[July 26, 2018] |
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Radian Announces Second Quarter 2018 Financial Results
Radian Group Inc. (NYSE: RDN) today reported net income for the quarter
ended June 30, 2018, of $208.9 million, or $0.96 per diluted share,
which includes the impact of tax benefits related to the previously
disclosed expected settlement with the IRS as well as the reversal of
certain previously accrued state and local tax liabilities. This
compares to a net loss for the quarter ended June 30, 2017, of $27.3
million, or $0.13 per diluted share.
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Key Financial Highlights (dollars in millions, except
per-share data)
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Quarter Ended June 30, 2018
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Quarter Ended June 30, 2017
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Percent Change
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Net income (loss) (1)
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$208.9
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$(27.3)
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N/M (2)
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Diluted net income (loss) per share
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$0.96
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$(0.13)
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N/M (2)
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Consolidated pretax income (loss)
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$180.6
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$(35.5)
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N/M (2)
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Adjusted pretax operating income (3)
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$191.0
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$163.7
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17%
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Adjusted diluted net operating income per share(3) (4)
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$0.69
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$0.48
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44%
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Net premiums earned - mortgage insurance
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$249.0
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$229.1
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9%
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MI New Insurance Written (NIW)
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$16,417
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$14,342
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14%
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MI primary insurance in force
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$210,741
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$191,637
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10%
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Book value per share
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$15.01
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$13.54
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11%
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Tangible book value per share (3)
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$14.73
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$13.22
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11%
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Return on Equity (5)
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26.7%
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(3.7)%
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N/M (2)
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Adjusted Net Operating Return on Equity (3)
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19.3%
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14.6%
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32%
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(1)
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Net income for the second quarter of 2018 includes the impact
of tax benefits related to the previously disclosed settlement
with the IRS and the reversal of certain related previously
accrued state and local tax liabilities, as well as a pretax net
loss on investments and other financial instruments of $7.4
million and $0.9 million of pretax restructuring and other exit
costs related to the Mortgage and Real Estate Services segment.
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(2)
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N/M - Calculation results are not meaningful. The net loss in
the second quarter of 2017 was attributed to after-tax, non-cash
impairment charges of $130.9 million associated with an impairment
of goodwill and other intangible assets related to the Mortgage
and Real Estate Services segment.
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(3)
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Adjusted results, including adjusted pretax operating income,
adjusted diluted net operating income per share, tangible book
value per share and adjusted net operating return on equity, are
non-GAAP financial measures. For definitions and a reconciliation
of these measures to the comparable GAAP measures, see Exhibits F
and G.
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(4)
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Adjusted diluted net operating income per share is calculated
using the company's statutory tax rates of 21 percent in 2018 and
35 percent in 2017.
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(5)
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Calculated by dividing annualized net income by average
stockholders' equity, based on the average of the beginning and
ending balances for each period presented.
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Adjusted pretax operating income for the quarter ended June 30, 2018,
was $191.0 million, compared to $163.7 million for the quarter ended
June 30, 2017. Adjusted diluted net operating income per share for the
quarter ended June 30, 2018, was $0.69, an increase of 44 percent
compared to $0.48 for the quarter ended June 30, 2017.
Book value per share at June 30, 2018, was $15.01, an increase of 6
percent compared to $14.16 at March 31, 2018, and an increase of 11
percent compared to $13.54 at June 30, 2017. Tangible book value per
share at June 30, 2018, was $14.73, an increase of 6 percent compared to
$13.88 at March 31, 2018, and an increase of 11 percent compared to
$13.22 at June 30, 2017.
"We reported outstanding financial results for the second quarter, with
net income of $209 million, adjusted net operating ROE of 19%,
record-breaking NIW of $16.4 billion, growth in our Services segment,
10% growth in MI insurance in force and 11% growth in book value," said
Radian's Chief Executive Officer Rick Thornberry. "These results reflect
the success of our business strategy as one Radian, the breadth and
depth of our customer relationships, the strength and flexibility of our
financial position, the value of our $211 billion insurance portfolio
and the hard work of our outstanding team."
SECOND QUARTER HIGHLIGHTS AND RECENT EVENTS
Mortgage Insurance
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Mortgage insurance new insurance written (NIW) was $16.4 billion for
the quarter, representing record volume of NIW on a flow basis for the
company, and an increase of 41 percent compared to $11.7 billion in
the first quarter of 2018 as well as an increase of 14 percent
compared to $14.3 billion in the prior-year quarter. Purchase
originations accounted for 95 percent of total NIW in the second
quarter of 2018, compared to 89 percent in the first quarter of 2018,
and 91 percent a year ago.
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Total primary mortgage insurance in force as of June 30, 2018, grew to
$210.7 billion, an increase of 3 percent compared to $204.0 billion as
of March 31, 2018, and an increase of 10 percent compared to $191.6
billion as of June 30, 2017.
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The composition of Radian's mortgage insurance portfolio continues
to improve, with 93 percent consisting of new business written
after 2008, including those loans that successfully completed the
Home Affordable Refinance Program (HARP).
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Persistency, which is the percentage of mortgage insurance that
remains in force after a 12-month period, was 80.9 percent as of
June 30, 2018, compared to 81.0 percent as of March 31, 2018, and
78.5 percent as of June 30, 2017.
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Annualized persistency for the three months ended June 30, 2018,
was 82.3 percent, compared to 84.3 percent for the three months
ended March 31, 2018, and 82.8 percent for the three months ended
June 30, 2017.
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Net mortgage insurance premiums earned were $249.0 million for the
quarter ended June 30, 2018, compared to $242.6 million for the
quarter ended March 31, 2018, and $229.1 million for the quarter ended
June 30, 2017.
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Mortgage insurance in force premium yield was 48.4 basis points in
the second quarter of 2018, a slight decrease compared to 48.7
basis points in the first quarter of 2018 and in the second
quarter of 2017.
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Total net mortgage insurance premium yield, which includes the
impact of ceded premiums and accrued profit commission, was 48.0
basis points in the second quarter of 2018, compared to 47.9 basis
points in the first quarter of 2018, and 48.5 basis points in the
second quarter of 2017.
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Additional details regarding notable variable items impacting
premiums earned may be found in Exhibit D.
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The mortgage insurance provision for losses was $19.4 million in the
second quarter of 2018, compared to $37.4 million in the first quarter
of 2018, and $17.7 million in the prior-year quarter.
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The number of primary delinquent loans was 22,088 as of June 30,
2018, a decrease of 10 percent compared to 24,597 as of March 31,
2018 and a decrease of 7 percent compared to 23,755 as of June 30,
2017.
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Excluding the impact of delinquent loans from areas affected
by major 2017 hurricanes, the total number of primary
delinquent loans of 17,956 decreased by 15 percent from 21,006
as of June 30, 2017. Based on past experience, the company
continues to expect that these delinquencies will not result
in a material number of new paid claims.
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The primary mortgage insurance delinquency rate decreased to 2.2
percent in the second quarter of 2018, compared to 2.5 percent in
the first quarter of 2018, and 2.6 percent in the second quarter
of 2017.
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The loss ratio in the second quarter of 2018 was 7.8 percent,
compared to 15.4 percent in the first quarter of 2018, and 7.7
percent in the second quarter of 2017.
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Mortgage insurance loss reserves were $448.1 million as of
June 30, 2018, compared to $485.2 million as of March 31, 2018,
and $651.6 million as of June 30, 2017.
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Total mortgage insurance claims paid were $56.5 million in the second
quarter of 2018, compared to $59.9 million in the first quarter of
2018, and $91.3 million in the second quarter of 2017. In addition,
the company's pending claim inventory declined 43 percent from
June 30, 2017.
Mortgage and Real Estate Services
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Total revenues for the second quarter of 2018 were $40.5 million,
compared to $34.2 million for the first quarter of 2018, and $40.0
million for the second quarter of 2017.
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Adjusted pretax operating income before corporate allocations for the
quarter ended June 30, 2018, was $1.0 million, which includes $1.1
million in restructuring and other exit costs as well as a loss of
$0.9 million related to Radian's recently aquired national title
insurance and settlement company. This compares to a loss of $0.4
million for the quarter ended March 31, 2018, which includes $0.5
million in restructuring and other exit costs, and income of $1.2
million for the quarter ended June 30, 2017.
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Adjusted earnings before interest, income taxes, depreciation and
amortization (Services adjusted EBITDA) for the quarter ended June 30,
2018, was $2.0 million, which includes $1.1 million in restructuring
and other exit costs as well as a loss of $0.9 million related to
Radian's recently acquired national title insurance and settlement
company. This compares to $0.5 million for the quarter ended March 31,
2018, which includes $0.5 million in restructuring and other exit
costs, and $2.0 million for the quarter ended June 30, 2017.
Additional details regarding the non-GAAP measure Services adjusted
EBITDA may be found in Exhibits E, F and G.
Consolidated Expenses and Operating Leverage
Other operating expenses were $70.2 million in the second quarter of
2018, compared to $63.2 million in the first quarter of 2018, and $68.8
million in the second quarter of 2017. Beginning in the second quarter
of 2018, operating expenses include expenses related to Radian's
national title insurance and settlement services company acquired in
March 2018, which were $3.7 million in the quarter. Additionally,
consistent with prior years, operating expenses in the second quarter
also include the seasonal impact associated with the annual grant of the
company's long-term equity awards.
