[April 27, 2017] |
|
Radian Announces First Quarter 2017 Financial Results
Radian Group Inc. (NYSE: RDN) today reported net income for the quarter
ended March 31, 2017, of $76.5 million, or $0.34 per diluted share. This
compares to net income for the quarter ended March 31, 2016, of $66.2
million, or $0.29 per diluted share. Consolidated pretax income for the
quarter ended March 31, 2017, was $114.7 million, which compares to
consolidated pretax income of $102.4 million for the quarter ended March
31, 2016.
Book value per share at March 31, 2017, was $13.58, compared to $13.39
at December 31, 2016, and an increase of 9 percent from $12.42 at March
31, 2016.
Key Financial Highlights (dollars in millions, except per
share data)
|
|
|
|
|
|
|
|
|
Quarter Ended March 31, 2017
|
|
Quarter Ended March 31, 2016
|
|
Percent Change
|
Net income
|
|
$76.5
|
|
$66.2
|
|
16
|
%
|
Diluted net income per share
|
|
$0.34
|
|
$0.29
|
|
17
|
%
|
Pretax income
|
|
$114.7
|
|
$102.4
|
|
12
|
%
|
Adjusted pretax operating income
|
|
$125.3
|
|
$130.2
|
|
(4
|
%)
|
Adjusted diluted net operating
income per share *
|
|
$0.37
|
|
$0.37
|
|
--
|
|
Net premiums earned - insurance
|
|
$221.8
|
|
$221.0
|
|
--
|
|
New Mortgage Insurance Written (NIW)
|
|
$10,055
|
|
$8,071
|
|
25
|
%
|
Mortgage insurance in force
|
|
185.9
|
|
175.4
|
|
6
|
%
|
Book value per share
|
|
$13.58
|
|
$12.42
|
|
9
|
%
|
|
|
|
|
|
|
|
* Adjusted diluted net operating income per share is
calculated using the company's statutory tax rate of 35 percent.
Adjusted pretax operating income for the quarter ended March 31, 2017,
was $125.3 million, compared to $130.2 million for the quarter ended
March 31, 2016. Adjusted diluted net operating income per share for the
quarter ended March 31, 2017, was $0.37, flat to $0.37 for the quarter
ended March 31, 2016. See "Non-GAAP Financial Measures" below as well as
Exhibits F and G for additional details regarding these adjusted
measures.
"I am pleased to report strong first quarter results for Radian,
including year over year growth in net income, book value and new MI
business written," said Radian's Chief Executive Officer Rick
Thornberry. "As persistency rises, we expect our large, high-quality MI
in-force portfolio to grow and generate future premium revenue. This is
the primary driver of future earnings for Radian."
Thornberry added, "After nearly two months with Radian as CEO, my
excitement about the prospects ahead continues to grow. I decided to
join the company based on the excellent businesses, great team,
diversified set of products and services, high quality portfolio, and
the institutional commitment to serve customers. Those qualities, along
with a strong capital base, solid profitability and excellent market
opportunity, are a winning combination."
FIRST QUARTER HIGHLIGHTS
Mortgage Insurance
-
New mortgage insurance written (NIW) was $10.1 billion for the
quarter, compared to $13.9 billion in the fourth quarter of 2016 and
$8.1 billion in the prior-year quarter.
-
For the first quarter of 2017, NIW grew 25 percent compared to the
first quarter of 2016.
-
Of the $10.1 billion in new business written in the first quarter
of 2017, 25 percent was written with single premiums. Net single
premiums written, after consideration of the 35 percent ceded
under the Single Premium Quota Share Reinsurance Transaction, was
16 percent in the first quarter of 2017.
-
Refinances accounted for 16 percent of total NIW in the first
quarter of 2017, compared to 27 percent in the fourth quarter of
2016, and 19 percent a year ago.
-
NIW continued to consist of loans with excellent risk
characteristics.
-
Total primary mortgage insurance in force as of March 31, 2017, grew
to $185.9 billion, compared to $183.5 billion as of December 31, 2016,
and $175.4 billion as of March 31, 2016.
-
The composition of Radian's mortgage insurance portfolio continues
to improve, with 89 percent consisting of new business written
after 2008, including those loans that successfully completed the
Home Affordable Refinance Program (HARP).
-
Persistency, which is the percentage of mortgage insurance that
remains in force after a twelve-month period, was 77.1 percent as
of March 31, 2017, compared to 76.7 percent as of December 31,
2016, and 79.4 percent as of March 31, 2016.
-
Annualized persistency for the three-months ended March 31, 2017,
was 84.4 percent, compared to 76.8 percent for the three-months
ended December 31, 2016, and 82.3 percent for the three-months
ended March 31, 2016.
-
Total net premiums earned were $221.8 million for the quarter ended
March 31, 2017, compared to $233.6 million for the quarter ended
December 31, 2016, and $221.0 million for the quarter ended March 31,
2016.
-
Accelerated revenue recognition due to Single Premium Policy
cancellations, which are net of reinsurance, were $5.9 million in
the first quarter, compared to $15.7 million in the fourth quarter
of 2016, and $9.8 million in the first quarter of 2016.
-
Ceded premiums of $14.3 million, $18.2 million and $19.4 million
for the quarters ended March 31, 2017, December 31, 2016, and
March 31, 2016, respectively, are net of accrued profit commission
on reinsurance transactions of $5.9 million in the first quarter
of 2017, compared to $8.5 million in the fourth quarter of 2016,
and $6.1 million in the first quarter of 2016.
-
The decrease in the level of refinancing activity in the first
quarter contributed to the decrease in acceleration of premiums
related to Single Premium Policy cancellations as well as the
decrease in ceded premiums and profit commission related to the
company's Single Premium Quota Share Reinsurance transaction.
-
The mortgage insurance provision for losses was $47.2 million in the
first quarter of 2017, compared to $54.7 million in the fourth quarter
of 2016, and $43.3 million in the prior-year period.
-
The provision for losses in the first quarter included the
positive impact of a modest reduction in the company's default to
claim rate assumption for new notices of default.
-
The loss ratio in the first quarter was 21.3 percent, compared to
23.4 percent in the fourth quarter of 2016 and 19.6 percent in the
first quarter of 2016.
-
Mortgage insurance loss reserves were $726.2 million as of March
31, 2017, compared to $760.3 million as of December 31, 2016, and
$891.3 million as of March 31, 2016.
-
Primary reserve per primary default (excluding IBNR and other
reserves) was $24,230 as of March 31, 2017. This compares to
primary reserve per primary default of $22,503 as of December 31,
2016, and $24,959 as of March 31, 2016.
-
The total number of primary delinquent loans decreased by 11.4 percent
in the first quarter from the fourth quarter of 2016, and by 16.4
percent from the first quarter of 2016. The primary mortgage insurance
delinquency rate decreased to 2.8 percent in the first quarter of
2017, compared to 3.2 percent in the fourth quarter of 2016, and 3.5
percent in the first quarter of 2016.
-
Total net mortgage insurance claims paid were $82.1 million in the
first quarter, compared to $116.5 million in the fourth quarter of
2016, and $127.7 million in the first quarter of 2016. In addition,
the company's pending claim inventory declined 37 percent from the
first quarter of 2016.
Mortgage and Real Estate Services
-
The Services segment provides analytics and outsourced services,
including residential loan due diligence and underwriting, valuations,
servicing surveillance, title and escrow, and consulting services for
buyers and sellers of, and investors in, mortgage- and real
estate-related loans and securities. These services and solutions are
provided primarily through Clayton and its subsidiaries, including
Green River Capital, Red Bell Real Estate and ValuAmerica.
-
Total revenues for the first quarter were $40.1 million, compared to
$52.6 million for the fourth quarter of 2016, and $34.5 million for
the first quarter of 2016.
-
The adjusted pretax operating loss before corporate allocations for
the quarter ended March 31, 2017, was $1.2 million, compared to income
of $3.6 million for the quarter ended December 31, 2016, and a loss of
$3.8 million for the quarter ended March 31, 2016.
-
Services adjusted earnings before interest, income taxes, depreciation
and amortization (Services adjusted EBITDA) for the quarter ended
March 31, 2017, was a loss of $0.3 million, compared to income of $4.4
million for the quarter ended December 31, 2016, and a loss of $3.1
million for the quarter ended March 31, 2016. Additional details
regarding the non-GAAP measure Services adjusted EBITDA may be found
in Exhibits F and G.
Consolidated Expenses
Other operating expenses were $68.4 million in the first quarter,
compared to $62.4 million in the fourth quarter of 2016, and $57.2
million in the first quarter of last year.
-
Notable increases to items impacting other operating expenses in the
first quarter of 2017 compared to the first quarter of 2016 include:
-
$3.6 million associated with retirement and consulting agreements
entered into in February 2017 with the company's former CEO.
Additional expenses are expected to be recognized throughout the
year. A portion of both the current and future expenses are
subject to change, based on the company's and former CEO's future
performance. Details may be found in the company's recent proxy
statement.
