Radian Announces Second Quarter 2021 Financial Results

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-- GAAP net income of $155 million, or $0.80 per diluted share --

-- Adjusted diluted net operating income of $0.75 per diluted share --

-- Book value per share grows 11% year-over-year to $23.02 --

-- homegenius revenues grow 48% year-over-year to $33.5 million --

-- Company purchases 3.9 million shares or $90.1 million of Radian Group common stock during the three months ended June 30th; and an additional 2.8 million shares or $61.4 million purchased in July --

PHILADELPHIA, August 03, 2021--(BUSINESS WIRE)--Radian Group Inc. (NYSE: RDN) today reported net income for the quarter ended June 30, 2021, of $155.2 million, or $0.80 per diluted share. This compares with a net loss for the quarter ended June 30, 2020, of $30.0 million, or $0.15 per diluted share.

Key Financial Highlights (dollars in millions, except per-share amounts)

Quarter ended

June 30, 2021

March 31, 2021

June 30, 2020

Net income (loss) (1)

$155.2

$125.6

($30.0)

Diluted net income (loss) per share

$0.80

$0.64

($0.15)

Consolidated pretax income (loss)

$195.5

$161.2

($42.2)

Adjusted pretax operating income (loss) (2)

$184.7

$167.3

($88.5)

Adjusted diluted net operating

income (loss) per share (2)(3)

$0.75

$0.68

($0.36)

Return on equity (1)(4)

14.5%

11.8%

(3.1)%

Adjusted net operating return on equity (2)(3)

13.6%

12.4%

(7.1)%

New Insurance Written (NIW) - mortgage insurance

$21,662

$20,161

$25,459

Net premiums earned - mortgage insurance

$247.1

$264.7

$247.6

New defaults (5)

8,145

11,851

63,005

Provision for losses - mortgage insurance

$3.3

$45.9

$304.0

Book value per share (6)

$23.02

$22.14

$20.82

PMIERs Available Assets (7)

$5,042

$4,909

$4,229

PMIERs excess Available Assets (8)

$1,857

$1,451

$1,002

Total Holding Company Liquidity (9)

$1,191

$1,292

$1,404

Total investments

$6,682

$6,672

$6,431

Primary mortgage insurance in force

$237,302

$238,921

$241,306

Percentage of primary loans in default (10)

4.0%

4.9%

6.5%

Mortgage insurance loss reserves

$881

$883

$735

homegenius revenues

$33.5

$25.8

$22.5

(1)

Net income for the second quarter of 2021 includes a pretax net gain on investments and other financial instruments of $15.7 million, compared to a pretax net loss on investments and other financial instruments of $5.2 million in the first quarter of 2021 and a pretax net gain on investments and other financial instruments for the second quarter of 2020 of $47.3 million.

(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 reconciliations of these measures to the comparable GAAP measures, see Exhibits F and G.

(3)

Calculated using the company’s statutory tax rate of 21 percent.

(4)

Calculated by dividing annualized net income by average stockholders' equity, based on the average of the beginning and ending balances for each period presented.

(5)

Represents the number of new defaults reported during the period on loans related to primary mortgage insurance policies.

(6)

Book value per share includes accumulated other comprehensive income (loss) of $0.95 as of June 30, 2021, $0.61 as of March 31, 2021 and $1.11 as of June 30, 2020.

(7)

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.

(8)

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.

(9)

Represents Radian Group's total liquidity, including the $35 million minimum liquidity requirement and available capacity under its unsecured revolving credit facility.

(10)

Represents the number of primary loans in default as a percentage of the total number of insured primary loans.

Adjusted pretax operating income for the quarter ended June 30, 2021, was $184.7 million, or $0.75 per diluted share. This compares with adjusted pretax operating loss for the quarter ended June 30, 2020, of $88.5 million, or $0.36 per diluted share.

Book value as of June 30, 2021, was $4.3 billion, an increase of 9 percent compared to $4.0 billion as of June 30, 2020. Book value per share at June 30, 2021, was $23.02, an increase of 11 percent compared to $20.82 at June 30, 2020.

"As a company that offers products and services across the mortgage and real estate spectrum, we are encouraged by the continued positive momentum in the housing market, as well as the favorable credit trends within our insured portfolio," said Radian’s Chief Executive Officer Rick Thornberry. "Year-over-year we successfully increased book value per share by 11%, grew PMIERs excess Available Assets to $1.9 billion, increased monthly premium mortgage insurance in force by 8% and grew revenues in our homegenius segment by 48%. Based on Radian’s strong financial position and capital flexibility, we also increased our quarterly dividend by 12% and repurchased 3.9 million shares during the second quarter."

Thornberry added, "Our team continues to demonstrate outstanding resilience and dedication as we work together to support our customers and help ensure Radian’s continued success."

SECOND QUARTER HIGHLIGHTS

  • NIW was $21.7 billion in the second quarter of 2021, compared to $20.2 billion in the first quarter of 2021 and $25.5 billion in the second quarter of 2020.

    • Of the $21.7 billion in NIW in the second quarter of 2021, 93.1 percent was written with monthly and other recurring premiums, compared to 90.2 percent in the first quarter of 2021, and 84.7 percent in the second quarter of 2020.

    • Refinances accounted for 22.9 percent of total NIW in the second quarter of 2021, compared to 40.9 percent in the first quarter of 2021, and 43.6 percent in the second quarter of 2020.

  • Total primary mortgage insurance in force as of June 30, 2021, declined to $237.3 billion, a decrease of 0.7 percent compared to $238.9 billion as of March 31, 2021, and a decrease of 1.7 percent compared to $241.3 billion as of June 30, 2020. The year over year decrease included a 28.2 percent decline in single premium policy insurance in force, partially offset by a 8.1 percent increase in monthly premium policy insurance in force.