Revenue in the second quarter of 2018 grew 5 percent year over year,
driven by a 10 percent increase in net premiums earned, while other
operating expenses increased 2 percent. These results are consistent
with Radian's long-term strategic objective of generating positive
operating leverage through accretive revenue growth and disciplined
expense management.
CAPITAL AND LIQUIDITY UPDATE
Radian Group maintained approximately $200 million of available
liquidity as of June 30, 2018, which excludes the $31 million expected
to be submitted to the U.S. Department of the Treasury for the IRS
settlement. Total liquidity, which includes the company's $225 million
unsecured revolving credit facility entered into in October 2017, was
approximately $425 million as of June 30, 2018. The company remains
focused on improving its capital position, enhancing its return on
capital, and increasing its financial flexibility, as well as
positioning Radian Group for a return to investment grade ratings.
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During the second quarter, Radian repurchased 2,491,843 shares, or
approximately $40 million, of Radian Group common stock.
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As previously announced, in December 2017 Radian Guaranty received the
proposed changes to the Private Mortgage Insurer Eligibility
Requirements (PMIERs) of Fannie Mae and Freddie Mac (the GSEs),
referred to as PMIERs 2.0. In June 2018, the company received
revisions to PMIERs 2.0 that take into consideration, among other
items, the comments previously provided by the private mortgage
insurance industry to the GSEs and FHFA.
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The company expects that PMIERs 2.0 will be finalized in the third
quarter of 2018 and, after an implementation period, will become
effective at the end of the first quarter of 2019.
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Based on the most recent version of PMIERs 2.0, as of the
effective date, Radian expects to be able to fully comply with
PMIERs 2.0 and to maintain substantially the same excess of
Available Assets over Minimum Required Assets under PMIERs 2.0 as
it does today under the current PMIERs, without a need to take
further actions to do so.
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Radian's expectation is based on the company's current
understanding of the most recent version of PMIERs 2.0, its
forecasted NIW, its projections for ongoing positive operating
results, its strong capital position and the benefits of its
reinsurance programs.
CONFERENCE CALL
Radian will discuss second quarter financial results in a conference
call today, Thursday, July 26, 2018, 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 800.288.8976 inside the U.S.,
or 612.332.0228 for international callers, using passcode 451857 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 451857.
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, 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 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 (loss) 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 or impairment of goodwill and other intangible assets;
and (v) net impairment losses recognized in earnings and losses from the
sale of business lines. 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. Adjusted net operating return on
equity is calculated by dividing annualized adjusted pretax operating
income, 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.
The company has also presented a non-GAAP measure for tangible book
value per share, which represents book value per share less the
per-share impact of goodwill and other intangible assets, net. The
company uses this measure to assess the quality and growth of its
capital. Because tangible book value per share is a widely used
financial measure which focuses on the underlying fundamentals of the
company's financial position and operating trends without the impact of
goodwill and other intangible assets, the company believes that current
and prospective investors may find it useful in their analysis.
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
tax provision (benefit), 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. In addition, the company also has presented a
related non-GAAP measure, Services adjusted EBITDA margin, which is
calculated by dividing Services adjusted EBITDA by GAAP total revenue
for the Services segment. Services adjusted EBITDA and Services adjusted
EBITDA margin are presented 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 Services
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), 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:
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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%.
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Mortgage and Real Estate Services, through its principal
services subsidiary Clayton, as well as Entitle Direct, 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.
Exhibit A:
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Condensed Consolidated Statements of Operations Trend Schedule
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Exhibit B:
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Net Income (Loss) Per Share Trend Schedule
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Exhibit C:
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Condensed Consolidated Balance Sheets
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Exhibit D:
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Net Premiums Earned - Insurance and Restructuring and Other Exit
Costs
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Exhibit E:
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Segment Information
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Exhibit F:
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Definition of Consolidated Non-GAAP Financial Measures
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Exhibit G:
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Consolidated Non-GAAP Financial Measure Reconciliations
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Exhibit H:
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Mortgage Insurance Supplemental Information New Insurance
Written
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Exhibit I:
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Mortgage Insurance Supplemental Information Primary Insurance
in Force and Risk in Force
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Exhibit J:
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Mortgage Insurance Supplemental Information Claims and Reserves
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Exhibit K:
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Mortgage Insurance Supplemental Information Default Statistics
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Exhibit L:
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Mortgage Insurance Supplemental Information QSR Transactions,
Captives and Persistency
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Radian Group Inc. and Subsidiaries
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Condensed Consolidated Statements of Operations Trend Schedule
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Exhibit A
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2018
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2017
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(In thousands, except per-share amounts)
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Qtr 2
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Qtr 1
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Qtr 4
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Qtr 3
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Qtr 2
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Revenues:
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Net premiums earned - insurance
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$
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251,344
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$
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242,550
|
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$
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245,175
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$
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236,702
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$
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229,096
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Services revenue
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36,828
|
|
|
|
33,164
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|
|
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39,703
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|
|
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39,571
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|
|
|
37,802
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Net investment income
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37,473
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33,956
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33,605
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32,540
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30,071
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Net gains (losses) on investments and other financial instruments
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(7,404
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)
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(18,887
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)
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(1,339
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)
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|
2,480
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|
|
|
5,331
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Other income
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|
1,016
|
|
|
|
807
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|
|
|
768
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|
|
|
760
|
|
|
|
612
|
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Total revenues
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|
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319,257
|
|
|
|
291,590
|
|
|
|
317,912
|
|
|
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312,053
|
|
|
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302,912
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|
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|
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|
|
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Expenses:
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|
|
|
|
|
|
|
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Provision for losses
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19,337
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|
|
|
37,283
|
|
|
|
35,178
|
|
|
|
35,841
|
|
|
|
17,222
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|
Policy acquisition costs
|
|
|
5,996
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|
|
|
7,117
|
|
|
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5,871
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|
|
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5,554
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|
|
|
6,123
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Cost of services
|
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24,205
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|
|
|
23,126
|
|
|
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23,349
|
|
|
|
27,240
|
|
|
|
25,635
|
|
Other operating expenses
|
|
|
70,184
|
|
|
|
63,243
|
|
|
|
65,999
|
|
|
|
64,195
|
|
|
|
68,750
|
|
Restructuring and other exit costs
|
|
|
925
|
|
|
|
551
|
|
|
|
5,230
|
|
|
|
12,038
|
|
|
|
-
|
|
Interest expense
|
|
|
15,291
|
|
|
|
15,080
|
|
|
|
14,929
|
|
|
|
15,715
|
|
|
|
16,179
|
|
Loss on induced conversion and debt extinguishment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
45,766
|
|
|
|
1,247
|
|
Impairment of goodwill
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
184,374
|
|
Amortization and impairment of other intangible assets
|
|
|
2,748
|
|
|
|
2,748
|
|
|
|
2,629
|
|
|
|
2,890
|
|
|
|
18,856
|
|
Total expenses
|
|
|
138,686
|
|
|
|
149,148
|
|
|
|
153,185
|
|
|
|
209,239
|
|
|
|
338,386
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax income (loss)
|
|
|
180,571
|
|
|
|
142,442
|
|
|
|
164,727
|
|
|
|
102,814
|
|
|
|
(35,474
|
)
|
Income tax provision (benefit)
|
|
|
(28,378
|
)
|
|
|
27,956
|
|
|
|
157,911
|
|
|
|
37,672
|
|
|
|
(8,132
|
)
|
Net income (loss)
|
|
$
|
208,949
|
|
|
$
|
114,486
|
|
|
$
|
6,816
|
|
|
$
|
65,142
|
|
|
$
|
(27,342
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share
|
|
$
|
0.96
|
|
|
$
|
0.52
|
|
|
$
|
0.03
|
|
|
$
|
0.30
|
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Selected Mortgage Insurance Key Ratios
|
|
|
|
|
|
|
|
|
|
|
Loss ratio (1)
|
|
|
7.8
|
%
|
|
|
15.4
|
%
|
|
|
14.4
|
%
|
|
|
15.2
|
%
|
|
|
7.7
|
%
|
Expense ratio (1)
|
|
|
23.9
|
%
|
|
|
23.7
|
%
|
|
|
23.0
|
%
|
|
|
22.9
|
%
|
|
|
26.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Calculated on a GAAP basis using net premiums earned.