-
$3.7 million related to variable and incentive-based compensation
expenses, including an increase in the first quarter 2017 for
year-end bonus accruals related to the company's 2016 performance,
compared to a decrease in year-end bonus accruals in the first
quarter of 2016.
-
$2.4 million associated with various items including periodic
non-capitalized costs associated with recently deployed technology
systems as well as consulting services, including those related to
the company's CEO search.
-
$1.2 million in expense, driven primarily by depreciation, related
to the company's investment to significantly upgrade its
technology systems.
Details regarding notable variable items impacting other operating
expenses may be found in Exhibit D.
CAPITAL AND LIQUIDITY UPDATE
-
Radian Group maintained approximately $360 million of available
liquidity as of March 31, 2017. The company initiated a series of
capital actions two years ago, in order to strengthen its capital and
liquidity position, improve its debt maturity profile and reduce the
impact of dilution from its convertible bonds. The combination of
these capital actions decreased the company's total number of diluted
shares outstanding by 27.1 million from March 31, 2015, to March 31,
2017. During the same time period, the company's debt to capital ratio
decreased from 34.6 percent to 25.7 percent. Radian Group has no
material debt maturities prior to June 2019.
-
The company's most recent capital action was executed in January 2017,
in which Radian settled its obligations with respect to the remaining
$68.0 million aggregate principal amount of its Convertible Senior
Notes due 2019. While the transaction had a negative impact of $0.20
to book value per share during the first quarter of 2017, it also
reduced the company's diluted shares by 6.4 million at the time of the
settlement, or approximately 3 percent of diluted shares outstanding
as of December 31, 2016.
CONFERENCE CALL
Radian will discuss first quarter financial results in a conference call
today, Thursday, April 27, 2017, at 10:00 a.m. Eastern time. The
conference call will be broadcast live over the Internet at http://www.radian.biz/page?name=Webcasts
or at www.radian.biz.
The call may also be accessed by dialing 800.230.1096 inside the U.S.,
or 612.332.0228 for international callers, using passcode 422045 or by
referencing Radian.
A replay of the webcast will be available on the Radian website
approximately two hours after the live broadcast ends for a period of
one year. A replay of the conference call will be available
approximately two and a half hours after the call ends for a period of
two weeks, using the following dial-in numbers and passcode:
800.475.6701 inside the U.S., or 320.365.3844 for international callers,
passcode 422045.
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 under Investors >Quarterly Results, or by clicking on http://www.radian.biz/page?name=QuarterlyResults.
NON-GAAP FINANCIAL MEASURES
Radian believes that adjusted pretax operating income and adjusted
diluted net operating income per share (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 viewed as alternatives to 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 is defined as earnings excluding the
impact of certain items that are not viewed as part of the operating
performance of the company's primary activities, or not expected to
result in an economic impact equal to the amount reflected in pretax
income (loss). Adjusted pretax operating income adjusts GAAP pretax
income to remove the effects of: (i) net gains (losses) on investments
and other financial instruments; (ii) loss on induced conversion and
debt extinguishment; (iii) acquisition-related expenses; (iv)
amortization and impairment of intangible assets; and (v) net impairment
losses recognized in earnings. Adjusted diluted net operating income per
share represents a diluted net income per share calculation using as its
basis adjusted pretax operating income, net of taxes at the company's
statutory tax rate for the period.
In addition to the above non-GAAP measures for the consolidated company,
the company also presents as supplemental information a non-GAAP measure
for the Services segment, representing earnings before interest, income
taxes, depreciation and amortization (EBITDA). Services adjusted EBITDA
is calculated by using the Services segment's adjusted pretax operating
income as described above, further adjusted to remove the impact of
depreciation and corporate allocations for interest and operating
expenses. Services adjusted EBITDA is presented to facilitate
comparisons with other services companies, since it is a widely accepted
measure of performance in the services industry.
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), headquartered in Philadelphia, provides
private mortgage insurance, risk management products and real estate
services to financial institutions. Radian offers products and services
through two business segments:
-
Mortgage Insurance, through its principal mortgage insurance
subsidiary Radian Guaranty Inc. This private mortgage insurance helps
protect lenders from default-related losses, facilitates the sale of
low-downpayment mortgages in the secondary market and enables
homebuyers to purchase homes more quickly with downpayments less than
20%.
-
Mortgage and Real Estate Services, through its principal
services subsidiary Clayton, as well as Green River Capital, Red Bell
Real Estate and ValuAmerica. These solutions include information and
services that financial institutions, investors and government
entities use to evaluate, acquire, securitize, service and monitor
loans and asset-backed securities.
Additional information may be found at www.radian.biz.
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 Per Share Trend Schedule
|
Exhibit C:
|
|
Condensed Consolidated Balance Sheets
|
Exhibit D:
|
|
Net Premiums Earned - Insurance and Other Operating Expenses
|
Exhibit E:
|
|
Segment Information
|
Exhibit F:
|
|
Definition of Consolidated Non-GAAP Financial Measures
|
Exhibit G:
|
|
Consolidated Non-GAAP Financial Measure Reconciliations
|
Exhibit H:
|
|
Mortgage Insurance Supplemental Information
|
|
|
New Insurance Written
|
Exhibit I:
|
|
Mortgage Insurance Supplemental Information
|
|
|
Primary Insurance in Force and Risk in Force
|
Exhibit J:
|
|
Mortgage Insurance Supplemental Information
|
|
|
Claims and Reserves
|
Exhibit K:
|
|
Mortgage Insurance Supplemental Information
|
|
|
Default Statistics
|
Exhibit L:
|
|
Mortgage Insurance Supplemental Information
|
|
|
Captives, QSR and Persistency
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Condensed Consolidated Statements of Operations Trend Schedule (1)
|
Exhibit A
|
|
|
|
|
|
|
|
2017
|
|
2016
|
(In thousands, except per-share amounts)
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned - insurance
|
|
$
|
221,800
|
|
|
$
|
233,585
|
|
|
$
|
238,149
|
|
|
$
|
229,085
|
|
|
$
|
220,950
|
|
Services revenue
|
|
38,027
|
|
|
49,905
|
|
|
45,877
|
|
|
40,263
|
|
|
32,849
|
|
Net investment income
|
|
31,032
|
|
|
28,996
|
|
|
28,430
|
|
|
28,839
|
|
|
27,201
|
|
Net gains (losses) on investments and other financial instruments
|
|
(2,851
|
)
|
|
(38,773
|
)
|
|
7,711
|
|
|
30,527
|
|
|
31,286
|
|
Other income
|
|
746
|
|
|
736
|
|
|
716
|
|
|
1,454
|
|
|
666
|
|
Total revenues
|
|
288,754
|
|
|
274,449
|
|
|
320,883
|
|
|
330,168
|
|
|
312,952
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Provision for losses
|
|
46,913
|
|
|
54,287
|
|
|
55,785
|
|
|
49,725
|
|
|
42,991
|
|
Policy acquisition costs
|
|
6,729
|
|
|
5,579
|
|
|
6,119
|
|
|
5,393
|
|
|
6,389
|
|
Cost of services
|
|
28,375
|
|
|
33,812
|
|
|
29,447
|
|
|
27,365
|
|
|
23,550
|
|
Other operating expenses
|
|
68,377
|
|
|
62,416
|
|
|
62,119
|
|
|
63,173
|
|
|
57,188
|
|
Interest expense
|
|
15,938
|
|
|
17,269
|
|
|
19,783
|
|
|
22,546
|
|
|
21,534
|
|
Loss on induced conversion and debt extinguishment
|
|
4,456
|
|
|
-
|
|
|
17,397
|
|
|
2,108
|
|
|
55,570
|
|
Amortization and impairment of intangible assets
|
|
3,296
|
|
|
3,290
|
|
|
3,292
|
|
|
3,311
|
|
|
3,328
|
|
Total expenses
|
|
174,084
|
|
|
176,653
|
|
|
193,942
|
|
|
173,621
|
|
|
210,550
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax income
|
|
114,670
|
|
|
97,796
|
|
|
126,941
|
|
|
156,547
|
|
|
102,402
|
|
Income tax provision
|
|
38,198
|
|
|
36,707
|
|
|
44,138
|
|
|
58,435
|
|
|
36,153
|
|
Net income
|
|
$
|
76,472
|
|
|
$
|
61,089
|
|
|
$
|
82,803
|
|
|
$
|
98,112
|
|
|
$
|
66,249
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share
|
|
$
|
0.34
|
|
|
$
|
0.27
|
|
|
$
|
0.37
|
|
|
$
|
0.44
|
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Mortgage Insurance Key Ratios
|
|
|
|
|
|
|
|
|
|
|
Loss ratio (1)
|
|
21.3
|
%
|
|
23.4
|
%
|
|
23.6
|
%
|
|
21.9
|
%
|
|
19.6
|
%
|
Expense ratio (1)
|
|
27.1
|
%
|
|
22.7
|
%
|
|
22.7
|
%
|
|
23.6
|
%
|
|
21.8
|
%
|
|
|
|
(1)
|
|
Calculated on a GAAP basis using net premiums earned.