    • Persistency, which is the percentage of mortgage insurance that remains in force after a twelve-month period, was 57.7 percent for the twelve months ended June 30, 2021, compared to 57.2 percent for the twelve months ended March 31, 2021 and 70.2 percent for the twelve months ended June 30, 2020.

    • Annualized persistency for the three months ended June 30, 2021, was 66.3 percent, compared to 62.5 percent for the three months ended March 31, 2021, and 63.8 percent for the three months ended June 30, 2020.

  • Net mortgage insurance premiums earned were $247.1 million for the quarter ended June 30, 2021, compared to $264.7 million for the quarter ended March 31, 2021, and $247.6 million for the quarter ended June 30, 2020.

    • Mortgage insurance in force portfolio premium yield was 41.1 basis points in the second quarter of 2021, compared to 42.7 basis points in the first quarter of 2021 and 44.3 basis points in the second quarter of 2020.

    • The impact of single premium policy cancellations before consideration of reinsurance represented 5.3 basis points of direct premium yield in the second quarter of 2021, 6.4 basis points in the first quarter of 2021, and 8.2 basis points in the second quarter of 2020.

    • Total net mortgage insurance premium yield, which includes the impact of ceded premiums and accrued profit commission, was 41.5 basis points in the second quarter of 2021, 43.7 basis points in the first quarter of 2021, and 41.0 basis points in the second quarter of 2020.

    • Additional details regarding premiums earned may be found in Exhibit D.

  • The mortgage insurance provision for losses was $3.3 million in the second quarter of 2021, compared to $45.9 million in the first quarter of 2021, and $304.0 million in the second quarter of 2020.

    • The decrease in the second quarter of 2021 compared to the first quarter of 2021 was primarily related to a favorable development on prior period reserves, based on more favorable trends in cures than originally estimated. The decrease in second quarter of 2021 compared to the second quarter of 2020 was driven primarily by a significant decrease in primary new default notices related to the effects of the COVID-19 pandemic.

    • The number of primary delinquent loans was 40,464 as of June 30, 2021, compared to 50,106 as of March 31, 2021 and 69,742 as of June 30, 2020.

    • The loss ratio in the second quarter of 2021 was 1.3 percent, compared to 17.3 percent in the first quarter of 2021 and 122.8 percent in the second quarter of 2020.

    • Total mortgage insurance claims paid were $4.2 million in the second quarter of 2021, compared to $10.5 million in the first quarter of 2021, and $22.8 million in the second quarter of 2020. Excluding the impact of commutations and settlements, claims paid were $4.2 million in the second quarter of 2021, compared to $6.5 million in the first quarter of 2021 and $22.8 million in the second quarter of 2020.

  • Radian's homegenius segment offers a broad array of title, valuation, asset management, software-as-a-service and other real estate services to mortgage lenders, mortgage and real estate investors, GSEs, real estate brokers and agents.

    • Total homegenius segment revenues for the second quarter of 2021 were $33.5 million, compared to $25.8 million for the first quarter of 2021, and $22.5 million for the second quarter of 2020.

    • The increase in revenues for the homegenius segment in the second quarter of 2021 compared to the first quarter of 2021 was primarily driven by increases in services revenue attributable to all of our services business lines. The increase in revenues for the homegenius segment in the second quarter of 2021 compared to the second quarter of 2020 was primarily driven by increases in net title premiums earned and services revenue attributable to our title and valuation services businesses.

      homegenius Profitability Metrics

    • Adjusted pretax operating loss, our primary segment measure of profitability for the homegenius segment for the quarter ended June 30, 2021 was $9.2 million, compared to $10.5 million for the quarter ended March 31, 2021, and $3.9 million for the quarter ended June 30, 2020.

    • Adjusted pretax operating loss before allocated corporate operating expenses for the homegenius segment for the quarter ended June 30, 2021 was $4.5 million, compared to $6.5 million for the quarter ended March 31, 2021, and $1.1 million for the quarter ended June 30, 2020. Additional details regarding the homegenius results and related non-GAAP measures may be found in Exhibits F and G.

    • Adjusted gross profit, for the homegenius segment for the quarter ended June 30, 2021 was $11.7 million, compared to $8.5 million for the quarter ended March 31, 2021, and $9.4 million for the quarter ended June 30, 2020. Additional details regarding the homegenius results and related non-GAAP measures may be found in Exhibits F and G.

  • Other operating expenses were $86.5 million in the second quarter of 2021, compared to $70.3 million in the first quarter of 2021, and $60.6 million in the second quarter of 2020.

    • The increase in the second quarter of 2021 compared to the first quarter of 2021 was primarily related to an increase in incentive compensation expense and a $3.9 million increase in non-operating items. The increase in the second quarter of 2021 compared to the second quarter of 2020 was driven primarily by an increase in compensation expense and a decrease in ceding commissions.

CAPITAL AND LIQUIDITY UPDATE

Radian Group

  • As of June 30, 2021, Radian Group maintained $923.0 million of available liquidity. Total liquidity, which includes the company’s $267.5 million unsecured revolving credit facility, was $1.2 billion as of June 30, 2021.

  • During the quarter ended June 30, 2021, the company repurchased 3.9 million shares of Radian Group common stock at a total cost of $90.1 million, including commissions. As of June 30, 2021, purchase authority of up to $100.2 million remained available under this program. The current share repurchase authorization expires on August 31, 2021.

  • In addition, in July the Company purchased an additional 2.8 million shares, or approximately $61.4 million of Radian Group common stock, including commissions. After the repurchases in July, purchase authority of up to approximately $38.9 million remained available under the existing program.

  • On May 4, 2021, Radian Group’s Board of Directors authorized an increase to the Company's quarterly dividend on its common stock from $0.125 to $0.14 per share and paid the dividend on June 4, 2021.

Radian Guaranty

  • At June 30, 2021, Radian Guaranty’s Available Assets under PMIERs totaled approximately $5.0 billion, resulting in excess available resources or a "cushion" of $1.9 billion, or 58 percent, over its Minimum Required Assets.