|
|
|
|
|
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:
|
|
|
|
|
|
|
|
2018
|
|
2017
|
(In thousands, except per-share amounts)
|
|
Qtr 2
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
Net income (loss)-basic and diluted
|
|
$
|
208,949
|
|
$
|
114,486
|
|
$
|
6,816
|
|
$
|
65,142
|
|
$
|
(27,342
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Average common shares outstanding-basic
|
|
|
213,976
|
|
|
215,967
|
|
|
215,623
|
|
|
215,279
|
|
|
215,152
|
|
Dilutive effect of Convertible Senior Notes due 2017 (1)
|
|
|
-
|
|
|
-
|
|
|
9
|
|
|
16
|
|
|
-
|
|
Dilutive effect of stock-based compensation arrangements (1)
|
|
|
3,854
|
|
|
3,916
|
|
|
4,618
|
|
|
4,096
|
|
|
-
|
|
Adjusted average common shares outstanding-diluted
|
|
|
217,830
|
|
|
219,883
|
|
|
220,250
|
|
|
219,391
|
|
|
215,152
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share
|
|
$
|
0.98
|
|
$
|
0.53
|
|
$
|
0.03
|
|
$
|
0.30
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share
|
|
$
|
0.96
|
|
$
|
0.52
|
|
$
|
0.03
|
|
$
|
0.30
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
There are no Convertible Senior Notes outstanding at December
31, 2017, or in subsequent periods. There were no dilutive shares
for the three months ended June 30, 2017, 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 and our convertible debt were not included in the
calculation of diluted net income (loss) per share because they
were anti-dilutive:
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
(In thousands)
|
|
Qtr 2
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
|
|
Shares of common stock equivalents
|
|
484
|
|
170
|
|
170
|
|
676
|
|
5,975
|
|
|
|
Shares of Convertible Senior Notes due 2017
|
|
-
|
|
-
|
|
-
|
|
-
|
|
509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Condensed Consolidated Balance Sheets
|
Exhibit C
|
|
(In thousands, except per-share data)
|
|
June 30, 2018
|
|
|
March 31, 2018
|
|
December 31, 2017
|
|
September 30, 2017
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
$
|
4,873,919
|
|
|
|
|
$
|
4,668,217
|
|
|
|
$
|
4,643,942
|
|
|
|
$
|
4,546,664
|
|
|
|
$
|
4,583,842
|
|
|
Cash
|
|
|
95,573
|
|
|
|
|
|
122,481
|
|
|
|
|
80,569
|
|
|
|
|
61,917
|
|
|
|
|
56,918
|
|
|
Restricted cash
|
|
|
9,152
|
|
|
|
|
|
7,623
|
|
|
|
|
15,675
|
|
|
|
|
36,888
|
|
|
|
|
25,486
|
|
|
Accounts and notes receivable
|
|
|
94,848
|
|
|
|
|
|
80,068
|
|
|
|
|
72,558
|
|
|
|
|
97,020
|
|
|
|
|
78,540
|
|
|
Deferred income taxes, net
|
|
|
171,293
|
|
|
|
|
|
253,381
|
|
|
|
|
229,567
|
|
|
|
|
356,181
|
|
|
|
|
389,759
|
|
|
Goodwill and other intangible assets, net
|
|
|
59,179
|
|
|
|
|
|
61,465
|
|
|
|
|
64,212
|
|
|
|
|
66,967
|
|
|
|
|
69,857
|
|
|
Prepaid reinsurance premium
|
|
|
405,447
|
|
|
|
|
|
390,241
|
|
|
|
|
386,509
|
|
|
|
|
239,620
|
|
|
|
|
235,349
|
|
|
Other assets
|
|
|
430,077
|
|
|
|
|
|
426,773
|
|
|
|
|
407,849
|
|
|
|
|
439,016
|
|
|
|
|
377,355
|
|
|
Total assets
|
|
$
|
6,139,488
|
|
|
|
|
$
|
6,010,249
|
|
|
|
$
|
5,900,881
|
|
|
|
$
|
5,844,273
|
|
|
|
$
|
5,817,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned premiums
|
|
$
|
741,296
|
|
|
|
|
$
|
723,100
|
|
|
|
$
|
723,938
|
|
|
|
$
|
717,589
|
|
|
|
$
|
702,210
|
|
|
Reserve for losses and loss adjustment expense
|
|
|
451,542
|
|
|
|
|
|
488,656
|
|
|
|
|
507,588
|
|
|
|
|
556,488
|
|
|
|
|
651,591
|
|
|
Senior notes
|
|
|
1,028,687
|
|
|
|
|
|
1,027,875
|
|
|
|
|
1,027,074
|
|
|
|
|
1,026,806
|
|
|
|
|
989,010
|
|
|
Reinsurance funds withheld
|
|
|
331,776
|
|
|
|
|
|
305,409
|
|
|
|
|
288,398
|
|
|
|
|
194,353
|
|
|
|
|
180,991
|
|
|
Other liabilities
|
|
|
385,051
|
|
|
|
|
|
412,793
|
|
|
|
|
353,845
|
|
|
|
|
360,835
|
|
|
|
|
379,144
|
|
|
Total liabilities
|
|
|
2,938,352
|
|
|
|
|
|
2,957,833
|
|
|
|
|
2,900,843
|
|
|
|
|
2,856,071
|
|
|
|
|
2,902,946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity component of currently redeemable convertible senior notes
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
231
|
|
|
|
|
|
233
|
|
|
|
|
233
|
|
|
|
|
233
|
|
|
|
|
233
|
|
|
Treasury stock
|
|
|
(894,610
|
)
|
|
|
|
|
(894,191
|
)
|
|
|
|
(893,888
|
)
|
|
|
|
(893,754
|
)
|
|
|
|
(893,531
|
)
|
|
Additional paid-in capital
|
|
|
2,715,426
|
|
|
|
|
|
2,748,233
|
|
|
|
|
2,754,275
|
|
|
|
|
2,747,393
|
|
|
|
|
2,743,872
|
|
|
Retained earnings
|
|
|
1,438,032
|
|
|
|
|
|
1,229,616
|
|
|
|
|
1,116,333
|
|
|
|
|
1,110,057
|
|
|
|
|
1,045,453
|
|
|
Accumulated other comprehensive income (loss)
|
|
|
(57,943
|
)
|
|
|
|
|
(31,475
|
)
|
|
|
|
23,085
|
|
|
|
|
24,273
|
|
|
|
|
18,117
|
|
|
Total stockholders' equity
|
|
|
3,201,136
|
|
|
|
|
|
3,052,416
|
|
|
|
|
3,000,038
|
|
|
|
|
2,988,202
|
|
|
|
|
2,914,144
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
6,139,488
|
|
|
|
|
$
|
6,010,249
|
|
|
|
$
|
5,900,881
|
|
|
|
$
|
5,844,273
|
|
|
|
$
|
5,817,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding
|
|
|
213,232
|
|
|
|
|
|
215,543
|
|
|
|
|
215,814
|
|
|
|
|
215,299
|
|
|
|
|
215,175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share
|
|
$
|
15.01
|
|
|
|
|
$
|
14.16
|
|
|
|
$
|
13.90
|
|
|
|
$
|
13.88
|
|
|
|
$
|
13.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book value per share (See Exhibit G)
|
|
$
|
14.73
|
|
|
|
|
$
|
13.88
|
|
|
|
$
|
13.60
|
|
|
|
$
|
13.57
|
|
|
|
$
|
13.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statutory Capital Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk to capital ratio-Radian Guaranty only
|
|
|
12.5
|
|
:1
|
|
(1)
|
|
12.6
|
|
:1
|
|
|
12.8
|
|
:1
|
|
|
14.4
|
|
:1
|
|
|
14.3
|
|
:1
|
Risk to capital ratio-Mortgage Insurance combined
|
|
|
11.8
|
|
:1
|
|
(1)
|
|
11.9
|
|
:1
|
|
|
12.1
|
|
:1
|
|
|
13.4
|
|
:1
|
|
|
13.4
|
|
:1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Net Premiums Earned - Insurance and Restructuring and Other Exit
Costs
|
Exhibit D
|
|
|
|
2018
|
|
2017
|
(In thousands)
|
|
Qtr 2
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned - insurance: (1)
|
|
|
|
|
|
|
|
|
|
|
Direct
|
|
$
|
267,957
|
|
|
$
|
258,743
|
|
|
$
|
260,184
|
|
|
$
|
250,541
|
|
|
$
|
243,229
|
|
Assumed
|
|
|
7
|
|
|
|
6
|
|
|
|
7
|
|
|
|
7
|
|
|
|
7
|
|
Ceded
|
|
|
(16,620
|
)
|
|
|
(16,199
|
)
|
|
|
(15,016
|
)
|
|
|
(13,846
|
)
|
|
|
(14,140
|
)
|
Net premiums earned - insurance
|
|
$
|
251,344
|
|
|
$
|
242,550
|
|
|
$
|
245,175
|
|
|
$
|
236,702
|
|
|
$
|
229,096
|
|
|
|
|
|
|
|
|
|
|
|
|
Notable variable items: (2)
|
|
|
|
|
|
|
|
|
|
|
Single Premium Policy cancellations, direct
|
|
$
|
14,776
|
|
|
$
|
12,335
|
|
|
$
|
21,172
|
|
|
$
|
15,415
|
|
|
$
|
13,346
|
|
Single Premium Policy cancellations, ceded (3)
|
|
|
(4,046
|
)
|
|
|
(3,301
|
)
|
|
|
(3,934
|
)
|
|
|
(3,075
|
)
|
|
|
(2,622
|
)
|
Single Premium Policy cancellations, net
|
|
$
|
10,730
|
|
|
$
|
9,034
|
|
|
$
|
17,238
|
|
|
$
|
12,340
|
|
|
$
|
10,724
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit commission - other (4)
|
|
$
|
7,917
|
|
|
$
|
7,405
|
|
|
$
|
4,272
|
|
|
$
|
4,876
|
|
|
$
|
4,521
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and other exit costs: (5)
|
|
|
|
|
|
|
|
|
|
|
Employee severance, related benefits and other exit costs (6)
|
|
$
|
1,055
|
|
|
$
|
525
|
|
|
$
|
1,365
|
|
|
$
|
5,463
|
|
|
$
|
-
|
|
Impairment of other long-lived assets and loss from the sale of
a business line (7)
|
|
|
(130
|
)
|
|
|
26
|
|
|
|
3,865
|
|
|
|
6,575
|
|
|
|
-
|
|
Total restructuring and other exit costs
|
|
$
|
925
|
|
|
$
|
551
|
|
|
$
|
5,230
|
|
|
$
|
12,038
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
These amounts are related to our Mortgage Insurance segment.