|
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Net Income Per Share Trend Schedule
|
Exhibit B
|
|
|
The calculation of basic and diluted net income per share was as
follows:
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
(In thousands, except per-share amounts)
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
Net income:
|
|
|
|
|
|
|
|
|
|
|
|
Net income-basic
|
|
$
|
76,472
|
|
|
$
|
61,089
|
|
|
$
|
82,803
|
|
|
$
|
98,112
|
|
|
$
|
66,249
|
|
Adjustment for dilutive Convertible Senior Notes due 2019, net of
tax (1)
|
|
(215
|
)
|
|
665
|
|
|
848
|
|
|
913
|
|
|
3,390
|
|
Net income-diluted
|
|
$
|
76,257
|
|
|
$
|
61,754
|
|
|
$
|
83,651
|
|
|
$
|
99,025
|
|
|
$
|
69,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common shares outstanding-basic
|
|
214,925
|
|
|
214,481
|
|
|
214,387
|
|
|
214,274
|
|
|
203,706
|
|
Dilutive effect of Convertible Senior Notes due 2017 (2)
|
|
701
|
|
|
421
|
|
|
178
|
|
|
12
|
|
|
-
|
|
Dilutive effect of Convertible Senior Notes due 2019
|
|
1,854
|
|
|
6,417
|
|
|
8,274
|
|
|
8,928
|
|
|
33,583
|
|
Dilutive effect of stock-based compensation arrangements (2)
|
|
4,017
|
|
|
3,457
|
|
|
3,129
|
|
|
2,989
|
|
|
2,418
|
|
Adjusted average common shares outstanding-diluted
|
|
221,497
|
|
|
224,776
|
|
|
225,968
|
|
|
226,203
|
|
|
239,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share
|
|
$
|
0.36
|
|
|
$
|
0.28
|
|
|
$
|
0.39
|
|
|
$
|
0.46
|
|
|
$
|
0.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share
|
|
$
|
0.34
|
|
|
$
|
0.27
|
|
|
$
|
0.37
|
|
|
$
|
0.44
|
|
|
$
|
0.29
|
|
|
|
|
(1)
|
|
As applicable, includes coupon interest, amortization of
discount and fees, and other changes in income or loss that would
result from the assumed conversion. Due to the January 2017
settlement of our obligations with respect to the remaining
Convertible Senior Notes due 2019, a benefit was recorded to
adjust estimated accrued expense to actual amounts.
|
(2)
|
|
The following number of shares of our common stock equivalents
issued under our share-based compensation arrangements and
convertible debt were not included in the calculation of diluted
net income per share because they were anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
(In thousands)
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
|
|
|
Shares of Convertible Senior Notes due 2017
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,902
|
|
|
|
|
Shares of common stock equivalents
|
|
445
|
|
|
1,042
|
|
|
1,045
|
|
|
1,042
|
|
|
709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Condensed Consolidated Balance Sheets
|
Exhibit C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
(In thousands, except per-share data)
|
|
2017
|
|
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
$
|
4,437,716
|
|
|
|
|
$
|
4,462,430
|
|
|
$
|
4,565,748
|
|
|
$
|
4,636,914
|
|
|
$
|
4,470,172
|
|
Cash
|
|
77,954
|
|
|
|
|
52,149
|
|
|
46,356
|
|
|
55,062
|
|
|
64,844
|
|
Restricted cash
|
|
8,436
|
|
|
|
|
9,665
|
|
|
10,312
|
|
|
9,298
|
|
|
10,060
|
|
Accounts and notes receivable
|
|
73,794
|
|
|
|
|
77,631
|
|
|
94,692
|
|
|
77,170
|
|
|
66,340
|
|
Deferred income taxes, net
|
|
369,209
|
|
|
|
|
411,798
|
|
|
401,442
|
|
|
444,513
|
|
|
518,059
|
|
Goodwill and other intangible assets, net
|
|
273,068
|
|
|
|
|
276,228
|
|
|
279,400
|
|
|
282,703
|
|
|
286,069
|
|
Prepaid reinsurance premium
|
|
230,148
|
|
|
|
|
229,438
|
|
|
229,754
|
|
|
229,231
|
|
|
228,718
|
|
Other assets
|
|
357,435
|
|
|
|
|
343,835
|
|
|
422,123
|
|
|
332,372
|
|
|
325,129
|
|
Total assets
|
|
$
|
5,827,760
|
|
|
|
|
$
|
5,863,174
|
|
|
$
|
6,049,827
|
|
|
$
|
6,067,263
|
|
|
$
|
5,969,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned premiums
|
|
$
|
684,797
|
|
|
|
|
$
|
681,222
|
|
|
$
|
680,973
|
|
|
$
|
677,599
|
|
|
$
|
673,887
|
|
Reserve for losses and loss adjustment expense
|
|
726,169
|
|
|
|
|
760,269
|
|
|
821,934
|
|
|
848,379
|
|
|
891,348
|
|
Long-term debt
|
|
1,008,777
|
|
|
|
|
1,069,537
|
|
|
1,067,666
|
|
|
1,278,051
|
|
|
1,286,466
|
|
Reinsurance funds withheld
|
|
167,427
|
|
|
|
|
158,001
|
|
|
177,147
|
|
|
163,360
|
|
|
151,104
|
|
Other liabilities
|
|
319,282
|
|
|
|
|
321,859
|
|
|
413,401
|
|
|
294,507
|
|
|
306,188
|
|
Total liabilities
|
|
2,906,452
|
|
|
|
|
2,990,888
|
|
|
3,161,121
|
|
|
3,261,896
|
|
|
3,308,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity component of currently redeemable convertible senior notes
|
|
883
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
233
|
|
|
|
|
232
|
|
|
232
|
|
|
232
|
|
|
232
|
|
Treasury stock
|
|
(893,372
|
)
|
|
|
|
(893,332
|
)
|
|
(893,197
|
)
|
|
(893,176
|
)
|
|
(893,176
|
)
|
Additional paid-in capital
|
|
2,743,594
|
|
|
|
|
2,779,891
|
|
|
2,778,860
|
|
|
2,781,136
|
|
|
2,773,349
|
|
Retained earnings
|
|
1,073,333
|
|
|
|
|
997,890
|
|
|
937,338
|
|
|
855,070
|
|
|
757,202
|
|
Accumulated other comprehensive income (loss)
|
|
(3,363
|
)
|
|
|
|
(12,395
|
)
|
|
65,473
|
|
|
62,105
|
|
|
22,791
|
|
Total stockholders' equity
|
|
2,920,425
|
|
|
|
|
2,872,286
|
|
|
2,888,706
|
|
|
2,805,367
|
|
|
2,660,398
|
|
Total liabilities and stockholders' equity
|
|
$
|
5,827,760
|
|
|
|
|
$
|
5,863,174
|
|
|
$
|
6,049,827
|
|
|
$
|
6,067,263
|
|
|
$
|
5,969,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding
|
|
215,091
|
|
|
|
|
214,521
|
|
|
214,405
|
|
|
214,284
|
|
|
214,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share
|
|
$
|
13.58
|
|
|
|
|
$
|
13.39
|
|
|
$
|
13.47
|
|
|
$
|
13.09
|
|
|
$
|
12.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statutory Capital Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk to capital ratio-Radian Guaranty only
|
|
14.3
|
:1
|
|
(1)
|
|
13.5
|
:1
|
|
13.7
|
:1
|
|
14.0
|
:1
|
|
12.5
|
:1
|
Risk to capital ratio-Mortgage Insurance combined
|
|
13.4
|
:1
|
|
(1)
|
|
13.6
|
:1
|
|
13.9
|
:1
|
|
14.2
|
:1
|
|
12.9
|
:1
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Net Premiums Earned - Insurance and Other Operating Expenses
|
Exhibit D
|
|
|
|
|
|
|
|
2017
|
|
2016
|
(In thousands)
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned - insurance:
|
|
|
|
|
|
|
|
|
|
|
Direct
|
|
$
|
236,062
|
|
|
$
|
251,751
|
|
|
$
|
258,074
|
|
|
$
|
248,938
|
|
|
$
|
240,330
|
|
Assumed
|
|
7
|
|
|
8
|
|
|
9
|
|
|
9
|
|
|
9
|
|
Ceded
|
|
(14,269
|
)
|
|
(18,174
|
)
|
|
(19,934
|
)
|
|
(19,862
|
)
|
|
(19,389
|
)
|
Net premiums earned - insurance
|
|
$
|
221,800
|
|
|
$
|
233,585
|
|
|
$
|
238,149
|
|
|
$
|
229,085
|
|
|
$
|
220,950
|
|
|
|
|
|
|
|
|
|
|
|
|
Notable variable items: (1)
|
|
|
|
|
|
|
|
|
|
|
Single Premium Policy cancellations, net of reinsurance
|
|
$
|
5,879
|
|
|
$
|
15,702
|
|
|
$
|
18,448
|
|
|
$
|
14,841
|
|
|
$
|
9,783
|
|
Profit commission - reinsurance (2)
|
|
5,888
|
|
|
8,458
|
|
|
8,922
|
|
|
7,891
|
|
|
6,134
|
|
Total
|
|
$
|
11,767
|
|
|
$
|
24,160
|
|
|
$
|
27,370
|
|
|
$
|
22,732
|
|
|
$
|
15,917
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating expenses
|
|
$
|
68,377
|
|
|
$
|
62,416
|
|
|
$
|
62,119
|
|
|
$
|
63,173
|
|
|
$
|
57,188
|
|
|
|
|
|
|
|
|
|
|
|
|
Notable variable items: (3)
|
|
|
|
|
|
|
|
|
|
|
Technology upgrade project (4)
|
|
$
|
3,512
|
|
|
$
|
3,648
|
|
|
$
|
2,440
|
|
|
$
|
2,443
|
|
|
$
|
2,271
|
|
Severance costs
|
|
961
|
|
|
888
|
|
|
1,137
|
|
|
277
|
|
|
3,040
|
|
Retirement and consulting agreement (5)
|
|
3,622
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Incentive compensation (6) (7)
|
|
7,447
|
|
|
9,072
|
|
|
12,652
|
|
|
14,183
|
|
|
6,235
|
|
Ceding commissions (8)
|
|
(3,864
|
)
|
|
(5,105
|
)
|
|
(5,460
|
)
|
|
(5,006
|
)
|
|
(4,413
|
)
|
Total
|
|
$
|
11,678
|
|
|
$
|
8,503
|
|
|
$
|
10,769
|
|
|
$
|
11,897
|
|
|
$
|
7,133
|
|
|
|
|
(1)
|
|
Affecting net premiums earned - insurance. These amounts are
included in net premiums earned - insurance.