  • As of June 30, 2021, 71 percent of Radian Guaranty's primary mortgage insurance risk in force is subject to some form of risk distribution, providing a $1.3 billion reduction of Minimum Required Assets under PMIERs.

RECENT EVENTS

Radian Guaranty Operating Statistics for July 2021

The information below 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

2021

June

2021

May

2021

April

2021

Beginning primary default inventory (# of loans)

40,464

42,802

45,689

50,106

New defaults

2,749

2,680

2,714

2,751

Cures

(4,728)

(4,980)

(5,573)

(7,128)

Claims paid

(141)

(29)

(32)

(37)

Rescissions and Claim Denials, net (1)

3

(9)

4

(3)

Ending primary default inventory

38,347

40,464

42,802

45,689

(1)

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 2021 financial results in a conference call tomorrow, Wednesday, August 4, 2021, at 11:00 a.m. Eastern daylight 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 800.447.0521 inside the U.S., or 847.413.3238 for international callers, using passcode 50201372 by referencing Radian.

A digital replay of the webcast will be available on the Radian 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 50201372.

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 impairment of internal-use software, 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 non-GAAP measures for our homegenius segment of adjusted pretax operating income (loss) before allocated corporate operating expenses and adjusted gross profit. Adjusted pretax operating income (loss) before allocated corporate operating expenses is calculated as adjusted pretax operating income (loss) as described above (which is the segment's ASC 280 GAAP measure of operating performance), adjusted to remove the impact of corporate allocations of other operating expenses for the homegenius segment. Adjusted gross profit is further adjusted to remove other operating expenses. In addition, homegenius adjusted pretax operating margin before allocated corporate operating expenses and homegenius adjusted gross profit margin are calculated by dividing homegenius adjusted pretax operating margin before allocated corporate operating expenses and homegenius adjusted gross profit, respectively, by GAAP total revenue for the homegenius segment. For the homegenius segment, adjusted pretax operating income (loss) before allocated corporate operating expenses, adjusted gross profit, and the related homegenius profit margins 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 homegenius 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, software-as-a service 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)

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

2021

2020

(In thousands, except per-share amounts)

Qtr 2

Qtr 1

Qtr 4

Qtr 3

Qtr 2

Revenues:

Net premiums earned

$

254,756

$

271,872

$

302,140

(1)

$

286,471

$

249,295

Services revenue

29,464

22,895

11,440

(1)

33,943

28,075

Net investment income

36,291

38,251

38,115

36,255

38,723

Net gains (losses) on investments and other financial instruments

15,661

(5,181

)

17,376

17,652

47,276

Other income

822

976

790

913

1,072

Total revenues

336,994

328,813

369,861

375,234

364,441

Expenses:

Provision for losses

3,648

46,143

56,664

88,084

304,418

Policy acquisition costs

4,838

8,996

7,395

10,166

6,015

Cost of services

24,615

20,246

21,600

24,353

17,972

Other operating expenses

86,469

70,262

81,641

69,377

60,582

Interest expense

21,065

21,115

21,169

21,088

16,699

Amortization and impairment of other acquired intangible assets

863

862

2,225

961

979

Total expenses

141,498

167,624

190,694

214,029

406,665

Pretax income (loss)

195,496

161,189

179,167

161,205

(42,224

)

Income tax provision (benefit)

40,290

35,581

31,154

26,102

(12,273

)

Net income (loss)

$

155,206

$

125,608

$

148,013

$

135,103

$

(29,951

)

Diluted net income (loss) per share

$

0.80

$

0.64

$

0.76

$

0.70

$

(0.15

)

(1)

Includes the impact of a line item reclassification recorded in the fourth quarter to correct earlier periods in 2020, which increased net premiums earned and decreased services revenue by $7.8 million each. See Exhibit E for additional detail by period related to this out-of-period adjustment reflected in our All Other results.

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:

2021

2020

(In thousands, except per-share amounts)

Qtr 2

Qtr 1

Qtr 4

Qtr 3

Qtr 2

Net income (loss) —basic and diluted

$

155,206

$

125,608

$

148,013

$

135,103

$

(29,951

)

Average common shares outstanding—basic

193,436

193,439

193,248

193,176

193,299

Dilutive effect of stock-based compensation arrangements (1)

1,202

1,764

1,415

980

Adjusted average common shares outstanding—diluted

194,638

195,203

194,663

194,156

193,299

Basic net income (loss) per share

$

0.80

$

0.65

$

0.77

$

0.70

$

(0.15

)

Diluted net income (loss) per share

$

0.80

$

0.64

$

0.76

$

0.70

$

(0.15

)

(1)

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:

2021

2020

(In thousands)

Qtr 2

Qtr 1

Qtr 4

Qtr 3

Qtr 2

Shares of common stock equivalents

324

710

2,295

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)

2021

2021

2020

2020

2020

Assets:

Investments

$

6,681,659

$

6,671,874

$

6,788,442

$

6,584,577

$

6,431,350

Cash

134,939

102,776

87,915

82,020

68,387

Restricted cash

2,968

20,987

6,231

4,424

16,279

Accrued investment income

32,223

34,841

34,047

36,093

34,179

Accounts and notes receivable

153,128

134,075

121,294

145,164

110,722

Reinsurance recoverables

75,411

76,664

73,202

66,515

56,852

Deferred policy acquisition costs

17,873

15,652

18,305

17,926

21,774

Property and equipment, net

74,288

78,309

80,457

88,717

89,143

Goodwill and other acquired intangible assets, net

21,318

22,181

23,043

25,268

26,229

Other assets

815,261

763,502

715,085

726,641

714,394

Total assets

$

8,009,068

$

7,920,861

$

7,948,021

$

7,777,345

$

7,569,309

Liabilities and stockholders’ equity:

Unearned premiums

$

373,031

$

406,689

$

448,791

$

501,787

$

561,280

Reserve for losses and loss adjustment expense

885,498

887,355

848,413

825,792

738,885

Senior notes

1,407,545

1,406,603

1,405,674

1,404,759

1,403,857

FHLB advances

153,983

138,833

176,483

141,058

175,122

Reinsurance funds withheld

285,406

282,345

278,555

318,773

312,350

Net deferred tax liability

266,330

210,571

213,897

166,136

126,883

Other liabilities

303,442

353,173

291,855

296,661

264,927

Total liabilities

3,675,235

3,685,569

3,663,668

3,654,966

3,583,304

Common stock

207

210

210

210

210

Treasury stock

(920,225

)

(910,347

)

(910,115

)

(909,745

)

(909,738

)

Additional paid-in capital

2,161,857

2,242,950

2,245,897

2,238,869

2,232,949

Retained earnings

2,913,138

2,785,744

2,684,636

2,561,076

2,450,423

Accumulated other comprehensive income

178,856

116,735

263,725

231,969

212,161

Total stockholders’ equity

4,333,833

4,235,292

4,284,353

4,122,379

3,986,005

Total liabilities and stockholders’ equity

$

8,009,068

$

7,920,861

$

7,948,021

$

7,777,345

$

7,569,309

Shares outstanding

188,290

191,311

191,606

191,556

191,492

Book value per share

$

23.02

$

22.14

$

22.36

$

21.52

$

20.82

Debt to capital ratio (1)

24.5

%

24.9

%

24.7

%

25.4

%

26.0

%

Risk to capital ratio-Radian Guaranty only

11.4:1

11.9:1

12.7:1

13.2:1

13.3:1

(1)

Calculated as senior notes divided by senior notes and stockholders' equity.

Radian Group Inc. and Subsidiaries

Net Premiums Earned

Exhibit D

2021

2020

(In thousands)

Qtr 2

Qtr 1

Qtr 4

Qtr 3

Qtr 2

Premiums earned:

Direct - Mortgage:

Premiums earned, excluding revenue from cancellations (1)

$

243,077

$

256,905

$

272,331

$

259,889

$

263,468

Single Premium Policy cancellations

31,592

38,510

53,526

65,667

50,023

Total direct - Mortgage (1)

274,669

295,415

325,857

325,556

313,491

Assumed - Mortgage: (2)

1,615

2,298

2,615

2,946

3,197

Ceded - Mortgage:

Premiums earned, excluding revenue from cancellations

(27,324

)

(25,373

)

(27,229

)

(25,120

)

(26,493

)...

Single Premium Policy cancellations (3)

(9,036

)

(11,109

)

(15,197

)

(18,679

)

(14,424

)

Profit commission - other (4)

7,162

3,433

770

(1,347

)

(28,175

)

Total ceded premiums - Mortgage (5)

(29,198

)

(33,049

)

(41,656

)

...

(45,146

)

(69,092

)

Net premiums earned - Mortgage (1)

247,086

264,664

286,816

283,356

247,596

Net premiums earned - homegenius (6)

7,670

7,208

7,572

7,099

4,734

Net premiums earned - All Other (6)

7,752

(3,984

)

(3,035

)

Net premiums earned (1)

$

254,756

$

271,872

$

302,140

$

286,471

$

249,295

(1)

The fourth quarter of 2020 includes an increase to premiums earned of $11.3 million related to changes in present value estimates for initial premiums on monthly policies that are deferred and not collected until cancellation. The impact of changes in this estimate in other periods is not material.

(2)

Relates primarily to premiums earned from our participation in certain credit risk transfer programs.

(3)

Includes the impact of related profit commissions.

(4)

The amounts represent the profit commission on the Single Premium QSR Program, excluding the impact of Single Premium Policy cancellations.

(5)

See Exhibit L for additional information on ceded premiums for our various reinsurance programs.

(6)

See Exhibit E for additional information on changes that impacted our reported segment results for all periods.

Radian Group Inc. and Subsidiaries
Segment Information
Exhibit E (page 1 of 4)

Summarized financial information concerning our operating segments as of and for the periods indicated is as follows. For a definition of adjusted pretax operating income (loss), homegenius adjusted pretax operating income (loss) before allocated corporate operating expenses and homegenius adjusted gross profit, along with reconciliations to consolidated GAAP measures, see Exhibits F and G.

Three Months Ended June 30, 2021

(In thousands)

Mortgage

homegenius

All Other

Inter-segment

Total

Net premiums written

$

231,027

$

7,670

$

$

$

238,697

(Increase) decrease in unearned premiums

16,059

16,059

Net premiums earned

247,086

7,670

254,756

Services revenue

3,732

25,750

44

(62

)

29,464

Net investment income

32,842

31

3,418

36,291

Other income

641

181

822

Total

284,301

33,451

3,643

(62

)

321,333

Provision for losses

3,334

335

(21

)

3,648

Policy acquisition costs

4,838

4,838

Cost of services

3,161

21,433

19

2

24,615

Other operating expenses before allocated corporate operating expenses (1)

27,441

16,160

1,169

(43

)

44,727

Interest expense

21,065

21,065

Total

59,839

37,928

1,188

(62

)

98,893

Adjusted pretax operating income (loss) before allocated corporate operating expenses

224,462

(4,477

)

2,455

222,440

Allocation of corporate operating expenses

33,000

4,721

37,721

Adjusted pretax operating income (loss)

$

191,462

$

(9,198

)

$

2,455

$

$

184,719

Three Months Ended June 30, 2020

(In thousands)

Mortgage

homegenius

All Other

Inter-segment

Total

Net premiums written

$

229,458

$

4,734

$

(3,035

)

$

$

231,157

(Increase) decrease in unearned premiums

18,138

18,138

Net premiums earned

247,596

4,734

(3,035

)

249,295

Services revenue

3,918

17,688

6,579

(110

)

