Radian Group Inc. · NYSE:RDN
Radian — Q3 2021 Earnings Presentation
29 slides from Radian's earnings presentation, 2021
Slide 1: Financial Results Q3 2021
Financial Results Q3 2021 NYSE: RDN www.radian.com
Slide 2: Safe Harbor Statements
Safe Harbor Statements All statements in this presentation that address events, developments or results that we ▪ changes in the charters or business practices of, or rules or regulations imposed by or applicable ▪ legal and regulatory claims, assertions, actions, reviews, audits, inquiries and inve
Slide 3: About Us
About Us Radian Group Inc. is a diversified mortgage and Our culture is built around a set of core real estate business that maintains two reportable organizational values that we live by, and segments: mortgage and homegenius define who we are as an enterprise: Innovate for the Future Our mortgage
Slide 4: Q3 2021 Summary Financial Metrics
Q3 2021 Summary Financial Metrics $126.4 million Compared to $155.2 million in Q2 2021 11.8% Compared to 14.5% in Q2 2021 and and $135.1 million in Q3 2020 13.3% in Q3 2020 Net Income Return on Average Equity $0.67 Compared to $0.80 in Q2 2021 and $0.70 11.8% Compared to 13.6% in Q2 2021 and in Q3 2
Slide 5: Q3 2021 Summary Financial Metrics
Q3 2021 Summary Financial Metrics $241.6 billion Compared to $237.3 billion as of June 30, 2021 and $245.5 billion as of $17.3 million Compared to $3.6 million in Q2 2021 and $88.1 million in Q3 2020 Primary Insurance In Force September 30, 2020 Provision for Losses $26.6 billion Compared to $21.7 b
Slide 6: GAAP Diluted Net Income Per Share
GAAP Diluted Net Income Per Share (1) Q2 2021 to Q3 2021 $1.00 1) All diluted net income (loss) per share items are calculated based on 194.6 million weighted-average diluted shares $0.80 outstanding for the quarter ended $0.80 June 30, 2021, except for the September 30, 2021 diluted net income $(0.
Slide 7: GAAP Book Value Per Share
GAAP Book Value Per Share (1) June 30, 2021 to September 30, 2021 1) All book value per share items are $24.00 $0.67 calculated based on 188.3 million $0.03 $0.04 $23.48 shares outstanding as of June 30, 2021, $23.02 $(0.14) $(0.14) except for the September 30, 2021 book value per share, which was c
Slide 8: Financial Highlights
Financial Highlights Radian Group Inc. Consolidated September 30, June 30, March 31, December 31, September 30, ($ in millions, except per-share amounts) 2021 2021 2021 2020 2020 Primary Insurance In Force $241,575 $237,302 $238,921 $246,144 $245,467 Total Assets $8,042 $8,009 $7,921 $7,948 $7,777 T
Slide 9: Primary Insurance In Force
Primary Insurance In Force (1) Monthly and Single Mix ($ in billions) Insurance in Force as of: ò Total $250 Vintage written in: September 30, December 31, September 30, ò Monthly / Other ($ in billions) 2021 2020 2020 ò Single Lender-paid 2021 $66.1 27.4 % $— —% $— —% $200 ò Single Borrower-paid 20
Slide 10: In Force Portfolio Premium Yield
In Force Portfolio Premium Yield (in basis points, except as otherwise indicated) Q3 2021 Q2 2021 Q1 2021 Q4 2020 (1) Q3 2020 (2) In Force Portfolio Premium Yield 40.3 41.1 42.7 42.8 43.2 Single Premium Cancellations (3) 4.3 5.3 6.4 8.7 10.7 Total Direct Yield 44.6 46.4 49.1 51.5 53.9 Ceded Earned P
Slide 11: First-lien Mortgage Insurance
First-lien Mortgage Insurance 2021 Performance by Vintage ($ in millions) Three Months Ended September 30, 2021 (1) Vintage Premiums Earned Incurred Losses (1) Net 2008 & Prior $14.3 $2.1 $12.2 2009 - 2015 $17.8 $0.3 $17.5 2016 $16.8 ($1.0) $17.8 2017 $19.1 $1.2 $17.9 2018 $21.9 $3.3 $18.6 2019 $32.