|
(2)
|
|
The amounts represent the profit commission on the Single
Premium QSR Transaction.
|
(3)
|
|
Affecting other operating expenses. These amounts are included
in other operating expenses.
|
(4)
|
|
Represents the expense impact of certain costs incurred in our
initiative to significantly upgrade our technology systems.
|
(5)
|
|
The amount represents expenses associated with retirement and
consulting agreements entered into in February 2017 with our
former CEO. Additional expenses are expected to be recognized
throughout the year. A portion of both the current and future
expenses are subject to change, based on the Company's and former
CEO's future performance.
|
(6)
|
|
The expense relates to short- and long-term incentive programs.
|
(7)
|
|
Incentive compensation expense is shown net of deferred policy
acquisition costs.
|
(8)
|
|
Ceding commissions are shown net of deferred policy acquisition
costs.
|
|
Radian Group Inc. and Subsidiaries
|
Segment Information
|
Exhibit E (page 1 of 2)
|
|
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 and Services adjusted EBITDA,
along with reconciliations to consolidated GAAP measures, see
Exhibits F and G.
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage Insurance
|
|
|
|
2017
|
|
2016
|
|
(In thousands)
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
|
Net premiums written - insurance
|
|
$
|
224,665
|
|
|
$
|
234,172
|
|
|
$
|
240,999
|
|
|
$
|
232,353
|
|
|
$
|
26,310
|
|
(1)
|
(Increase) decrease in unearned premiums
|
|
(2,865
|
)
|
|
(587
|
)
|
|
(2,850
|
)
|
|
|
(3,268
|
)
|
|
|
194,640
|
|
|
Net premiums earned - insurance
|
|
221,800
|
|
|
233,585
|
|
|
238,149
|
|
|
|
229,085
|
|
|
|
220,950
|
|
|
Net investment income
|
|
31,032
|
|
|
28,996
|
|
|
28,430
|
|
|
|
28,839
|
|
|
|
27,201
|
|
|
Other income
|
|
746
|
|
|
736
|
|
|
716
|
|
|
|
1,454
|
|
|
|
666
|
|
|
Total
|
|
253,578
|
|
|
263,317
|
|
|
267,295
|
|
|
|
259,378
|
|
|
|
248,817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for losses
|
|
47,232
|
|
|
54,675
|
|
|
56,151
|
|
|
|
50,074
|
|
|
|
43,275
|
|
|
Policy acquisition costs
|
|
6,729
|
|
|
5,579
|
|
|
6,119
|
|
|
|
5,393
|
|
|
|
6,389
|
|
|
Other operating expenses before corporate allocations
|
|
39,289
|
|
|
37,773
|
|
|
35,940
|
|
|
|
34,365
|
|
|
|
32,546
|
|
|
Total (2)
|
|
93,250
|
|
|
98,027
|
|
|
98,210
|
|
|
|
89,832
|
|
|
|
82,210
|
|
|
Adjusted pretax operating income before corporate allocations
|
|
160,328
|
|
|
165,290
|
|
|
169,085
|
|
|
|
169,546
|
|
|
|
166,607
|
|
|
Allocation of corporate operating expenses
|
|
14,186
|
|
|
9,652
|
|
|
11,911
|
|
|
|
14,286
|
|
|
|
9,329
|
|
|
Allocation of interest expense
|
|
11,509
|
|
|
12,843
|
|
|
15,360
|
|
|
|
18,124
|
|
|
|
17,112
|
|
|
Adjusted pretax operating income
|
|
$
|
134,633
|
|
|
$
|
142,795
|
|
|
$
|
141,814
|
|
|
$
|
137,136
|
|
|
$
|
140,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
|
|
2017
|
|
2016
|
|
(In thousands)
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
|
Qtr 2
|
|
Qtr 1
|
|
Services revenue (2)
|
|
$
|
40,089
|
|
|
$
|
52,558
|
|
|
$
|
48,033
|
|
|
$42,210
|
|
|
$
|
34,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services
|
|
28,690
|
|
|
34,130
|
|
|
29,655
|
|
|
27,730
|
|
|
|
23,854
|
|
|
Other operating expenses before corporate allocations
|
|
12,604
|
|
|
14,842
|
|
|
13,575
|
|
|
13,030
|
|
|
|
14,368
|
|
|
Total
|
|
41,294
|
|
|
48,972
|
|
|
43,230
|
|
|
40,760
|
|
|
|
38,222
|
|
|
Adjusted pretax operating income (loss) before corporate
allocations (3)
|
|
(1,205
|
)
|
|
3,586
|
|
|
4,803
|
|
|
1,450
|
|
|
|
(3,774
|
)
|
|
Allocation of corporate operating expenses
|
|
3,718
|
|
|
1,738
|
|
|
2,265
|
|
|
2,779
|
|
|
|
1,751
|
|
|
Allocation of interest expense
|
|
4,429
|
|
|
4,426
|
|
|
4,423
|
|
|
4,422
|
|
|
|
4,422
|
|
|
Adjusted pretax operating income (loss)
|
|
$
|
(9,352
|
)
|
|
$
|
(2,578
|
)
|
|
$
|
(1,885
|
)
|
|
$(5,751
|
)
|
|
$
|
(9,947
|
)
|
|
|
|
|
(1)
|
|
Net of ceded premiums written under the Single Premium QSR
transaction of $197.6 million.
|
(2)
|
|
Inter-segment information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
|
|
|
Inter-segment expense included in Mortgage Insurance segment
|
|
$
|
2,062
|
|
|
$
|
2,653
|
|
|
$
|
2,156
|
|
|
$
|
1,947
|
|
|
$
|
1,599
|
|
|
|
|
Inter-segment revenue included in Services segment
|
|
2,062
|
|
|
2,653
|
|
|
2,156
|
|
|
1,947
|
|
|
1,599
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Segment Information
|
Exhibit E (page 2 of 2)
|
|
|
|
(3)
|
|
Supplemental information for Services adjusted EBITDA (see
definition in Exhibit F):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
|
|
|
Adjusted pretax operating income (loss) before corporate
allocations
|
|
$
|
(1,205
|
)
|
|
$
|
3,586
|
|
|
$
|
4,803
|
|
|
$
|
1,450
|
|
|
$
|
(3,774
|
)
|
|
|
|
Depreciation and amortization
|
|
858
|
|
|
829
|
|
|
884
|
|
|
749
|
|
|
663
|
|
|
|
|
Services adjusted EBITDA
|
|
$
|
(347
|
)
|
|
$
|
4,415
|
|
|
$
|
5,687
|
|
|
$
|
2,199
|
|
|
$
|
(3,111
|
)
|
|
Selected balance sheet information for our segments, as of the
periods indicated, is as follows:
|
|
|
|
|
|
At March 31, 2017
|
(In thousands)
|
|
Mortgage Insurance
|
|
Services
|
|
Total
|
Total assets
|
|
$
|
5,475,502
|
|
|
$
|
352,258
|
|
|
$
|
5,827,760
|
|
|
|
|
|
At December 31, 2016
|
(In thousands)
|
|
Mortgage Insurance
|
|
Services
|
|
Total
|
Total assets
|
|
$
|
5,506,338
|
|
|
$
|
356,836
|
|
|
$
|
5,863,174
|
|
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" and "adjusted diluted net
operating income per share," 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" and "adjusted diluted net operating income per share"
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 is defined as GAAP pretax income
excluding the effects of: (i) net gains (losses) on investments and
other financial instruments; (ii) loss on induced conversion and debt
extinguishment; (iii) acquisition-related expenses; (iv) amortization
and impairment of intangible assets; and (v) net impairment losses
recognized in earnings. Adjusted diluted net operating income per share
is calculated by dividing (i) adjusted pretax operating income
attributable to common shareholders, 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. Interest expense on convertible debt, share dilution
from convertible debt and the impact of share-based compensation
arrangements have been reflected in the per share calculations
consistent with the accounting standard regarding earnings per share,
whenever the impact is dilutive.