28,075

Net investment income

34,708

126

3,889

38,723

Other income (1)

721

104

825

Total

286,943

22,548

7,537

(110

)

316,918

Provision for losses

304,021

426

(29

)

304,418

Policy acquisition costs

6,015

6,015

Cost of services

2,133

12,681

3,177

(19

)

17,972

Other operating expenses before allocated corporate operating expenses (1)

18,537

10,527

3,129

(62

)

32,131

Interest expense

16,699

16,699

Total

347,405

23,634

6,306

(110

)

377,235

Adjusted pretax operating income (loss) before allocated corporate operating expenses

(60,462

)

(1,086

)

1,231

(60,317

)

Allocation of corporate operating expenses

25,359

2,823

28,182

Adjusted pretax operating income (loss)

$

(85,821

)

$

(3,909

)

$

1,231

$

$

(88,499

)

Radian Group Inc. and Subsidiaries

Segment Information

Exhibit E (page 2 of 4)

Mortgage

2021

2020

(In thousands)

Qtr 2

Qtr 1

Qtr 4

Qtr 3

Qtr 2

Net premiums written (2) (3)

$

231,027

$

246,874

$

261,244

$

259,278

$

229,458

(Increase) decrease in unearned premiums

16,059

17,790

25,572

24,078

18,138

Net premiums earned

247,086

264,664

286,816

283,356

247,596

Services revenue

3,732

4,351

3,717

3,914

3,918

Net investment income

32,842

34,013

34,235

32,054

34,708

Other income

641

769

735

689

721

Total

284,301

303,797

325,503

320,013

286,943

Provision for losses

3,334

45,869

56,312

87,753

304,021

Policy acquisition costs

4,838

8,996

7,395

10,166

6,015

Cost of services

3,161

3,192

3,245

2,908

2,133

Other operating expenses before allocated corporate operating expenses (1)

27,441

22,454

21,974

21,635

18,537

Interest expense (5) (6)

21,065

21,115

21,169

21,088

16,699

Total (7)

59,839

101,626

110,095

143,550

347,405

Adjusted pretax operating income (loss) before allocated corporate operating expenses

224,462

202,171

215,408

176,463

(60,462

)

Allocation of corporate operating expenses

33,000

27,884

31,102

29,127

25,359

Adjusted pretax operating income (loss)

$

191,462

$

174,287

$

184,306

$

147,336

$

(85,821

)

homegenius (6)

2021

2020

(In thousands)

Qtr 2

Qtr 1

Qtr 4

Qtr 3

Qtr 2

Net premiums earned (7)

$

7,670

$

7,208

$

7,572

$

7,099

$

4,734

Services revenue (6) (7)

25,750

18,550

15,958

22,627

17,688

Net investment income

31

37

43

67

126

Total

33,451

25,795

23,573

29,793

22,548

Provision for losses

335

296

392

370

426

Cost of services

21,433

17,028

15,706

18,085

12,681

Other operating expenses before allocated corporate operating expenses (1)

16,160

14,928

15,238

13,136

10,527

Total

37,928

32,252

31,336

31,591

23,634

Adjusted pretax operating income (loss) before allocated corporate operating expenses

(4,477

)

(6,457

)

(7,763

)

(1,798

)

(1,086

)

Allocation of corporate operating expenses

4,721

3,996

3,369

3,248

2,823

Adjusted pretax operating income (loss)

$

(9,198

)

$

(10,453

)

$

(11,132

)

$

(5,046

)

$

(3,909

)

Radian Group Inc. and Subsidiaries

Segment Information

Exhibit E (page 3 of 4)

All Other (6) (9)

2021

2020

(In thousands)

Qtr 2

Qtr 1

Qtr 4

Qtr 3

Qtr 2

Net premiums earned (8)

$

$

$

7,752

$

(3,984

)

$

(3,035

)

Services revenue (7) (8)

44

53

(7,963

)

8,267

6,579

Net investment income

3,418

4,201

3,837

4,134

3,889

Other income

181

207

55

224

104

Total

3,643

4,461

3,681

8,641

7,537

Cost of services

19

28

2,835

4,127

3,177

Other operating expenses (1)

1,169

951

3,033

1,824

3,129

Total

1,188

979

5,868

5,951

6,306

Adjusted pretax operating income (loss)

$

2,455

$

3,482

$

(2,187

)

$

2,690

$

1,231

(1)

Does not include impairment of long-lived assets and other non-operating items, which are not considered components of adjusted pretax operating income (loss).

(2)

Net of ceded premiums written under the QSR Programs and the Excess-of-Loss Program. See Exhibit L for additional information.

(3)

The fourth quarter of 2020 includes an increase to premiums earned of $11.3 million, related to changes in present value estimates for initial premiums on monthly policies that are deferred and not collected until cancellation. The impact of changes in this estimate in other periods is not material.

(4)

Does not include impairment of long-lived assets and other non-operating items, which are not considered components of adjusted pretax operating income (loss).

(5)

Relates to interest on our borrowing and financing activities including our Senior Notes issued by our holding company and FHLB borrowings made by our mortgage insurance subsidiaries.

(6)

The wind-down of our traditional appraisal business announced in the fourth quarter of 2020 caused the composition of our reportable segments to change, including all activity related to that business and certain other adjustments to services revenue now being reflected in All Other activities. In addition, there were certain other immaterial reclassifications to net investment income and interest expense. These changes to our reportable segments have been reflected in our segment operating results for all periods presented.

(7)

Inter-segment information:

2021

2020

(In thousands)

Qtr 2

Qtr 1

Qtr 4

Qtr 3

Qtr 2

Inter-segment revenue included in:

Mortgage

$

$

$

$

$

homegenius

62

59

86

98

91

All Other

186

767

19

Total inter-segment revenue

$

62

$

59

$

272

$

865

$

110

Inter-segment expense included in:

Mortgage

$

62

$

59

$

86

$

98

$

91

homegenius

186

767

19

All Other

Total inter-segment expense

$

62

$

59

$

272

$

865

$

110

See notes continued on next page.