|
(2)
|
|
These amounts are included in net premiums earned - insurance,
in our Mortgage Insurance segment.
|
(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)
|
|
Represents the charges associated with our plan to restructure
the Services business.
|
(6)
|
|
Employee severance, related benefits and other exit costs are
components of adjusted pretax operating income.
|
(7)
|
|
Impairment of other long-lived assets and loss from the sale of
a business line are not components of adjusted pretax operating
income. The amounts for the three months ended June 30, 2018 and
December 31, 2017 primarily relate to the loss on the sale of our
EuroRisk business, which was completed during the fourth quarter
of 2017. The amounts for the three months ended March 31, 2018 and
September 30, 2017 relate to the impairment of other long-lived
assets. See Exhibit F for additional information on our non-GAAP
financial measures.
|
|
|
|
|
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
|
|
|
2018
|
|
2017
|
(In thousands)
|
|
Qtr 2
|
|
Qtr 1
|
|
Qtr 4
|
|
|
Qtr 3
|
|
Qtr 2
|
Net premiums written - insurance
|
|
$
|
251,958
|
|
|
$
|
237,980
|
|
|
$
|
104,635
|
|
(1
|
)
|
|
$
|
247,810
|
|
|
$
|
241,307
|
|
(Increase) decrease in unearned premiums
|
|
|
(2,990
|
)
|
|
|
4,570
|
|
|
|
140,540
|
|
|
|
|
(11,108
|
)
|
|
|
(12,211
|
)
|
Net premiums earned - insurance
|
|
|
248,968
|
|
|
|
242,550
|
|
|
|
245,175
|
|
|
|
|
236,702
|
|
|
|
229,096
|
|
Net investment income
|
|
|
37,447
|
|
|
|
33,956
|
|
|
|
33,605
|
|
|
|
|
32,540
|
|
|
|
30,071
|
|
Other income
|
|
|
621
|
|
|
|
807
|
|
|
|
768
|
|
|
|
|
760
|
|
|
|
612
|
|
Total
|
|
|
287,036
|
|
|
|
277,313
|
|
|
|
279,548
|
|
|
|
|
270,002
|
|
|
|
259,779
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for losses
|
|
|
19,362
|
|
|
|
37,391
|
|
|
|
35,257
|
|
|
|
|
35,980
|
|
|
|
17,714
|
|
Policy acquisition costs
|
|
|
5,996
|
|
|
|
7,117
|
|
|
|
5,871
|
|
|
|
|
5,554
|
|
|
|
6,123
|
|
Other operating expenses before corporate allocations
|
|
|
33,262
|
|
|
|
31,888
|
|
|
|
36,806
|
|
|
|
|
36,941
|
|
|
|
37,939
|
|
Total (2)
|
|
|
58,620
|
|
|
|
76,396
|
|
|
|
77,934
|
|
|
|
|
78,475
|
|
|
|
61,776
|
|
Adjusted pretax operating income before corporate allocations
|
|
|
228,416
|
|
|
|
200,917
|
|
|
|
201,614
|
|
|
|
|
191,527
|
|
|
|
198,003
|
|
Allocation of corporate operating expenses
|
|
|
20,136
|
|
|
|
18,577
|
|
|
|
13,624
|
|
|
|
|
11,737
|
|
|
|
15,894
|
|
Allocation of interest expense
|
|
|
10,840
|
|
|
|
10,629
|
|
|
|
10,477
|
|
|
|
|
11,282
|
|
|
|
11,748
|
|
Adjusted pretax operating income
|
|
$
|
197,440
|
|
|
$
|
171,711
|
|
|
$
|
177,513
|
|
|
|
$
|
168,508
|
|
|
$
|
170,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
|
2018
|
|
2017
|
(In thousands)
|
|
Qtr 2
|
|
Qtr 1
|
|
Qtr 4
|
|
|
Qtr 3
|
|
Qtr 2
|
Net premiums earned - insurance
|
|
$
|
2,376
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Services revenue (2)
|
|
|
37,713
|
|
|
|
34,166
|
|
|
|
40,707
|
|
|
|
|
41,062
|
|
|
|
39,975
|
|
Net investment income
|
|
|
26
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
Other income
|
|
|
395
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
40,510
|
|
|
|
34,166
|
|
|
|
40,707
|
|
|
|
|
41,062
|
|
|
|
39,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for losses
|
|
|
53
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
Cost of services
|
|
|
24,357
|
|
|
|
23,270
|
|
|
|
23,616
|
|
|
|
|
27,544
|
|
|
|
25,962
|
|
Other operating expenses before corporate allocations
|
|
|
14,015
|
|
|
|
10,744
|
|
|
|
12,781
|
|
|
|
|
12,781
|
|
|
|
12,803
|
|
Restructuring and other exit costs (3)
|
|
|
1,055
|
|
|
|
525
|
|
|
|
1,365
|
|
|
|
|
5,463
|
|
|
|
-
|
|
Total
|
|
|
39,480
|
|
|
|
34,539
|
|
|
|
37,762
|
|
|
|
|
45,788
|
|
|
|
38,765
|
|
Adjusted pretax operating income (loss) before corporate
allocations (4)
|
|
|
1,030
|
|
|
|
(373
|
)
|
|
|
2,945
|
|
|
|
|
(4,726
|
)
|
|
|
1,210
|
|
Allocation of corporate operating expenses
|
|
|
3,010
|
|
|
|
2,784
|
|
|
|
3,467
|
|
|
|
|
3,730
|
|
|
|
3,404
|
|
Allocation of interest expense
|
|
|
4,451
|
|
|
|
4,451
|
|
|
|
4,452
|
|
|
|
|
4,433
|
|
|
|
4,431
|
|
Adjusted pretax operating income (loss)
|
|
$
|
(6,431
|
)
|
|
$
|
(7,608
|
)
|
|
$
|
(4,974
|
)
|
|
|
$
|
(12,889
|
)
|
|
$
|
(6,625
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Effective December 31, 2017, we amended the 2016 Single Premium
QSR Agreement to increase the amount of ceded risk for 2015
through 2017 vintages under the agreement from 35% to 65%,
resulting in a reduction of $145.7 million in net premiums written
for the fourth quarter of 2017.
|
|
|
|
See notes continued on next page.
|
|
Radian Group Inc. and Subsidiaries
|
Segment Information
|
Exhibit E (page 2 of 2)
|
|
Notes continued from prior page.
|
|
|
|
|
|
|
|
|
(2)
|
|
Inter-segment information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
|
Qtr 2
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
|
Inter-segment expense included in Mortgage Insurance segment
|
|
$
|
885
|
|
$
|
1,002
|
|
$
|
1,004
|
|
$
|
1,491
|
|
$
|
2,173
|
|
|
Inter-segment revenue included in Services segment
|
|
|
885
|
|
|
1,002
|
|
|
1,004
|
|
|
1,491
|
|
|
2,173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
Primarily includes employee severance and related benefit
costs. Does not include impairment of long-lived assets and loss
from the sale of a business line, which are not considered
components of adjusted pretax operating income (loss).
|
(4)
|
|
Supplemental information for Services adjusted EBITDA (see
definition in Exhibit F):
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
Qtr 2
|
|
Qtr 1
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
|
|
Adjusted pretax operating income (loss) before corporate
allocations
|
|
$
|
1,030
|
|
$
|
(373
|
)
|
|
$
|
2,945
|
|
$
|
(4,726
|
)
|
|
$
|
1,210
|
|
|
|
Depreciation and amortization
|
|
|
920
|
|
|
867
|
|
|
|
893
|
|
|
1,172
|
|
|
|
835
|
|
|
|
Services adjusted EBITDA
|
|
$
|
1,950
|
|
$
|
494
|
|
|
$
|
3,838
|
|
$
|
(3,554
|
)
|
|
$
|
2,045
|
Selected balance sheet information for our segments, as of the
periods indicated, is as follows:
|
|
|
|
|
At June 30, 2018
|
(In thousands)
|
|
|
Mortgage Insurance
|
|
Services
|
|
Total
|
Total assets
|
|
|
$
|
5,949,845
|
|
$
|
189,643
|
|
$
|
6,139,488
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2017
|
(In thousands)
|
|
|
Mortgage Insurance
|
|
Services
|
|
Total
|
Total assets
|
|
|
$
|
5,733,918
|
|
$
|
166,963
|
|
$
|
5,900,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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," "adjusted diluted net
operating income per share" and "adjusted net operating return on
equity," 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," "adjusted diluted net operating
income 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 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 induced conversion and debt extinguishment; (iii)
acquisition-related expenses; (iv) amortization or impairment of
goodwill and other intangible assets; and (v) net impairment losses
recognized in earnings and losses from the sale of lines of
business. 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. Adjusted net
operating return on equity is calculated by dividing annualized
adjusted pretax operating income, 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 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 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. 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 or impairment of goodwill and other 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 and losses from
the sale of lines of business. The recognition of net
impairment losses on investments and the impairment of other
long-lived assets does not result in a cash payment and can vary
significantly in both amount and frequency, depending on market
credit cycles and other factors. Losses from the sale of lines of
business are highly discretionary as a result of strategic
restructuring decisions, and generally do not occur in the normal
course of our business. We do not view these 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).