Slide 12: Primary Mortgage Insurance
Primary Mortgage Insurance Cumulative Incurred Loss Ratio by Development Year (1) Vintage Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 (2) Sep-21 (2) 2011 1.7 % 4.4 % 5.5 % 5.6 % 5.0 % 4.9 % 5.0 % 4.9 % 5.0 % 5.2 % 5.2 % 2012 2.0 % 3.2 % 3.6 % 2.7 % 2.9 % 2.8 % 2.8 % 2.8 % 3
Slide 13: Components of Mortgage Provision for Losses
Components of Mortgage Provision for Losses Three Months Ended ($ in millions) Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 (1) Current period defaults $33.3 $34.3 $50.3 $63.9 $96.0 Prior period defaults (2) (16.5) (31.0) (4.5) (7.7) (8.2) Second-lien premium deficiency reserve &
Slide 14: Default Rollforward
Default Rollforward Primary Insurance in Force Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 (number of loans) Beginning Default Inventory 40,464 50,106 55,537 62,737 69,742 Total New Defaults (1) 8,132 8,145 11,851 14,552 20,508 Cures (14,475) (17,681) (17,137) (21,567) (27,283) Claims Paid (321) (98) (1
Slide 15: Primary Loans In Default
Primary Loans In Default September 30, 2021 Foreclosure Stage Total Cure % During Q3 Reserve for Losses % of Reserve ($ in thousands) Defaulted Loans Missed Payments # % # % $ % 3 Payments or Fewer 6,671 19.7 % 34 38.4 % $59,663 7.0 % 4 to 11 Payments 9,977 29.5 % 102 28.5 % $177,416 20.9 % 12 Payme
Slide 16: COVID-19 Forbearance Program Summary
COVID-19 Forbearance Program Summary The FHFA, in coordination with the GSEs, have enacted a payment forbearance program with broad availability ▪ Borrowers experiencing a financial hardship relating to COVID-19 may request a forbearance to suspend or reduce their mortgage payments for up to 12 mont
Slide 17: Financial Strength and Risk Distribution Overview
Financial Strength and Risk Distribution Overview 17
Slide 18: Capital, Investments & Ratings
Capital, Investments & Ratings Total Capitalization as of September 30, 2021 Stockholders’ Equity Carrying Value Principal % of Total Coupon Description ($ in billions) ($’000) ($’000) Capitalization (1) 4.500 % Senior Notes due October 2024 $446,346 $450,000 7.9 % $4.3 $4.3 $4.1 6.625 % Senior Note
Slide 19: Eagle Re Mortgage Insurance-Linked Notes Reinsurance Key Metrics
Eagle Re Mortgage Insurance-Linked Notes Reinsurance Key Metrics (1) Pro Forma Eagle Re 1) Through September 30, 2021, Radian Guaranty has entered into five fully collateralized Eagle Re Eagle Re Eagle Re Eagle Re Eagle Re reinsurance arrangements with the Eagle Re Issuers. The Eagle Re Issuers are
Slide 20: Quota Share Reinsurance (QSR) Key Summary Metrics
Quota Share Reinsurance (QSR) Key Summary Metrics (1) ($ in millions) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 2016 Single Premium QSR Agreement NIW Policy Dates 2012 – 2017 Quota Share — 20% - 65% (2) Ceded Risk in Force $2,115 $2,366 $2,683 $3,071 $3,676 (3) Ceding / Profit Commission — 25% / Up to
Slide 21: homegenius
21 homegenius radian
Slide 22: homegenius Highlights
homegenius Highlights Actual Actual Current (1) ($ in millions) Q3 2021 Q2 2021 Q1 2021 YTD 2021 Projected 2021 Revenue / % of Total Revenue Title $25.2 $17.1 $15.3 $57.6 55% 50 - 55 % SaaS 0.8 0.9 0.9 2.6 3% 5 - 10 % SFR / REO / Other 19.0 15.5 9.6 44.1 42% 35 - 40 % Total Revenue $45.0 $33.5 $25.8
Slide 23: Consolidated Non-GAAP Financial Measures Reconciliations
Consolidated Non-GAAP Financial Measures Reconciliations 23
Slide 24: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures In addition to the traditional GAAP financial measures, we have presented “adjusted 1) Net gains (losses) on investments and other financial instruments. The recognition In addition to the above non-GAAP measures for the consolidated company, we also pretax operati
Slide 25: Reconciliation of Consolidated Pretax Income to Adjusted Pretax Operating Income
Reconciliation of Consolidated Pretax Income (Loss) to Adjusted Pretax Operating Income (Loss) 2021 2020 ($ in thousands) Q3 Q2 Q1 Q4 Q3 Consolidated pretax income (loss) $161,641 $195,496 $161,189 $179,167 $161,205 Less reconciling income (expense) items: Net gains (losses) on investments and other
Slide 26: Reconciliation of Diluted Net Income Per Share to Adjusted Diluted Net Operating Income
Reconciliation of Diluted Net Income (Loss) Per Share to Adjusted Diluted Net Operating Income (Loss) Per Share 2021 2020 Q3 Q2 Q1 Q4 Q3 Diluted net income (loss) per share $0.67 $0.80 $0.64 $0.76 $0.70 Less per-share impact of reconciling income (expense) items: Net gains (losses) on investments an
Slide 27: Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity
Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity 2021 2020 Q3 Q2 Q1 Q4 Q3 (1) Return on equity 11.8 % 14.5 % 11.8 % 14.1 % 13.3 % (2) Less impact of reconciling income (expense) items: Net gains (losses) on investments and other financial instruments 0.2 1.5 (0.5) 1.7 1.
Slide 28: Reconciliation of homegenius Adjusted Pretax Operating Income to Adjusted Gross Profit
Reconciliation of homegenius Adjusted Pretax Operating Income (Loss) to homegenius Adjusted Gross Profit 2021 2020 YTD Current (1)(2) Projected Q3 Q2 Q1 Q4 Q3 2021 ($ in thousands) 2021 homegenius adjusted pretax operating income $(5,557) $(9,198) $(10,453) $(11,132) $(5,046) $(25,208) $(32,000) (lo
Slide 29: radian
radian ensuring the American dream