Radian Group Inc. and Subsidiaries

Segment Information

Exhibit E (page 4 of 4)

Notes continued from prior page.

(8)

In the fourth quarter of 2020, we reclassified certain revenue previously reflected in the homegenius segment results as services revenue to net premiums earned. As a result, for all periods presented in 2020, on the homegenius segment, net premiums earned has been increased and services revenue has been decreased, with offsetting adjustments reflected in All Other activities.

(9)

All Other activities include: (i) income (losses) from assets held by our holding company; (ii) related general corporate operating expenses not attributable or allocated to our reportable segments; (iii) for all periods presented, the income and expenses related to our traditional appraisal services; and (iv) certain other immaterial revenue and expense items.

Selected Mortgage Key Ratios

2021

2020

Qtr 2

Qtr 1

Qtr 4

Qtr 3

Qtr 2

Loss ratio (1)

1.3

%

17.3

%

19.6

%

31.0

%

122.8

%

Expense ratio (1)

26.4

%

22.4

%

21.1

%

21.5

%

20.2

%

(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 impairment of internal-use software, 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) impairment of internal-use software and other long-lived assets; (ii) gains (losses) from the sale of lines of business: and (iii) acquistion-related income and 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 non-GAAP measures for our homegenius segment of adjusted pretax operating income (loss) before allocated corporate operating expenses and adjusted gross profit. Adjusted pretax operating income (loss) before allocated corporate operating expenses is calculated as adjusted pretax operating income (loss) as described above (which is the segment's ASC 280 GAAP measure of operating performance), adjusted to remove the impact of corporate allocations of other operating expenses for the homegenius segment. Adjusted gross profit is further adjusted to remove other operating expenses. In addition, homegenius adjusted pretax operating margin before allocated corporate operating expenses and adjusted gross profit margin are calculated by dividing homegenius adjusted pretax operating margin before allocated corporate operating expenses and adjusted gross profit, respectively, by GAAP total revenue for the homegenius segment. For the homegenius segment, adjusted pretax operating income (loss) before allocated corporate operating expenses, adjusted gross profit, and the related profit margins 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 homegenius segment.

See Exhibit G for the reconciliation of the most comparable GAAP measures, consolidated pretax income (loss), diluted net income (loss) per share and return on equity 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 adjusted pretax operating income (loss) to adjusted pretax operating income (loss) before allocated corporate operating expenses and adjusted gross profit for the homegenius segment.

Total adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share, adjusted net operating return on equity, homegenius adjusted pretax operating income (loss) before allocated corporate operating expenses and homegenius adjusted gross profit should not be considered in isolation or viewed as substitutes for GAAP pretax income (loss), diluted net income (loss) per share, return on equity or net income (loss), or in the case of the homegenius non-GAAP measures, for homegenius adjusted pretax operating income (loss). Our definitions of adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share, adjusted net operating return on equity and homegenius adjusted pretax operating income (loss) before allocated corporate operating expenses, homegenius adjusted gross profit, homegenius adjusted pretax operating margin before allocated corporate operating expenses or homegenius adjusted gross profit 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)

2021

2020

(In thousands)

Qtr 2

Qtr 1

Qtr 4

Qtr 3

Qtr 2

Consolidated pretax income (loss)

$

195,496

$

161,189

$

179,167

$

161,205

$

(42,224

)

Less reconciling income (expense) items:

Net gains (losses) on investments and other financial instruments

15,661

(5,181

)

17,376

17,652

47,276

Amortization and impairment of other acquired intangible assets

(863

)

(862

)

(2,225

)

(961

)

(979

)

Impairment of other long-lived assets and other non-operating items (1)

(4,021

)

(84

)

(6,971

)

(466

)

(22

)

Total adjusted pretax operating income (loss) (2)

$

184,719

$

167,316

$

170,987

$

144,980

$

(88,499

)

(1)

The amounts for all the periods presented 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:

2021

2020

(In thousands)

Qtr 2

Qtr 1

Qtr 4

Qtr 3

Qtr 2

Adjusted pretax operating income (loss):

Mortgage segment

$

191,462

$

174,287

$

184,306

$

147,336

$

(85,821

)

homegenius segment

(9,198

)

(10,453

)

(11,132

)

(5,046

)

(3,909

)

All Other activities

2,455

3,482

(2,187

)

2,690

1,231

Total adjusted pretax operating income (loss)

$

184,719

$

167,316

$

170,987

$

144,980

$

(88,499

)

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

2021

2020

Qtr 2

Qtr 1

Qtr 4

Qtr 3

Qtr 2

Diluted net income (loss) per share

$

0.80

$

0.64

$

0.76

$

0.70

$

(0.15

)

Less per-share impact of reconciling income (expense) items:

Net gains (losses) on investments and other financial instruments

0.08

(0.03

)

0.09

0.09

0.24

Amortization and impairment of other acquired intangible assets

(0.01

)

(0.01

)

Impairment of other long-lived assets and other non-operating items

(0.02

)

(0.04

)

Income tax (provision) benefit on reconciling income (expense) items (1)

(0.01

)

0.01

(0.01

)

(0.02

)

(0.05

)

Difference between statutory and effective tax rate

(0.02

)

0.04

0.04

0.03

Per-share impact of reconciling income (expense) items

0.05

(0.04

)

0.07

0.11

0.21

Adjusted diluted net operating income (loss) per share (1)

$

0.75

$

0.68

$

0.69

$

0.59

$

(0.36

)

(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)

2021

2020

Qtr 2

Qtr 1

Qtr 4

Qtr 3

Qtr 2

Return on equity (1)

14.5

%

11.8

%

14.1

%

13.3

%

(3.1

)