|
|
|
|
We have also presented a non-GAAP measure for tangible book value
per share, which represents book value per share less the per-share
impact of goodwill and other intangible assets, net. We use this
measure to assess the quality and growth of our capital. Because
tangible book value per share is a widely-used financial measure
which focuses on the underlying fundamentals of our financial
position and operating trends without the impact of goodwill and
other intangible assets, we believe that current and prospective
investors may find it useful in their analysis of the Company.
|
|
|
|
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 tax provision (benefit),
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. In addition, we also have presented a related non-GAAP
measure, Services adjusted EBITDA margin, which we calculate by
dividing Services adjusted EBITDA by GAAP total revenue for the
Services segment. We have presented Services adjusted EBITDA and
Services adjusted EBITDA margin 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 Services
segment.
|
|
|
|
See Exhibit G for the reconciliation of the most comparable GAAP
measures, consolidated pretax income (loss), diluted net income
(loss) per share, return on equity and book value per share, to our
non-GAAP financial measures for the consolidated company, adjusted
pretax operating income, adjusted diluted net operating income per
share, adjusted net operating return on equity, and tangible book
value per share, respectively. Exhibit G also contains the
reconciliation of the most comparable GAAP measure, net income
(loss), to Services adjusted EBITDA.
|
|
|
|
Total adjusted pretax operating income, adjusted diluted net
operating income per share, adjusted net operating return on equity,
tangible book value per share, Services adjusted EBITDA and Services
adjusted EBITDA margin should not be considered in isolation or
viewed as substitutes for GAAP pretax income (loss), diluted net
income (loss) per share, return on equity, book value per share or
net income (loss). Our definitions of adjusted pretax operating
income, adjusted diluted net operating income per share, adjusted
net operating return on equity, tangible book value per share,
Services adjusted EBITDA or Services adjusted EBITDA margin may not
be comparable to similarly-named measures reported by other
companies.
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Consolidated Non-GAAP Financial Measure Reconciliations
|
Exhibit G (page 1 of 4)
|
|
Reconciliation of Consolidated Pretax Income (Loss) to Adjusted
Pretax Operating Income
|
|
|
|
|
2018
|
|
|
2017
|
(In thousands)
|
|
|
Qtr 2
|
|
|
Qtr 1
|
|
|
Qtr 4
|
|
|
Qtr 3
|
|
|
Qtr 2
|
Consolidated pretax income (loss)
|
|
|
$
|
180,571
|
|
|
|
$
|
142,442
|
|
|
|
$
|
164,727
|
|
|
|
$
|
102,814
|
|
|
|
$
|
(35,474
|
)
|
Less reconciling income (expense) items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on investments and other financial instruments
|
|
|
|
(7,404
|
)
|
|
|
|
(18,887
|
)
|
|
|
|
(1,339
|
)
|
|
|
|
2,480
|
|
|
|
|
5,331
|
|
Loss on induced conversion and debt extinguishment
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(45,766
|
)
|
|
|
|
(1,247
|
)
|
Acquisition-related expenses (1)
|
|
|
|
(416
|
)
|
|
|
|
-
|
|
|
|
|
21
|
|
|
|
|
(54
|
)
|
|
|
|
(64
|
)
|
Impairment of goodwill
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(184,374
|
)
|
Amortization and impairment of other intangible assets
|
|
|
|
(2,748
|
)
|
|
|
|
(2,748
|
)
|
|
|
|
(2,629
|
)
|
|
|
|
(2,890
|
)
|
|
|
|
(18,856
|
)
|
Impairment of other long-lived assets and loss from the sale of a
business line (2)
|
|
|
|
130
|
|
|
|
|
(26
|
)
|
|
|
|
(3,865
|
)
|
|
|
|
(6,575
|
)
|
|
|
|
-
|
|
Total adjusted pretax operating income (3)
|
|
|
$
|
191,009
|
|
|
|
$
|
164,103
|
|
|
|
$
|
172,539
|
|
|
|
$
|
155,619
|
|
|
|
$
|
163,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Please see Exhibit F for the definition of this line item. This
item is included within other operating expenses on the Condensed
Consolidated Statement of Operations in Exhibit A.
|
(2)
|
|
This item is included within restructuring and other exit costs
on the Condensed Consolidated Statement of Operations in Exhibit A.
|
(3)
|
|
Total adjusted pretax operating income consists of adjusted
pretax operating income (loss) for each segment as follows:
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(In thousands)
|
|
|
Qtr 2
|
|
|
Qtr 1
|
|
|
Qtr 4
|
|
|
Qtr 3
|
|
|
Qtr 2
|
|
|
|
|
Adjusted pretax operating income (loss) (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage Insurance
|
|
|
$
|
197,440
|
|
|
|
$
|
171,711
|
|
|
|
$
|
177,513
|
|
|
|
$
|
168,508
|
|
|
|
$
|
170,361
|
|
|
|
|
|
Services (2)
|
|
|
|
(6,431
|
)
|
|
|
|
(7,608
|
)
|
|
|
|
(4,974
|
)
|
|
|
|
(12,889
|
)
|
|
|
|
(6,625
|
)
|
|
|
|
|
Total adjusted pretax operating income
|
|
|
$
|
191,009
|
|
|
|
$
|
164,103
|
|
|
|
$
|
172,539
|
|
|
|
$
|
155,619
|
|
|
|
$
|
163,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Please see Exhibit E for additional segment-level detail.
|
(2)
|
|
Please see Exhibit G, page 4 of 4, for Services Adjusted
EBITDA, a supplemental metric used to facilitate comparisons with
other services companies.
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Consolidated Non-GAAP Financial Measure Reconciliations
|
Exhibit G (page 2 of 4)
|
|
Reconciliation of Diluted Net Income (Loss) Per Share to Adjusted
Diluted Net Operating Income Per Share
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
Qtr 2
|
|
|
Qtr 1
|
|
|
Qtr 4
|
|
|
Qtr 3
|
|
|
Qtr 2
|
Diluted net income (loss) per share
|
|
|
$
|
0.96
|
|
|
|
$
|
0.52
|
|
|
|
$
|
0.03
|
|
|
|
$
|
0.30
|
|
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less per-share impact of reconciling income (expense) items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on investments and other financial instruments
|
|
|
|
(0.03
|
)
|
|
|
|
(0.09
|
)
|
|
|
|
(0.01
|
)
|
|
|
|
0.01
|
|
|
|
|
0.02
|
|
Loss on induced conversion and debt extinguishment
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(0.14
|
)
|
|
|
|
(0.01
|
)
|
Acquisition-related expenses
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Impairment of goodwill
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(0.86
|
)
|
Amortization and impairment of other intangible assets
|
|
|
|
(0.01
|
)
|
|
|
|
(0.01
|
)
|
|
|
|
(0.01
|
)
|
|
|
|
(0.01
|
)
|
|
|
|
(0.09
|
)
|
Impairment of other long-lived assets and loss from the sale of a
business line
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(0.02
|
)
|
|
|
|
(0.03
|
)
|
|
|
|
-
|
|
Income tax provision (benefit) on reconciling income (expense)
items (1)
|
|
|
|
(0.01
|
)
|
|
|
|
(0.02
|
)
|
|
|
|
(0.01
|
)
|
|
|
|
(0.01
|
)
|
|
|
|
(0.32
|
)
|
Difference between statutory and effective tax rate
|
|
|
|
0.30
|
|
(2)
|
|
|
0.01
|
|
|
|
|
(0.45
|
)
|
(3)
|
|
|
-
|
|
|
|
|
-
|
|
Per-share impact of reconciling income (expense) items
|
|
|
|
0.27
|
|
|
|
|
(0.07
|
)
|
|
|
|
(0.48
|
)
|
|
|
|
(0.16
|
)
|
|
|
|
(0.62
|
)
|
Add per-share impact of share dilution
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(0.01
|
)
|
Adjusted diluted net operating income per share (1)
|
|
|
$
|
0.69
|
|
|
|
$
|
0.59
|
|
|
|
$
|
0.51
|
|
|
|
$
|
0.46
|
|
|
|
$
|
0.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Calculated using the company's federal statutory tax rates of
21% and 35% for 2018 and 2017, respectively. Any permanent tax
adjustments and state income taxes on these items have been deemed
immaterial and are not included.