Although adjusted pretax operating income 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 investment
gains and losses arise primarily from changes in the market value
of our investments that are classified as trading 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. We do not view them to be
indicative of our fundamental operating activities. Therefore, these
items are excluded from our calculation of adjusted pretax operating
income (loss).
|
|
|
|
(2)
|
|
Loss on induced conversion and debt extinguishment. Gains
or losses on early extinguishment of debt and losses incurred to
purchase our convertible 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. Therefore, these
items are excluded from our calculation of adjusted pretax
operating income (loss).
|
|
|
|
(3)
|
|
Acquisition-related expenses. Acquisition-related expenses
represent the costs incurred to effect an acquisition of a
business (i.e., a business combination). Because we pursue
acquisitions on a strategic and selective basis and not in the
ordinary course of our business, we do not view
acquisition-related expenses as a consequence of a primary
business activity. Therefore, we do not consider these expenses to
be part of our operating performance and they are excluded from
our calculation of adjusted pretax operating income (loss).
|
|
Radian Group Inc. and Subsidiaries
|
Definition of Consolidated Non-GAAP Financial Measures
|
Exhibit F (page 2 of 2)
|
|
|
|
(4)
|
|
Amortization and impairment of intangible assets.
Amortization of intangible assets represents the periodic expense
required to amortize the cost of intangible assets over their
estimated useful lives. Intangible assets with an indefinite
useful life are also periodically reviewed for potential
impairment, and impairment adjustments are made whenever
appropriate. These charges are not viewed as part of the operating
performance of our primary activities and therefore are excluded
from our calculation of adjusted pretax operating income (loss).
|
|
|
|
(5)
|
|
Net impairment losses recognized in earnings. The
recognition of net impairment losses on investments can vary
significantly in both size and timing, depending on market credit
cycles. We do not view these impairment losses to be indicative of
our fundamental operating activities. Therefore, whenever these
losses occur, we exclude them from our calculation of adjusted
pretax operating income (loss).
|
|
|
|
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 Services segment, representing a measure of earnings before
interest, income taxes, depreciation and amortization ("EBITDA"). We
calculate Services 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. We have presented Services adjusted EBITDA to facilitate
comparisons with other services companies, since it is a widely accepted
measure of performance in the services industry.
See Exhibit G for the reconciliation of the most comparable GAAP
measures, consolidated pretax income and diluted net income per share,
to our non-GAAP financial measures for the consolidated company,
adjusted pretax operating income and adjusted diluted net operating
income per share, respectively. Exhibit G also contains the
reconciliation of the most comparable GAAP measure, net income, to
Services adjusted EBITDA.
Total adjusted pretax operating income, adjusted diluted net operating
income per share and Services adjusted EBITDA are not measures of total
profitability, and therefore should not be viewed as substitutes for
GAAP pretax income, diluted net income per share or net income. Our
definitions of adjusted pretax operating income, adjusted diluted net
operating income per share or Services adjusted EBITDA 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 2)
|
|
Reconciliation of Consolidated Pretax Income to Adjusted Pretax
Operating Income
|
|
|
|
|
|
|
|
2017
|
|
2016
|
(In thousands)
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
Consolidated pretax income
|
|
$
|
114,670
|
|
|
$
|
97,796
|
|
|
$
|
126,941
|
|
|
$
|
156,547
|
|
|
$
|
102,402
|
|
Less income (expense) items:
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on investments and other financial instruments
|
|
(2,851
|
)
|
|
(38,773
|
)
|
|
7,711
|
|
|
30,527
|
|
|
31,286
|
|
Loss on induced conversion and debt extinguishment
|
|
(4,456
|
)
|
|
-
|
|
|
(17,397
|
)
|
|
(2,108
|
)
|
|
(55,570
|
)
|
Acquisition-related expenses (1)
|
|
(8
|
)
|
|
(358
|
)
|
|
(10
|
)
|
|
54
|
|
|
(205
|
)
|
Amortization and impairment of intangible assets
|
|
(3,296
|
)
|
|
(3,290
|
)
|
|
(3,292
|
)
|
|
(3,311
|
)
|
|
(3,328
|
)
|
Total adjusted pretax operating income (2)
|
|
$
|
125,281
|
|
|
$
|
140,217
|
|
|
$
|
139,929
|
|
|
$
|
131,385
|
|
|
$
|
130,219
|
|
|
|
|
(1)
|
|
Please see Exhibit F for the definition of this line item.
|
(2)
|
|
Total adjusted pretax operating income consists of adjusted
pretax operating income (loss) for each segment as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
(In thousands)
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
|
|
|
Adjusted pretax operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage Insurance
|
|
$
|
134,633
|
|
|
$
|
142,795
|
|
|
$
|
141,814
|
|
|
$
|
137,136
|
|
|
$
|
140,166
|
|
|
|
|
Services
|
|
(9,352
|
)
|
|
(2,578
|
)
|
|
(1,885
|
)
|
|
(5,751
|
)
|
|
(9,947
|
)
|
|
|
|
Total adjusted pretax operating income
|
|
$
|
125,281
|
|
|
$
|
140,217
|
|
|
$
|
139,929
|
|
|
$
|
131,385
|
|
|
$
|
130,219
|
|
|
|
|
|
|
Reconciliation of Diluted Net Income Per Share to Adjusted
Diluted Net Operating Income Per Share
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
Diluted net income per share
|
|
$
|
0.34
|
|
|
$
|
0.27
|
|
|
$
|
0.37
|
|
|
$
|
0.44
|
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
|
|
|
|
Less per-share impact of debt items:
|
|
|
|
|
|
|
|
|
|
|
Loss on induced conversion and debt extinguishment
|
|
(0.02
|
)
|
|
-
|
|
|
(0.08
|
)
|
|
(0.01
|
)
|
|
(0.23
|
)
|
Income tax provision (benefit) (1)
|
|
(0.01
|
)
|
|
-
|
|
|
(0.03
|
)
|
|
-
|
|
|
(0.03
|
)
|
Per-share impact of debt items
|
|
(0.01
|
)
|
|
-
|
|
|
(0.05
|
)
|
|
(0.01
|
)
|
|
(0.20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Less per-share impact of other income (expense) items:
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on investments and other financial instruments
|
|
(0.01
|
)
|
|
(0.17
|
)
|
|
0.03
|
|
|
0.13
|
|
|
0.13
|
|
Amortization and impairment of intangible assets
|
|
(0.01
|
)
|
|
(0.02
|
)
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
(0.01
|
)
|
Income tax provision (benefit) on other income (expense) items (2)
|
|
(0.01
|
)
|
|
(0.07
|
)
|
|
0.01
|
|
|
0.04
|
|
|
0.04
|
|
Difference between statutory and effective tax rate
|
|
(0.01
|
)
|
|
(0.02
|
)
|
|
-
|
|
|
(0.01
|
)
|
|
0.04
|
|
Per-share impact of other income (expense) items
|
|
(0.02
|
)
|
|
(0.14
|
)
|
|
0.01
|
|
|
0.07
|
|
|
0.12
|
|
Adjusted diluted net operating income per share (2)
|
|
$
|
0.37
|
|
|
$
|
0.41
|
|
|
$
|
0.41
|
|
|
$
|
0.38
|
|
|
$
|
0.37
|
|
|
|
|
(1)
|
|
A portion of the loss on induced conversion and debt
extinguishment is non-deductible for tax purposes. The income tax
benefit is based on the tax deductible loss using the company's
federal statutory tax rate of 35%.