%

Less impact of reconciling income (expense) items: (2)

Net gains (losses) on investments and other financial instruments

1.5

(0.5

)

1.7

1.7

4.8

Amortization and impairment of other acquired intangible assets

(0.1

)

(0.1

)

(0.2

)

(0.1

)

(0.1

)

Impairment of other long-lived assets and other non-operating items

(0.4

)

(0.7

)

Income tax (provision) benefit on reconciling income (expense) items (3)

(0.2

)

0.1

(0.2

)

(0.3

)

(1.0

)

Difference between statutory and effective tax rate

0.1

(0.1

)

0.6

0.7

0.3

Impact of reconciling income (expense) items

0.9

(0.6

)

1.2

2.0

4.0

Adjusted net operating return on equity

13.6

%

12.4

%

12.9

%

11.3

%

(7.1

)

%

(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 homegenius Adjusted Pretax Operating Income (Loss) to homegenius Adjusted Gross Profit

2021

2020

(In thousands)

Qtr 2

Qtr 1

Qtr 4

Qtr 3

Qtr 2

homegenius adjusted pretax operating income (loss)

$

(9,198

)

$

(10,453

)

$

(11,132

)

$

(5,046

)

$

(3,909

)

Less reconciling income (expense) items:

Allocation of corporate operating expenses

(4,721

)

(3,996

)

(3,369

)

(3,248

)

(2,823

)

Adjusted pretax operating income (loss) before allocated corporate operating expenses

(4,477

)

(6,457

)

(7,763

)

(1,798

)

(1,086

)

Less reconciling income (expense) items:

Other operating expenses before allocated corporate operating expenses

(16,160

)

(14,928

)

(15,238

)

(13,136

)

(10,527

)

homegenius adjusted gross profit

$

11,683

$

8,471

$

7,475

$

11,338

$

9,441

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. In addition, "homegenius adjusted pretax operating income (loss) before allocated corporate operating expenses","homegenius adjusted gross profit," "homegenius adjusted pretax operating margin before allocated corporate operating expenses" and "homegenius adjusted pretax operating 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 or net income (loss), or in the case of the homegenius non-GAAP measures, for homegenius adjusted pretax operating income (loss). Our definitions of adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share, adjusted net operating return on equity, homegenius adjusted pretax operating income (loss) before allocated corporate operating expenses, homegenius adjusted gross profit, homegenius adjusted pretax operating margin before allocated corporate operating expenses or homegenius adjusted gross profit 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

2021

2020

($ in millions)

Qtr 2

Qtr 1

Qtr 4

Qtr 3

Qtr 2

New insurance written ("NIW")

$

21,662

$

20,161

$

29,781

$

33,320

$

25,459

Percentage of NIW

Borrower-paid

99.1

%

99.2

%

99.2

%

98.5

%

97.8

%

Percentage by premium type

Direct monthly and other recurring premiums

93.1

%

90.2

%

91.4

%

90.0

%

84.7

%

Borrower-paid (1) (2)

6.6

9.4

8.3

9.0

13.6

Lender-paid (1)

0.3

0.4

0.3

1.0

1.7

Direct single premiums (1)

6.9

9.8

8.6

10.0

15.3

Total NIW

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

NIW for purchases

77.1

%

59.1

%

64.6

%

70.5

%

56.4

%

NIW for refinances

22.9

%

40.9

%

35.4

%

29.5

%

43.6

%

Percentage of NIW by FICO score (3)

>=740

61.4

%

64.3

%

64.7

%

66.2

%

67.3

%

680-739

33.1

31.5

31.5

30.7

30.1

620-679

5.5

4.2

3.8

3.1

2.6

Total NIW

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Percentage by LTV

95.01% and above

10.9

%

8.0

%

8.9

%

9.7

%

8.3

%

90.01% to 95.00%

40.4

31.6

34.7

39.6

36.4

85.01% to 90.00%

27.6

31.3

29.8

28.3

29.8

85.00% and below

21.1

29.1

26.6

22.4

25.5

Total NIW

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

(1)

Percentages exclude the impact of reinsurance.

(2)

Borrower-paid Single Premium Policies have lower Minimum Required Assets under PMIERs as compared to lender-paid Single Premium Policies.

(3)

For loans with multiple borrowers, the percentage of NIW by FICO score represents the lowest of the borrowers’ FICO scores.

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)

2021

2021

2020

2020

2020

Primary insurance in force (1)

Prime

$

233,543

$

234,980

$

242,044

$

241,166

$

236,835

Alt-A and A minus and below

3,759

3,941

4,100

4,301

4,471

Primary

$

237,302

$

238,921

$

246,144

$

245,467

$

241,306

Primary risk in force (1) (2)

Prime

$

57,155

$

57,579

$

59,689

$

59,972

$

59,253

Alt-A and A minus and below

885

929

967

1,017

1,058

Primary

$

58,040

$

58,508

$

60,656

$

60,989

$

60,311

Percentage of primary risk in force

Direct monthly and other recurring premiums

81.2

%

80.0

%

79.1

%

76.8

%

73.8

%

Direct single premiums

18.8

%

20.0

%

20.9

%

23.2

%

26.2

%

Percentage of primary risk in force by FICO score (3)

>=740

57.5

%

57.2

%

57.5

%

57.6

%

57.4

%

680-739

34.8

34.9

34.6

34.3

34.3

620-679

7.2

7.3

7.3

7.5

7.7

<=619

0.5

0.6

0.6

0.6

0.6

Total Primary

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Percentage of primary risk in force by LTV

95.01% and above

14.5

%

14.4

%

14.4

%

14.3

%

14.2

%

90.01% to 95.00%

48.5

48.6

49.3

50.1

50.4

85.01% to 90.00%

28.1

28.2

28.0

27.9

28.1

85.00% and below

8.9

8.8

8.3

7.7

7.3

Total

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Percentage of primary risk in force by policy year