|
(2)
|
|
Includes $0.34 of tax benefit related to the settlement of the
IRS Matter, which includes both the impact of the settlement with
the IRS as well as the reversal of certain related previously
accrued state and local tax liabilities.
|
(3)
|
|
Includes $0.47 in additional tax expense related to the
remeasurement of our net deferred tax assets as a result of the
Tax Cuts and Jobs Act enacted in December 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Consolidated Non-GAAP Financial Measure Reconciliations
|
Exhibit G (page 3 of 4)
|
|
Reconciliation of Return on Equity to Adjusted Net Operating
Return on Equity (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
Qtr 2
|
|
|
Qtr 1
|
|
|
Qtr 4
|
|
|
Qtr 3
|
|
|
Qtr 2
|
Return on equity (1)
|
|
|
26.7
|
%
|
|
|
15.1
|
%
|
|
|
0.9
|
%
|
|
|
8.8
|
%
|
|
|
(3.7
|
)%
|
Less impact of reconciling income (expense) items: (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on investments and other financial instruments
|
|
|
(0.9
|
)
|
|
|
(2.5
|
)
|
|
|
(0.2
|
)
|
|
|
0.3
|
|
|
|
0.7
|
|
Loss on induced conversion and debt extinguishment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6.2
|
)
|
|
|
(0.2
|
)
|
Acquisition-related expenses
|
|
|
(0.1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Impairment of goodwill
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(25.3
|
)
|
Amortization and impairment of other intangible assets
|
|
|
(0.4
|
)
|
|
|
(0.4
|
)
|
|
|
(0.4
|
)
|
|
|
(0.4
|
)
|
|
|
(2.6
|
)
|
Impairment of other long-lived assets and loss from the sale of a
business line
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.5
|
)
|
|
|
(0.9
|
)
|
|
|
-
|
|
Income tax provision (benefit) on reconciling income (expense)
items (3)
|
|
|
(0.3
|
)
|
|
|
(0.6
|
)
|
|
|
(0.4
|
)
|
|
|
(2.5
|
)
|
|
|
(9.6
|
)
|
Difference between statutory and effective tax rate
|
|
|
8.5
|
|
(4)
|
|
0.3
|
|
|
|
(13.4
|
)
|
|
|
(0.2
|
)
|
|
|
(0.5
|
)
|
Impact of reconciling income (expense) items
|
|
|
7.4
|
|
|
|
(2.0
|
)
|
|
|
(14.1
|
)
|
|
|
(4.9
|
)
|
|
|
(18.3
|
)
|
Adjusted net operating return on equity
|
|
|
19.3
|
%
|
|
|
17.1
|
%
|
|
|
15.0
|
%
|
|
|
13.7
|
%
|
|
|
14.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Calculated by dividing annualized net income 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 rates of
21% and 35% for 2018 and 2017, respectively. Any permanent tax
adjustments and state income taxes on these items have been deemed
immaterial and are not included.
|
(4)
|
|
Includes 9.4% of tax benefit related to the settlement of the
IRS Matter, which includes both the impact of the settlement with
the IRS as well as the reversal of certain related previously
accrued state and local tax liabilities.
|
|
|
|
|
Reconciliation of Book Value Per Share to Tangible Book Value Per
Share (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
Qtr 2
|
|
|
Qtr 1
|
|
|
Qtr 4
|
|
|
Qtr 3
|
|
|
Qtr 2
|
Book value per share
|
|
|
$
|
15.01
|
|
|
$
|
14.16
|
|
|
$
|
13.90
|
|
|
$
|
13.88
|
|
|
$
|
13.54
|
Less: Goodwill and other intangible assets, net per share
|
|
|
|
0.28
|
|
|
|
0.28
|
|
|
|
0.30
|
|
|
|
0.31
|
|
|
|
0.32
|
Tangible book value per share
|
|
|
$
|
14.73
|
|
|
$
|
13.88
|
|
|
$
|
13.60
|
|
|
$
|
13.57
|
|
|
$
|
13.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
All book value per share items are calculated based on the
number of shares outstanding at the end of each respective period.
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Consolidated Non-GAAP Financial Measure Reconciliations
|
Exhibit G (page 4 of 4)
|
|
Reconciliation of Net Income (Loss) to Services Adjusted EBITDA
|
|
|
|
|
2018
|
|
|
2017
|
(In thousands)
|
|
|
Qtr 2
|
|
|
Qtr 1
|
|
|
Qtr 4
|
|
|
Qtr 3
|
|
|
Qtr 2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
208,949
|
|
|
|
$
|
114,486
|
|
|
|
$
|
6,816
|
|
|
|
$
|
65,142
|
|
|
|
$
|
(27,342
|
)
|
Less reconciling income (expense) items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on investments and other financial instruments
|
|
|
|
(7,404
|
)
|
|
|
|
(18,887
|
)
|
|
|
|
(1,339
|
)
|
|
|
|
2,480
|
|
|
|
|
5,331
|
|
Loss on induced conversion and debt extinguishment
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(45,766
|
)
|
|
|
|
(1,247
|
)
|
Acquisition-related expenses
|
|
|
|
(416
|
)
|
|
|
|
-
|
|
|
|
|
21
|
|
|
|
|
(54
|
)
|
|
|
|
(64
|
)
|
Impairment of goodwill
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(184,374
|
)
|
Amortization and impairment of other intangible assets
|
|
|
|
(2,748
|
)
|
|
|
|
(2,748
|
)
|
|
|
|
(2,629
|
)
|
|
|
|
(2,890
|
)
|
|
|
|
(18,856
|
)
|
Impairment of other long-lived assets and loss from the sale of a
business line
|
|
|
|
130
|
|
|
|
|
(26
|
)
|
|
|
|
(3,865
|
)
|
|
|
|
(6,575
|
)
|
|
|
|
-
|
|
Income tax provision (benefit)
|
|
|
|
(28,378
|
)
|
|
|
|
27,956
|
|
|
|
|
157,911
|
|
|
|
|
37,672
|
|
|
|
|
(8,132
|
)
|
Mortgage Insurance adjusted pretax operating income
|
|
|
|
197,440
|
|
|
|
|
171,711
|
|
|
|
|
177,513
|
|
|
|
|
168,508
|
|
|
|
|
170,361
|
|
Services adjusted pretax operating income (loss)
|
|
|
|
(6,431
|
)
|
|
|
|
(7,608
|
)
|
|
|
|
(4,974
|
)
|
|
|
|
(12,889
|
)
|
|
|
|
(6,625
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less reconciling income (expense) items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of corporate operating expenses to Services
|
|
|
|
(3,010
|
)
|
|
|
|
(2,784
|
)
|
|
|
|
(3,467
|
)
|
|
|
|
(3,730
|
)
|
|
|
|
(3,404
|
)
|
Allocation of corporate interest expense to Services
|
|
|
|
(4,451
|
)
|
|
|
|
(4,451
|
)
|
|
|
|
(4,452
|
)
|
|
|
|
(4,433
|
)
|
|
|
|
(4,431
|
)
|
Services depreciation and amortization
|
|
|
|
(920
|
)
|
|
|
|
(867
|
)
|
|
|
|
(893
|
)
|
|
|
|
(1,172
|
)
|
|
|
|
(835
|
)
|
Services adjusted EBITDA
|
|
|
$
|
1,950
|
|
|
|
$
|
494
|
|
|
|
$
|
3,838
|
|
|
|
$
|
(3,554
|
)
|
|
|
$
|
2,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On a consolidated basis, "adjusted pretax operating income,"
"adjusted diluted net operating income per share," "adjusted net
operating return on equity" and "tangible book value per share" are
measures not determined in accordance with GAAP. "Services adjusted
EBITDA" and "Services adjusted EBITDA margin" are also non-GAAP
measures. These measures should not be considered in isolation or
viewed as substitutes for GAAP pretax income (loss), diluted net
income (loss) per share, return on equity, book value per share or
net income (loss). Our definitions of adjusted pretax operating
income, adjusted diluted net operating income per share, adjusted
net operating return on equity, tangible book value per share,
Services adjusted EBITDA or Services adjusted EBITDA margin may not
be comparable to similarly-named measures reported by other
companies. See Exhibit F for additional information on our
consolidated non-GAAP financial measures.
