066,464 |
|
|
738,386 |
|
|
834,072 |
|
|
926,640 |
|
|
||||||
Total PMIERs impact |
$ |
1,518,159 |
|
|
$ |
1,599,770 |
|
|
$ |
1,285,463 |
|
|
$ |
1,386,131 |
|
|
$ |
1,484,981 |
|
|
(1) |
Net of profit commission, where applicable. |
|
(2) |
Includes a cumulative adjustment to unearned premiums related to an update to the amortization rates used to recognize revenue for Single Premium Policies. |
|
(3) |
Includes amounts reported in policy acquisition costs and other operating expenses. Operating expenses include the following ceding commissions, net of deferred policy acquisition costs, for the periods indicated: |
|
2020 |
|
2019 |
|||||||||||||||||
($ in thousands) |
Qtr 2 |
|
Qtr 1 |
|
Qtr 4 |
|
Qtr 3 |
|
Qtr 2 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ceding commissions |
$ |
(10,406) |
|
|
$ |
(7,967) |
|
|
$ |
(7,973) |
|
|
$ |
(8,160) |
|
|
$ |
(12,408) |
|
(4) |
Included in primary RIF. |
|
(5) |
Excludes the impact of intercompany reinsurance. |
FORWARD-LOOKING STATEMENTS
All statements in this press release that address events, developments or results that we expect or anticipate may occur in the future are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995. In most cases, forward-looking statements may be identified by words such as “anticipate,” “may,” “will,” “could,” “should,” “would,” “expect,” “intend,” “plan,” “goal,” “contemplate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “seek,” “strategy,” “future,” “likely” or the negative or other variations on these words and other similar expressions. These statements, which may include, without limitation, projections regarding our future performance and financial condition, are made on the basis of management’s current views and assumptions with respect to future events, including management’s current views regarding the likely impacts of the COVID-19 pandemic. Any forward-looking statement is not a guarantee of future performance and actual results could differ materially from those contained in the forward-looking statement. These statements speak only as of the date they were made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We operate in a changing environment where new risks emerge from time to time and it is not possible for us to predict all risks that may affect us, particularly those associated with the COVID 19 pandemic, which has had wide-ranging and continually evolving effects. The forward-looking statements, as well as our prospects as a whole, are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. These risks and uncertainties include, without limitation:
For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to “Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, and to subsequent reports and registration statements filed from time to time with the U.S. Securities and Exchange Commission. We caution you not to place undue reliance on these forward-looking statements, which are current only as of the date on which we issued this press release. We do not intend to, and we disclaim any duty or obligation to, update or revise any forward-looking statements to reflect new information or future events or for any other reason.
For Investors:
John Damian - Phone: 215.231.1383
email: john.damian@radian.com
For Media:
Rashi Iyer - Phone 215.231.1167
email: rashi.iyer@radian.com