2008 and prior

5.7

%

6.1

%

6.2

%

6.6

%

7.2

%

2009 - 2015

8.7

9.9

11.3

13.3

16.0

2016

6.0

6.8

7.6

8.9

10.6

2017

6.8

8.0

9.1

10.7

13.0

2018

7.3

8.7

9.8

11.7

14.0

2019

13.6

15.6

17.8

20.6

23.3

2020

35.4

37.2

38.2

28.2

15.9

2021

16.5

7.7

Total

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Primary risk in force on defaulted loans

$

2,345

$

2,910

$

3,250

$

3,747

$

4,263

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,

2021

2021

2020

2020

2020

Persistency Rate (12 months ended)

57.7

%

(4)

57.2

%

(4)

61.2

%

(4)

65.6

%

(4)

70.2

%

Persistency Rate (quarterly, annualized) (5)

66.3

%

62.5

%

60.4

%

(4)

60.0

%

(4)

63.8

%

(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% 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 was reduced by an increase in cancellations of Single Premium Policies due to increased cancellations identified by our ongoing servicer monitoring process for Single Premium Policies.

(5)

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

2021

2020

($ in thousands)

Qtr 2

Qtr 1

Qtr 4

Qtr 3

Qtr 2

Net claims paid: (1)

Total primary claims paid

$

4,870

$

6,611

$

8,353

$

11,331

$

22,144

Total pool and other

(649

)

(138

)

70

(230

)

639

Subtotal

4,221

6,473

8,423

11,101

22,783

Impact of commutations and settlements (2)

4,000

32,170

(267

)

Total net claims paid

$

4,221

$

10,473

$

40,593

$

10,834

$

22,783

Total average net primary claims paid (1) (3)

$

46.8

$

43.8

$

46.9

$

46.4

$

47.9

Average direct primary claims paid (3) (4)

$

48.4

$

45.5

$

48.5

$

47.8

$

49.0

(1)

Includes the impact of reinsurance recoveries and LAE.

(2)

Includes payments to commute mortgage insurance coverage on certain performing and non-performing loans. For the first quarter of 2021 and the fourth quarter of 2020, primarily includes payments made to settle certain previously disclosed legal proceedings.

(3)

Calculated without giving effect to the impact of commutations and settlements.

(4)

Before reinsurance recoveries.

June 30,

March 31,

December 31,

September 30,

June 30,

($ in thousands, except per default amounts)

2021

2021

2020

2020

2020

Reserve for losses by category (1)

Mortgage reserves

Prime

$

750,699

$

751,100

$

711,245

$

655,754

$

573,463

Alt-A and A minus and below

90,065

90,455

88,269

88,879

86,646

IBNR and other

5,464

6,626

9,966

43,153

43,342

LAE

21,180

21,212

20,172

18,745

16,807

Total primary reserves

867,408

869,393

829,652

806,531

720,258

Total pool reserves

13,085

13,175

14,163

14,779

14,398

Total 1st lien reserves

880,493

882,568

843,815

821,310

734,656

Other

270

270

292

398

335

Total Mortgage reserves

880,763

882,838

844,107

821,708

734,991

homegenius reserves

4,735

4,517

4,306

4,084

3,894

Total reserves

$

885,498

$

887,355

$

848,413

$

825,792

$

738,885

Primary reserve per primary default excluding IBNR and other

$

21,304

$

17,219

$

14,759

$

12,168

$

9,706

(1)

Includes ceded losses on reinsurance transactions, which are expected to be recovered and are included in the reinsurance recoverables reported in our condensed consolidated balance sheets.

Radian Group Inc. and Subsidiaries

Mortgage Supplemental Information - Default Statistics

Exhibit K

June 30,

March 31,

December 31,

September 30,

June 30,

2021

2021

2020

2020

2020

Default Statistics

Primary Insurance:

Prime

Number of insured loans

976,344

996,082

1,031,736

1,043,450

1,040,964

Number of loans in default

36,826

45,929

51,032

58,057

64,648

Percentage of loans in default

3.77

%

4.61

%

4.95

%

5.56

%

6.21

%

Alt-A and A minus and below

Number of insured loans

24,205

25,282

26,208

27,310

28,357

Number of loans in default

3,638

4,177

4,505

4,680

5,094

Percentage of loans in default

15.03

%

16.52

%

17.19

%

17.14

%

17.96

%

Total Primary

Number of insured loans

1,000,549

1,021,364

1,057,944

1,070,760

1,069,321

Number of loans in default

40,464

50,106

55,537

62,737

69,742

Percentage of loans in default

4.04

%

4.91

%

5.25

%

5.86

%

6.52

%

Radian Group Inc. and Subsidiaries

Mortgage Supplemental Information - Reinsurance Programs

Exhibit L

2021

2020

($ 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)

$

(7,032

)

$

(2,852

)

$

(1,117

)

$

2,119

$

35,821

% of premiums written

(2.8

)

%

(1.1

)

%

(0.4

)

%

0.8

%

13.0

%

Ceded premiums earned

$

13,491

$

20,788

$

29,510

$

36,742

$

60,652

% of premiums earned

4.8

%

6.8

%

8.6

%

11.2

%

19.2

%

Ceding commissions written

$

(2,362

)

$

(2,949

)

$

(3,847

)

$

(4,984

)

$

(5,304

)

Ceding commissions earned (2)

$

7,920

$

10,407

$

13,197

$

17,038

$

13,453

Profit commission

$

17,935

$

16,350

$

18,406

$

20,425

$

(10,649

)

Ceded losses

$

(1,007

)

$

3,661

$

7,106

$

10,189

$

39,635

Excess-of-Loss Program

Ceded premiums written

$

18,524

$

11,482

$

15,240

$

7,499

$

7,525

% of premiums written

7.4

%

4.4

%

5.2

%

2.8

%

2.7

%

Ceded premiums earned

$

15,601