|
|
|
Radian Group Inc. and Subsidiaries
|
Mortgage Insurance Supplemental Information - New Insurance
Written
|
Exhibit H
|
|
|
|
|
2018
|
|
|
2017
|
($ in millions)
|
|
|
Qtr 2
|
|
|
Qtr 1
|
|
|
Qtr 4
|
|
|
Qtr 3
|
|
|
Qtr 2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total primary new insurance written
|
|
|
$
|
16,417
|
|
|
|
$
|
11,664
|
|
|
|
$
|
14,383
|
|
|
|
$
|
15,125
|
|
|
|
$
|
14,342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of primary new insurance
written by FICO score
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
>=740
|
|
|
|
60.8
|
%
|
|
|
|
61.0
|
%
|
|
|
|
60.4
|
%
|
|
|
|
61.1
|
%
|
|
|
|
61.6
|
%
|
680-739
|
|
|
|
32.5
|
|
|
|
|
32.6
|
|
|
|
|
33.1
|
|
|
|
|
32.5
|
|
|
|
|
32.6
|
|
620-679
|
|
|
|
6.7
|
|
|
|
|
6.4
|
|
|
|
|
6.5
|
|
|
|
|
6.4
|
|
|
|
|
5.8
|
|
Total Primary
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of primary new insurance
written
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct monthly and other premiums
|
|
|
|
76
|
%
|
|
|
|
79
|
%
|
|
|
|
77
|
%
|
|
|
|
77
|
%
|
|
|
|
77
|
%
|
Direct single premiums:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lender-paid
|
|
|
|
10
|
%
|
|
|
|
16
|
%
|
|
|
|
20
|
%
|
|
|
|
21
|
%
|
|
|
|
21
|
%
|
Borrower-paid (1)
|
|
|
|
14
|
%
|
|
|
|
5
|
%
|
|
|
|
3
|
%
|
|
|
|
2
|
%
|
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net single premiums (2)
|
|
|
|
8
|
%
|
|
|
|
7
|
%
|
|
|
|
15
|
%
|
|
|
|
15
|
%
|
|
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NIW for purchases
|
|
|
|
95
|
%
|
|
|
|
89
|
%
|
|
|
|
88
|
%
|
|
|
|
91
|
%
|
|
|
|
91
|
%
|
NIW for refinances
|
|
|
|
5
|
%
|
|
|
|
11
|
%
|
|
|
|
12
|
%
|
|
|
|
9
|
%
|
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTV
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95.01% and above
|
|
|
|
16.3
|
%
|
|
|
|
15.4
|
%
|
|
|
|
15.4
|
%
|
|
|
|
14.3
|
%
|
|
|
|
12.8
|
%
|
90.01% to 95.00%
|
|
|
|
45.3
|
%
|
|
|
|
44.5
|
%
|
|
|
|
43.9
|
%
|
|
|
|
45.7
|
%
|
|
|
|
47.3
|
%
|
85.01% to 90.00%
|
|
|
|
27.5
|
%
|
|
|
|
27.5
|
%
|
|
|
|
27.4
|
%
|
|
|
|
28.1
|
%
|
|
|
|
28.8
|
%
|
85.00% and below
|
|
|
|
10.9
|
%
|
|
|
|
12.6
|
%
|
|
|
|
13.3
|
%
|
|
|
|
11.9
|
%
|
|
|
|
11.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Borrower-paid Single Premium Policies have lower Minimum
Required Assets under PMIERs as compared to lender-paid Single
Premium Policies.
|
(2)
|
|
Represents the percentage of direct Single Premium Policies
written, after consideration of the Single Premium NIW ceded under
the Single Premium QSR Program (for NIW after the effective dates
of the respective agreements). Effective December 31, 2017, we
amended the 2016 Single Premium QSR Agreement to increase the
amount of ceded risk for 2015 through 2017 vintages under the
agreement from 35% to 65%.
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Mortgage Insurance 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)
|
|
|
2018
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
Primary insurance in force (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
|
$
|
204,537
|
|
|
|
$
|
197,589
|
|
|
|
$
|
193,949
|
|
|
|
$
|
189,340
|
|
|
|
$
|
183,886
|
|
Alt-A and A minus and below
|
|
|
|
6,204
|
|
|
|
|
6,436
|
|
|
|
|
6,775
|
|
|
|
|
7,201
|
|
|
|
|
7,751
|
|
Total Primary
|
|
|
$
|
210,741
|
|
|
|
$
|
204,025
|
|
|
|
$
|
200,724
|
|
|
|
$
|
196,541
|
|
|
|
$
|
191,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary risk in force (1) (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
|
$
|
52,446
|
|
|
|
$
|
50,623
|
|
|
|
$
|
49,674
|
|
|
|
$
|
48,516
|
|
|
|
$
|
47,075
|
|
Alt-A and A minus and below
|
|
|
|
1,476
|
|
|
|
|
1,530
|
|
|
|
|
1,614
|
|
|
|
|
1,721
|
|
|
|
|
1,854
|
|
Total Primary
|
|
|
$
|
53,922
|
|
|
|
$
|
52,153
|
|
|
|
$
|
51,288
|
|
|
|
$
|
50,237
|
|
|
|
$
|
48,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of primary risk in force
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct monthly and other premiums
|
|
|
|
70
|
%
|
|
|
|
69
|
%
|
|
|
|
69
|
%
|
|
|
|
69
|
%
|
|
|
|
69
|
%
|
Direct single premiums
|
|
|
|
30
|
%
|
|
|
|
31
|
%
|
|
|
|
31
|
%
|
|
|
|
31
|
%
|
|
|
|
31
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net single premiums (3)
|
|
|
|
18
|
%
|
|
|
|
19
|
%
|
|
|
|
19
|
%
|
|
|
|
24
|
%
|
|
|
|
25
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of primary risk in force by
FICO score
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
>=740
|
|
|
|
59.3
|
%
|
|
|
|
59.2
|
%
|
|
|
|
58.9
|
%
|
|
|
|
58.8
|
%
|
|
|
|
58.3
|
%
|
680-739
|
|
|
|
31.5
|
|
|
|
|
31.4
|
|
|
|
|
31.4
|
|
|
|
|
31.3
|
|
|
|
|
31.1
|
|
620-679
|
|
|
|
8.3
|
|
|
|
|
8.4
|
|
|
|
|
8.6
|
|
|
|
|
8.8
|
|
|
|
|
9.3
|
|
<=619
|
|
|
|
0.9
|
|
|
|
|
1.0
|
|
|
|
|
1.1
|
|
|
|
|
1.1
|
|
|
|
|
1.3
|
|
Total Primary
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of primary risk in force by LTV
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95.01% and above
|
|
|
|
10.3
|
%
|
|
|
|
9.7
|
%
|
|
|
|
9.2
|
%
|
|
|
|
8.6
|
%
|
|
|
|
8.0
|
%
|
90.01% to 95.00%
|
|
|
|
53.3
|
|
|
|
|
53.2
|
|
|
|
|
53.2
|
|
|
|
|
53.1
|
|
|
|
|
52.9
|
|
85.01% to 90.00%
|
|
|
|
29.7
|
|
|
|
|
30.2
|
|
|
|
|
30.6
|
|
|
|
|
31.1
|
|
|
|
|
31.7
|
|
85.00% and below
|
|
|
|
6.7
|
|
|
|
|
6.9
|
|
|
|
|
7.0
|
|
|
|
|
7.2
|
|
|
|
|
7.4
|
|
Total
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of primary risk in force by
policy year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 and prior
|
|
|
|
2.8
|
%
|
|
|
|
3.0
|
%
|
|
|
|
3.3
|
%
|
|
|
|
3.6
|
%
|
|
|
|
4.1
|
%
|
2006
|
|
|
|
1.8
|
|
|
|
|
2.0
|
|
|
|
|
2.1
|
|
|
|
|
2.3
|
|
|
|
|
2.5
|
|
2007
|
|
|
|
4.4
|
|
|
|
|
4.8
|
|
|
|
|
5.2
|
|
|
|
|
5.6
|
|
|
|
|
6.2
|
|
2008
|
|
|
|
2.9
|
|
|
|
|
3.2
|
|
|
|
|
3.4
|
|
|
|
|
3.7
|
|
|
|
|
4.2
|
|
2009
|
|
|
|
0.4
|
|
|
|
|
0.5
|
|
|
|
|
0.6
|
|
|
|
|
0.7
|
|
|
|
|
0.8
|
|
2010
|
|
|
|
0.4
|
|
|
|
|
0.5
|
|
|
|
|
0.5
|
|
|
|
|
0.6
|
|
|
|
|
0.7
|
|
2011
|
|
|
|
1.0
|
|
|
|
|
1.2
|
|
|
|
|
1.3
|
|
|
|
|
1.5
|
|
|
|
|
1.7
|
|
2012
|
|
|
|
4.5
|
|
|
|
|
5.1
|
|
|
|
|
5.5
|
|
|
|
|
6.1
|
|
|
|
|
6.7
|
|
2013
|
|
|
|
7.4
|
|
|
|
|
8.2
|
|
|
|
|
8.9
|
|
|
|
|
9.8
|
|
|
|
|
10.7
|
|
2014
|
|
|
|
7.1
|
|
|
|
|
7.9
|
|
|
|
|
8.5
|
|
|
|
|
9.3
|
|
|
|
|
10.2
|
|
2015
|
|
|
|
11.9
|
|
|
|
|
13.0
|
|
|
|
|
13.8
|
|
|
|
|
14.9
|
|
|
|
|
16.1
|
|
2016
|
|
|
|
19.2
|
|
|
|
|
20.5
|
|
|
|
|
21.4
|
|
|
|
|
22.5
|
|
|
|
|
23.7
|
|
2017
|
|
|
|
23.2
|
|
|
|
|
24.5
|
|
|
|
|
25.5
|
|
|
|
|
19.4
|
|
|
|
|
12.4
|
|
2018
|
|
|
|
13.0
|
|
|
|
|
5.6
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Total
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary risk in force on defaulted loans (4)
|
|
|
$
|
1,093
|
|
|
|
$
|
1,223
|
|
|
|
$
|
1,389
|
|
|
|
$
|
1,137
|
|
|
|
$
|
1,124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes on next page.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Mortgage Insurance Supplemental Information - Primary Insurance
in Force and Risk in Force
|
Exhibit I (page 2 of 2)
|
|
Notes to table on preceding page,
|
|
(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 1.0% 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. Effective December 31, 2017, we
amended the 2016 Single Premium QSR Agreement to increase the
amount of ceded risk for 2015 through 2017 vintages under the
agreement from 35% to 65%, resulting in a reduction of $2.5
billion in net RIF on Single Premium Policies at December 31, 2017.
|
(4)
|
|
Excludes risk related to loans subject to the Freddie Mac
Agreement.