|
(2)
|
|
Calculated using the company's federal statutory tax rate of
35%. 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 2 of 2)
|
|
Reconciliation of Net Income to Services Adjusted EBITDA
|
|
|
|
|
|
|
|
2017
|
|
2016
|
(In thousands)
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
76,472
|
|
|
$
|
61,089
|
|
|
$
|
82,803
|
|
|
$
|
98,112
|
|
|
$
|
66,249
|
|
Less income (expense) items:
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on investments and other financial instruments
|
|
(2,851
|
)
|
|
(38,773
|
)
|
|
7,711
|
|
|
30,527
|
|
|
31,286
|
|
Loss on induced conversion and debt extinguishment
|
|
(4,456
|
)
|
|
-
|
|
|
(17,397
|
)
|
|
(2,108
|
)
|
|
(55,570
|
)
|
Acquisition-related expenses
|
|
(8
|
)
|
|
(358
|
)
|
|
(10
|
)
|
|
54
|
|
|
(205
|
)
|
Amortization and impairment of intangible assets
|
|
(3,296
|
)
|
|
(3,290
|
)
|
|
(3,292
|
)
|
|
(3,311
|
)
|
|
(3,328
|
)
|
Income tax provision
|
|
38,198
|
|
|
36,707
|
|
|
44,138
|
|
|
58,435
|
|
|
36,153
|
|
Mortgage Insurance adjusted pretax operating income
|
|
134,633
|
|
|
142,795
|
|
|
141,814
|
|
|
137,136
|
|
|
140,166
|
|
Services adjusted pretax operating income (loss)
|
|
(9,352
|
)
|
|
(2,578
|
)
|
|
(1,885
|
)
|
|
(5,751
|
)
|
|
(9,947
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Less income (expense) items:
|
|
|
|
|
|
|
|
|
|
|
Allocation of corporate operating expenses to Services
|
|
(3,718
|
)
|
|
(1,738
|
)
|
|
(2,265
|
)
|
|
(2,779
|
)
|
|
(1,751
|
)
|
Allocation of corporate interest expense to Services
|
|
(4,429
|
)
|
|
(4,426
|
)
|
|
(4,423
|
)
|
|
(4,422
|
)
|
|
(4,422
|
)
|
Services depreciation and amortization
|
|
(858
|
)
|
|
(829
|
)
|
|
(884
|
)
|
|
(749
|
)
|
|
(663
|
)
|
Services adjusted EBITDA
|
|
$
|
(347
|
)
|
|
$
|
4,415
|
|
|
$
|
5,687
|
|
|
$
|
2,199
|
|
|
$
|
(3,111
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On a consolidated basis, "adjusted pretax operating income" and
"adjusted diluted net operating income per share" are measures not
determined in accordance with GAAP. "Services adjusted EBITDA" is also a
non-GAAP measure. These measures are not representative of total
profitability, and therefore should not be viewed as substitutes for
GAAP pretax income, diluted net income per share or net income. Our
definitions of adjusted pretax operating income, adjusted diluted net
operating income per share or Services adjusted EBITDA 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 Insurance Supplemental Information - New Insurance
Written
|
Exhibit H
|
|
|
|
|
|
|
|
2017
|
|
2016
|
($ in millions)
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
|
|
|
|
|
|
|
|
|
|
|
Total primary new insurance written
|
|
$
|
10,055
|
|
|
$
|
13,882
|
|
|
$
|
15,656
|
|
|
$
|
12,921
|
|
|
$
|
8,071
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of primary new insurance
written by FICO score
|
|
|
|
|
|
|
|
|
|
|
>=740
|
|
61.3
|
%
|
|
63.4
|
%
|
|
64.2
|
%
|
|
60.9
|
%
|
|
58.4
|
%
|
680-739
|
|
32.7
|
|
|
31.4
|
|
|
30.4
|
|
|
32.2
|
|
|
33.7
|
|
620-679
|
|
6.0
|
|
|
5.2
|
|
|
5.4
|
|
|
6.9
|
|
|
7.9
|
|
Total Primary
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of primary new insurance
written
|
|
|
|
|
|
|
|
|
|
|
Direct monthly and other premiums
|
|
75
|
%
|
|
73
|
%
|
|
73
|
%
|
|
74
|
%
|
|
71
|
%
|
Direct single premiums
|
|
25
|
%
|
|
27
|
%
|
|
27
|
%
|
|
26
|
%
|
|
29
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net single premiums (1)
|
|
16
|
%
|
|
17
|
%
|
|
17
|
%
|
|
17
|
%
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Refinances
|
|
16
|
%
|
|
27
|
%
|
|
22
|
%
|
|
18
|
%
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
LTV
|
|
|
|
|
|
|
|
|
|
|
95.01% and above
|
|
9.2
|
%
|
|
7.4
|
%
|
|
6.0
|
%
|
|
4.8
|
%
|
|
3.7
|
%
|
90.01% to 95.00%
|
|
47.3
|
%
|
|
43.6
|
%
|
|
47.1
|
%
|
|
50.2
|
%
|
|
50.5
|
%
|
85.01% to 90.00%
|
|
30.3
|
%
|
|
32.3
|
%
|
|
31.4
|
%
|
|
31.8
|
%
|
|
33.1
|
%
|
85.00% and below
|
|
13.2
|
%
|
|
16.7
|
%
|
|
15.5
|
%
|
|
13.2
|
%
|
|
12.7
|
%
|
|
|
|
(1)
|
|
Represents the percentage of direct single premiums written,
after consideration of the 35% single premium NIW ceded under the
Single Premium QSR Transaction.
|
|
|
|
|
|
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Mortgage Insurance Supplemental Information - Primary Insurance
in Force and Risk in Force
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit I
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
($ in millions)
|
|
2017
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
Primary insurance in force (1)
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
$
|
177,702
|
|
|
$
|
174,927
|
|
|
$
|
172,178
|
|
|
$
|
168,259
|
|
|
$
|
165,526
|
|
Alt-A
|
|
4,842
|
|
|
5,064
|
|
|
5,363
|
|
|
5,627
|
|
|
5,907
|
|
A minus and below
|
|
3,315
|
|
|
3,459
|
|
|
3,624
|
|
|
3,786
|
|
|
3,953
|
|
Total Primary
|
|
$
|
185,859
|
|
|
$
|
183,450
|
|
|
$
|
181,165
|
|
|
$
|
177,672
|
|
|
$
|
175,386
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary risk in force (1)
(2)
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
$
|
45,442
|
|
|
$
|
44,708
|
|
|
$
|
44,075
|
|
|
$
|
43,076
|
|
|
$
|
42,312
|
|
Alt-A
|
|
1,118
|
|
|
1,168
|
|
|
1,241
|
|
|
1,302
|
|
|
1,366
|
|
A minus and below
|
|
834
|
|
|
865
|
|
|
906
|
|
|
946
|
|
|
988
|
|
Total Primary
|
|
$
|
47,394
|
|
|
$
|
46,741
|
|
|
$
|
46,222
|
|
|
$
|
45,324
|
|
|
$
|
44,666
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of primary risk in force
|
|
|
|
|
|
|
|
|
|
|
Direct monthly and other premiums
|
|
69
|
%
|
|
69
|
%
|
|
69
|
%
|
|
69
|
%
|
|
69
|
%
|
Direct single premiums
|
|
31
|
%
|
|
31
|
%
|
|
31
|
%
|
|
31
|
%
|
|
31
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net single premiums (3)
|
|
25
|
%
|
|
25
|
%
|
|
25
|
%
|
|
25
|
%
|
|
25
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of primary risk in force by
FICO score
|
|
|
|
|
|
|
|
|
|
|
>=740
|
|
57.9
|
%
|
|
57.6
|
%
|
|
57.4
|
%
|
|
57.1
|
%
|
|
57.0
|
%
|
680-739
|
|
31.1
|
|
|
31.0
|
|
|
30.9
|
|
|
30.8
|
|
|
30.6
|
|
620-679
|
|
9.6
|
|
|
9.9
|
|
|
10.2
|
|
|
10.5
|
|
|
10.7
|
|
<=619
|
|
1.4
|
|
|
1.5
|
|
|
1.5
|
|
|
1.6
|
|
|
1.7
|
|
Total Primary
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of primary risk in force by LTV
|
|
|
|
|
|
|
|
|
|
|
95.01% and above
|
|
7.6
|
%
|
|
7.4
|
%
|
|
7.2
|
%
|
|
7.1
|
%
|
|
7.2
|
%
|
90.01% to 95.00%
|
|
52.6
|
|
|
52.3
|
|
|
52.1
|
|
|
51.6
|
|
|
50.9
|
|
85.01% to 90.00%
|
|
32.2
|
|
|
32.5
|
|
|
32.8
|
|
|
33.3
|
|
|
33.7
|
|
85.00% and below
|
|
7.6
|
|
|
7.8
|
|
|
7.9
|
|
|
8.0
|
|
|
8.2
|
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of primary risk in force by
policy year
|
|
|
|
|
|
|
|
|
|
|
2008 and prior
|
|
18.5
|
%
|
|
19.5
|
%
|
|
20.8
|
%
|
|
22.4
|
%
|
|
24.0
|
%
|
2009
|
|
0.9
|
|
|
1.0
|
|
|
1.2
|
|
|
1.3
|
|
|
1.5
|
|
2010
|
|
0.8
|
|
|
0.9
|
|
|
1.0
|
|
|
1.2
|
|
|
1.3
|
|
2011
|
|
1.8
|
|
|
2.0
|
|
|
2.2
|
|
|
2.5
|
|
|
2.7
|
|
2012
|
|
7.4
|
|
|
8.0
|
|
|
8.8
|
|
|
9.7
|
|
|
10.6
|
|
2013
|
|
11.8
|
|
|
12.6
|
|
|
13.9
|
|
|
15.5
|
|
|
17.0
|
|
2014
|
|
11.2
|
|
|
12.0
|
|
|
13.4
|
|
|
14.9
|
|
|
16.3
|
|
2015
|
|
17.3
|
|
|
18.1
|
|
|
19.4
|
|
|
21.0
|
|
|
22.0
|
|
2016
|
|
25.0
|
|
|
25.9
|
|
|
19.3
|
|
|
11.5
|
|
|
4.6
|
|
2017
|
|
5.3
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Primary risk in force on defaulted loans (4)
|
|
$
|
1,224
|
|
|
$
|
1,363
|
|
|
$
|
1,381
|
|
|
$
|
1,398
|
|
|
$
|
1,446
|
|
(1)
|
|
Includes amounts ceded under our reinsurance agreements, as
well as amounts related to the Freddie Mac Agreement.
|
(2)
|
|
Does not include pool risk in force or other risk in force,
which combined represent less than 3.0% of our total risk in force
for all periods presented.
|
(3)
|
|
Represents the percentage of Single Premium RIF, after giving
effect to all reinsurance ceded.
|
(4)
|
|
Excludes risk related to loans subject to the Freddie Mac
Agreement.
|
|
|
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Mortgage Insurance Supplemental Information - Claims and
Reserves
|
Exhibit J
|
|
|
|
|
|
|
|
2017
|
|
2016
|
($ in thousands)
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
|
|
|
|
|
|
|
|
|
|
|
Net claims paid: (1)
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
$
|
52,044
|
|
|
$
|
70,151
|
|
|
$
|
51,964
|
|
|
$
|
56,036
|
|
|
$
|
74,432
|
|
Alt-A
|
|
16,165
|
|
|
27,558
|
|
|
16,334
|
|
|
18,349
|
|
|
28,929
|
|
A minus and below
|
|
9,460
|
|
|
13,760
|
|
|
9,615
|
|
|
12,315
|
|
|
13,196
|
|
Total primary claims paid
|
|
77,669
|
|
|
111,469
|
|
|
77,913
|
|
|
86,700
|
|
|
116,557
|
|
Pool
|
|
4,180
|
|
|
4,788
|
|
|
4,492
|
|
|
5,451
|
|
|
7,389
|
|
Second-lien and other
|
|
78
|
|
|
(264
|
)
|
|
(234
|
)
|
|
(231
|
)
|
|
345
|
|
Subtotal
|
|
81,927
|
|
|
115,993
|
|
|
82,171
|
|
|
91,920
|
|
|
124,291
|
|
Impact of captive terminations
|
|
-
|
|
|
492
|
|
|
(171
|
)
|
|
(2,619
|
)
|
|
(120
|
)
|
Impact of settlements
|
|
161
|
|
|
-
|
|
|
705
|
|
|
1,400
|
|
|
3,500
|
|
Total net claims paid
|
|
$
|
82,088
|
|
|
$
|
116,485
|
|
|
$
|
82,705
|
|
|
$
|
90,701
|
|
|
$
|
127,671
|
|
|
|
|
|
|
|
|
|
|
|
|
Average net claims paid: (2)
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
$
|
50.5
|
|
|
$
|
45.5
|
|
|
$
|
48.3
|
|
|
$
|
48.6
|
|
|
$
|
47.7
|
|
Alt-A
|
|
67.1
|
|
|
65.5
|
|
|
65.3
|
|
|
63.5
|
|
|
63.0
|
|
A minus and below
|
|
39.6
|
|
|
37.7
|
|
|
41.3
|
|
|
39.9
|
|
|
36.8
|
|
Total average net primary claims paid
|
|
51.4
|
|
|
47.9
|
|
|
50.0
|
|
|
49.5
|
|
|
49.0
|
|
Pool
|
|
49.2
|
|
|
45.6
|
|
|
51.0
|
|
|
58.0
|
|
|
53.2
|
|
Total average net claims paid
|
|
$
|
50.9
|
|
|
$
|
47.6
|
|
|
$
|
49.7
|
|
|
$
|
49.6
|
|
|
$
|
48.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Average direct primary claims paid (2) (3)
|
|
$
|
51.6
|
|
|
$
|
48.2
|
|
|
$
|
50.3
|
|
|
$
|
49.9
|
|
|
$
|
49.6
|
|
Average total direct claims paid (2) (3)
|
|
$
|
51.1
|
|
|
$
|
47.9
|
|
|
$
|
50.0
|
|
|
$
|
50.0
|
|
|
$
|
49.5
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands, except primary reserve
per primary default amounts)
|
|
March 31, 2017
|
|
December 31, 2016
|
|
September 30, 2016
|
|
June 30, 2016
|
|
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for losses by category
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
$
|
362,804
|
|
|
$
|
379,845
|
|
|
$
|
409,438
|
|
|
$
|
420,281
|
|
|
$
|
438,598
|
|
Alt-A
|
|
140,543
|
|
|
148,006
|
|
|
166,349
|
|
|
173,284
|
|
|
183,189
|
|
A minus and below
|
|
96,373
|
|
|
101,653
|
|
|
106,678
|
|
|
112,001
|
|
|
116,835
|
|
IBNR and other
|
|
70,651
|
|
|
71,107
|
|
|
73,057
|
|
|
74,639
|
|
|
79,051
|
|
LAE
|
|
17,550
|
|
|
18,630
|
|
|
21,255
|
|
|
22,389
|
|
|
23,600
|
|
Reinsurance recoverable (4)
|
|
7,681
|
|
|
6,816
|
|
|
6,448
|
|
|
6,044
|
|
|
8,239
|
|
Total primary reserves
|
|
695,602
|
|
|
726,057
|
|
|
783,225
|
|
|
808,638
|
|
|
849,512
|
|
Pool insurance
|
|
28,453
|
|
|
31,853
|
|
|
36,065
|
|
|
36,982
|
|
|
38,843
|
|
IBNR and other
|
|
603
|
|
|
673
|
|
|
823
|
|
|
897
|
|
|
1,050
|
|
LAE
|
|
822
|
|
|
932
|
|
|
1,112
|
|
|
1,163
|
|
|
1,227
|
|
Reinsurance recoverable (4)
|
|
28
|
|
|
35
|
|
|
36
|
|
|
33
|
|
|
-
|
|
Total pool reserves
|
|
29,906
|
|
|
33,493
|
|
|
38,036
|
|
|
39,075
|
|
|
41,120
|
|
Total 1st lien reserves
|
|
725,508
|
|
|
759,550
|
|
|
821,261
|
|
|
847,713
|
|
|
890,632
|
|
Second-lien and other
|
|
661
|
|
|
719
|
|
|
673
|
|
|
666
|
|
|
716
|
|
Total reserves
|
|
$
|
726,169
|
|
|
$
|
760,269
|
|
|
$
|
821,934
|
|
|
$
|
848,379
|
|
|
$
|
891,348
|
|
|
|
|
|
|
|
|
|
|
|
|
1st lien reserve per default
|
|
|
|
|
|
|
|
|
|
|
Primary reserve per primary default excluding IBNR and other
|
|
$
|
24,230
|
|
|
$
|
22,503
|
|
|
$
|
24,049
|
|
|
$
|
24,609
|
|
|
$
|
24,959
|
|
(1)
|
|
Net of reinsurance recoveries.
|
(2)
|
|
Calculated without giving effect to the impact of the
termination of captive transactions and settlements.
|
(3)
|
|
Before reinsurance recoveries.
|
(4)
|
|
Represents ceded losses on captive transactions and quota share
reinsurance transactions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Mortgage Insurance Supplemental Information - Default Statistics
|
Exhibit K
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
|
2017
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
Default Statistics
|
|
|
|
|
|
|
|
|
|
|
Primary Insurance:
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
|
|
|
|
|
|
|
|
|
Number of insured loans
|
|
858,248
|
|
|
849,227
|
|
|
840,534
|
|
|
826,511
|
|
|
817,236
|
|
Number of loans in default
|
|
16,981
|
|
|
19,101
|
|
|
19,100
|
|
|
19,025
|
|
|
19,510
|
|
Percentage of loans in default
|
|
1.98
|
%
|
|
2.25
|
%
|
|
2.27
|
%
|
|
2.30
|
%
|
|
2.39
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Alt-A
|
|
|
|
|
|
|
|
|
|
|
Number of insured loans
|
|
25,425
|
|
|
26,536
|
|
|
28,080
|
|
|
29,445
|
|
|
30,990
|
|
Number of loans in default
|
|
3,812
|
|
|
4,193
|
|
|
4,545
|
|
|
4,820
|
|
|
5,138
|
|
Percentage of loans in default
|
|
14.99
|
%
|
|
15.80
|
%
|
|
16.19
|
%
|
|
16.37
|
%
|
|
16.58
|
%
|
|
|
|
|
|
|
|
|
|
|
|
A minus and below
|
|
|
|
|
|
|
|
|
|
|
Number of insured loans
|
|
26,043
|
|
|
27,115
|
|
|
28,313
|
|
|
29,450
|
|
|
30,681
|
|
Number of loans in default
|
|
5,000
|
|
|
5,811
|
|
|
5,885
|
|
|
5,982
|
|
|
6,221
|
|
Percentage of loans in default
|
|
19.20
|
%
|
|
21.43
|
%
|
|
20.79
|
%
|
|
20.31
|
%
|
|
20.28
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total Primary
|
|
|
|
|
|
|
|
|
|
|
Number of insured loans
|
|
909,716
|
|
|
902,878
|
|
|
896,927
|
|
|
885,406
|
|
|
878,907
|
|
Number of loans in default (1)
|
|
25,793
|
|
|
29,105
|
|
|
29,530
|
|
|
29,827
|
|
|
30,869
|
|
Percentage of loans in default
|
|
2.84
|
%
|
|
3.22
|
%
|
|
3.29
|
%
|
|
3.37
|
%
|
|
3.51
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Excludes the following number of loans subject to the Freddie
Mac Agreement that are in default as we no longer have claims
exposure on these loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
|
|
|
2017
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
|
|
Number of loans in default
|
|
1,395
|
|
1,639
|
|
1,888
|
|
2,180
|
|
2,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Mortgage Insurance Supplemental Information - QSR Transactions,
Captives and Persistency
|
Exhibit L
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
($ in thousands)
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quota Share Reinsurance ("QSR")
Transactions
|
|
|
|
|
|
|
|
|
|
|
|
QSR ceded premiums written (1)
|
|
$
|
5,457
|
|
|
$
|
6,049
|
|
|
$
|
6,730
|
|
|
$
|
7,356
|
|
|
$
|
7,962
|
|
|
% of premiums written
|
|
2.3
|
%
|
|
2.4
|
%
|
|
2.6
|
%
|
|
2.9
|
%
|
|
3.4
|
%
|
|
QSR ceded premiums earned (1)
|
|
$
|
7,834
|
|
|
$
|
9,421
|
|
|
$
|
10,597
|
|
|
$
|
11,172
|
|
|
$
|
11,325
|
|
|
% of premiums earned
|
|
3.3
|
%
|
|
3.8
|
%
|
|
4.1
|
%
|
|
4.5
|
%
|
|
4.7
|
%
|
|
Ceding commissions written
|
|
$
|
1,559
|
|
|
$
|
1,728
|
|
|
$
|
1,922
|
|
|
$
|
2,099
|
|
|
$
|
2,270
|
|
|
Ceding commissions earned (2)
|
|
$
|
3,894
|
|
|
$
|
4,374
|
|
|
$
|
3,974
|
|
|
$
|
3,779
|
|
|
$
|
4,446
|
|
|
Profit commission
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
RIF included in QSR Transactions (3)
|
|
$
|
1,488,972
|
|
|
$
|
1,578,300
|
|
|
$
|
1,718,031
|
|
|
$
|
1,872,017
|
|
|
$
|
2,018,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single Premium QSR Transaction
|
|
|
|
|
|
|
|
|
|
|
|
QSR ceded premiums written (1)
|
|
$
|
8,960
|
|
|
$
|
11,121
|
|
|
$
|
13,004
|
|
|
$
|
11,488
|
|
|
$
|
197,593
|
|
(4
|
)
|
% of premiums written
|
|
3.7
|
%
|
|
4.4
|
%
|
|
5.0
|
%
|
|
4.6
|
%
|
|
84.7
|
%
|
|
QSR ceded premiums earned (1)
|
|
$
|
5,859
|
|
|
$
|
8,060
|
|
|
$
|
8,608
|
|
|
$
|
7,146
|
|
|
$
|
5,994
|
|
|
% of premiums earned
|
|
2.5
|
%
|
|
3.2
|
%
|
|
3.3
|
%
|
|
2.9
|
%
|
|
2.5
|
%
|
|
Ceding commissions written
|
|
$
|
3,712
|
|
|
$
|
4,895
|
|
|
$
|
5,482
|
|
|
$
|
4,844
|
|
|
$
|
50,932
|
|
|
Ceding commissions earned (2)
|
|
$
|
2,937
|
|
|
$
|
4,130
|
|
|
$
|
4,382
|
|
|
$
|
3,759
|
|
|
$
|
3,032
|
|
|
Profit commission
|
|
$
|
5,888
|
|
|
$
|
8,458
|
|
|
$
|
8,922
|
|
|
$
|
7,891
|
|
|
$
|
6,134
|
|
|
RIF included in Single Premium QSR Transaction (3)
|
|
$
|
3,904,402
|
|
|
$
|
3,761,648
|
|
|
$
|
3,621,993
|
|
|
$
|
3,461,464
|
|
|
$
|
3,308,057
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total RIF included in QSR Transactions and Single Premium QSR
Transaction
|
|
$
|
5,393,374
|
|
|
$
|
5,339,948
|
|
|
$
|
5,340,024
|
|
|
$
|
5,333,481
|
|
|
$
|
5,326,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Lien Captives
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned ceded to captives
|
|
$
|
389
|
|
|
$
|
503
|
|
|
$
|
537
|
|
|
$
|
1,346
|
|
|
$
|
1,869
|
|
|
% of total premiums earned
|
|
0.2
|
%
|
|
0.2
|
%
|
|
0.2
|
%
|
|
0.5
|
%
|
|
0.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Persistency Rate (twelve months ended)
|
|
77.1
|
%
|
|
76.7
|
%
|
|
78.4
|
%
|
|
79.9
|
%
|
|
79.4
|
%
|
|
Persistency Rate (quarterly, annualized) (5)
|
|
84.4
|
%
|
|
76.8
|
%
|
|
75.3
|
%
|
|
78.0
|
%
|
|
82.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Net of profit commission.
|
(2)
|
|
Includes amounts reported in policy acquisition costs and other
operating expenses.
|
(3)
|
|
Included in primary RIF.
|
(4)
|
|
Includes ceded premiums for policies written in prior periods.
|
(5)
|
|
The Persistency Rate on a quarterly, annualized basis may be
impacted by seasonality or other factors, and may not be
indicative of full-year trends.
|
|
|
|
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 Exchange Act 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. 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. 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:
-
changes in general economic and political conditions, including
unemployment rates, interest rates and changes in housing and mortgage
credit markets, that impact the size of the insurable market and the
credit performance of our insured portfolio;
-
changes in the way customers, investors, regulators or legislators
perceive the performance and financial strength of private mortgage
insurers;
-
Radian Guaranty's ability to remain eligible under the Private
Mortgage Insurance Eligibility Requirements ("PMIERs") and other
applicable requirements imposed by the Federal Housing Finance Agency
and by the Government-Sponsored Enterprises ("GSEs") to insure loans
purchased by the GSEs;
-
our ability to successfully execute and implement our capital plans
and to maintain sufficient holding company liquidity to meet our
short- and long-term liquidity needs;
-
our ability to successfully execute and implement our business plans
and strategies, including plans and strategies that require GSE and/or
regulatory approvals;
-
our ability to maintain an adequate level of capital in our insurance
subsidiaries to satisfy existing and future state regulatory
requirements;
-
changes in the charters or business practices of, or rules or
regulations imposed by or applicable to the GSEs, including the GSEs'
interpretation and application of the PMIERs to our mortgage insurance
business;
-
changes in the current housing finance system in the U.S., including
the role of the Federal Housing Administration ("FHA"), the GSEs and
private mortgage insurers in this system;
-
any disruption in the servicing of mortgages covered by our insurance
policies, as well as poor servicer performance;
-
a significant decrease in the Persistency Rates of our mortgage
insurance policies;
-
competition in our mortgage insurance business, including price
competition and competition from the FHA, U.S. Department of Veteran
Affairs and other forms of credit enhancement;
-
the effect of the Dodd-Frank Wall Street Reform and Consumer
Protection Act ("Dodd-Frank Act") on the financial services industry
in general, and on our businesses in particular;
-
the adoption of new laws and regulations, or changes in existing laws
and regulations (including to the Dodd-Frank Act), or the way they are
interpreted or applied;
-
the outcome of legal and regulatory actions, reviews, audits,
inquiries and investigations that could result in adverse judgments,
settlements, fines, injunctions, restitutions or other relief that
could require significant expenditures or have other effects on our
business;
-
the amount and timing of potential payments or adjustments associated
with federal or other tax examinations, including deficiencies
assessed by the IRS resulting from its examination of our 2000 through
2007 tax years, which we are currently contesting;
-
the possibility that we may fail to estimate accurately the
likelihood, magnitude and timing of losses in connection with
establishing loss reserves for our mortgage insurance business;
-
volatility in our results of operations caused by changes in the fair
value of our assets and liabilities, including a significant portion
of our investment portfolio;
-
changes in accounting principles generally accepted in the U.S.
("GAAP") or statutory accounting principles and practices ("SAPP")
rules and guidance, or their interpretation;
-
our ability to attract and retain key employees;
-
legal and other limitations on dividends and other amounts we may
receive from our subsidiaries; and
-
the possibility that we may need to impair the carrying value of
goodwill established in connection with our acquisition of Clayton.
For more information regarding these risks and uncertainties as well as
certain additional risks that we face, you should refer to the Risk
Factors detailed in Item 1A of our Annual Report on Form 10-K for the
year ended December 31, 2016, and subsequent reports 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170427005367/en/
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