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Mortgage Insurance ("MI") Supplemental Information - Claims and
Reserves
|
Exhibit J (page 1 of 2)
|
|
|
|
|
2018
|
|
|
2017
|
($ in thousands)
|
|
|
Qtr 2
|
|
|
Qtr 1
|
|
|
Qtr 4
|
|
|
Qtr 3
|
|
|
Qtr 2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net claims paid: (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
|
$
|
30,936
|
|
|
$
|
37,142
|
|
|
|
$
|
37,191
|
|
|
|
$
|
47,541
|
|
|
$
|
45,562
|
|
Alt-A and A minus and below
|
|
|
|
17,156
|
|
|
|
21,416
|
|
|
|
|
19,384
|
|
|
|
|
26,807
|
|
|
|
24,286
|
|
Total primary claims paid
|
|
|
|
48,092
|
|
|
|
58,558
|
|
|
|
|
56,575
|
|
|
|
|
74,348
|
|
|
|
69,848
|
|
Pool
|
|
|
|
954
|
|
|
|
1,152
|
|
|
|
|
2,458
|
|
|
|
|
2,148
|
|
|
|
1,901
|
|
Second-lien and other
|
|
|
|
157
|
|
|
|
148
|
|
|
|
|
(110
|
)
|
|
|
|
32
|
|
|
|
(1,937
|
)
|
Subtotal
|
|
|
|
49,203
|
|
|
|
59,858
|
|
|
|
|
58,923
|
|
|
|
|
76,528
|
|
|
|
69,812
|
|
Impact of captive terminations
|
|
|
|
-
|
|
|
|
(36
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
645
|
|
Impact of commutations (2)
|
|
|
|
7,331
|
|
|
|
104
|
|
|
|
|
26,590
|
|
|
|
|
54,956
|
|
|
|
20,838
|
|
Total net claims paid
|
|
|
$
|
56,534
|
|
|
$
|
59,926
|
|
|
|
$
|
85,513
|
|
|
|
$
|
131,484
|
|
|
$
|
91,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average net claims paid: (1) (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
|
$
|
50.1
|
|
|
$
|
50.0
|
|
|
|
$
|
49.7
|
|
|
|
$
|
48.4
|
|
|
$
|
48.2
|
|
Alt-A and A minus and below
|
|
|
|
65.7
|
|
|
|
63.0
|
|
|
|
|
56.5
|
|
|
|
|
56.3
|
|
|
|
51.0
|
|
Total average net primary claims paid
|
|
|
|
54.8
|
|
|
|
54.1
|
|
|
|
|
51.8
|
|
|
|
|
51.0
|
|
|
|
49.1
|
|
Pool
|
|
|
|
73.4
|
|
|
|
52.4
|
|
|
|
|
102.4
|
|
|
|
|
59.7
|
|
|
|
47.5
|
|
Total average net claims paid
|
|
|
$
|
54.1
|
|
|
$
|
53.2
|
|
|
|
$
|
52.3
|
|
|
|
$
|
51.0
|
|
|
$
|
47.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average direct primary claims paid (3) (4)
|
|
|
$
|
55.5
|
|
|
$
|
54.5
|
|
|
|
$
|
52.2
|
|
|
|
$
|
51.4
|
|
|
$
|
49.4
|
|
Average total direct claims paid (3) (4)
|
|
|
$
|
54.8
|
|
|
$
|
53.6
|
|
|
|
$
|
52.7
|
|
|
|
$
|
51.4
|
|
|
$
|
47.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Net of reinsurance recoveries.
|
(2)
|
|
Includes payments to commute mortgage insurance coverage on
certain performing and non-performing loans. For the three months
ended September 30, 2017, primarily includes payments made under
the Freddie Mac agreement, as the final settlement date was
reached during the quarter.
|
(3)
|
|
Calculated without giving effect to the impact of the
termination of captive transactions and commutations.
|
(4)
|
|
Before reinsurance recoveries.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Mortgage Insurance ("MI") Supplemental Information - Claims and
Reserves
|
Exhibit J (page 2 of 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands, except primary reserve
per primary default amounts)
|
|
|
June 30,
2018
|
|
|
March 31,
2018
|
|
|
December 31,
2017
|
|
|
September 30,
2017
|
|
|
June 30,
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MI Reserve for losses by category
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
|
$
|
255,284
|
|
|
$
|
274,595
|
|
|
$
|
285,022
|
|
|
$
|
296,885
|
|
|
$
|
318,169
|
Alt-A and A minus and below
|
|
|
|
144,379
|
|
|
|
158,612
|
|
|
|
170,873
|
|
|
|
190,081
|
|
|
|
209,760
|
IBNR and other (1)
|
|
|
|
14,246
|
|
|
|
17,164
|
|
|
|
16,021
|
|
|
|
13,085
|
|
|
|
69,620
|
LAE
|
|
|
|
12,228
|
|
|
|
13,440
|
|
|
|
13,349
|
|
|
|
14,687
|
|
|
|
15,492
|
Reinsurance recoverable (2)
|
|
|
|
9,317
|
|
|
|
8,953
|
|
|
|
8,315
|
|
|
|
7,445
|
|
|
|
7,341
|
Total primary reserves
|
|
|
|
435,454
|
|
|
|
472,764
|
|
|
|
493,580
|
|
|
|
522,183
|
|
|
|
620,382
|
Pool insurance
|
|
|
|
11,674
|
|
|
|
11,387
|
|
|
|
12,794
|
|
|
|
18,630
|
|
|
|
29,099
|
IBNR and other
|
|
|
|
172
|
|
|
|
226
|
|
|
|
278
|
|
|
|
14,576
|
|
|
|
658
|
LAE
|
|
|
|
327
|
|
|
|
319
|
|
|
|
356
|
|
|
|
550
|
|
|
|
843
|
Reinsurance recoverable (2)
|
|
|
|
24
|
|
|
|
20
|
|
|
|
35
|
|
|
|
25
|
|
|
|
30
|
Total pool reserves
|
|
|
|
12,197
|
|
|
|
11,952
|
|
|
|
13,463
|
|
|
|
33,781
|
|
|
|
30,630
|
Total 1st lien reserves
|
|
|
|
447,651
|
|
|
|
484,716
|
|
|
|
507,043
|
|
|
|
555,964
|
|
|
|
651,012
|
Second-lien and other
|
|
|
|
443
|
|
|
|
476
|
|
|
|
545
|
|
|
|
524
|
|
|
|
579
|
Total MI reserves
|
|
|
$
|
448,094
|
|
|
$
|
485,192
|
|
|
$
|
507,588
|
|
|
$
|
556,488
|
|
|
$
|
651,591
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st lien reserve per default
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary reserve per primary default excluding IBNR and other
|
|
|
$
|
19,070
|
(3)
|
|
$
|
18,523
|
(3)
|
|
$
|
17,103
|
(3)
|
|
$
|
21,367
|
|
|
$
|
23,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
At June 30, 2017, primarily related to expected payments under
the Freddie Mac Agreement. However, during the third quarter of
2017, the final settlement date under the Freddie Mac Agreement
was reached. Therefore, except for loans with loss mitigation and
claims activity already in process, most of the loans subject to
the Freddie Mac Agreement were removed from RIF and IIF, because
the insurance no longer remains in force.
|
(2)
|
|
Represents ceded losses on captive transactions and quota share
reinsurance transactions.
|
(3)
|
|
Includes the impact of reserves and defaults related to areas
designated as individual assistance disaster areas by FEMA ("FEMA
Designated Areas") associated with Hurricanes Harvey and Irma.
Excluding the impact from defaults received subsequent to
Hurricanes Harvey and Irma in these FEMA Designated Areas, this
amount would be approximately $20,656, $21,512 and $20,500 at June
30, 2018, March 31, 2018 and December 31, 2017, respectively.
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Mortgage Insurance Supplemental Information - Default Statistics
|
Exhibit K
|
|
|
|
|
June 30,
|
|
|
March 31,
|
|
|
December 31,
|
|
|
September 30,
|
|
|
June 30,
|
|
|
|
2018
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
Default Statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary Insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of insured loans
|
|
|
947,165
|
|
|
|
925,648
|
|
|
|
913,408
|
|
|
|
897,253
|
|
|
|
879,926
|
|
Number of loans in default
|
|
|
15,849
|
|
|
|
17,887
|
|
|
|
20,269
|
|
|
|
15,953
|
|
|
|
15,664
|
|
Percentage of loans in default
|
|
|
1.67
|
%
|
|
|
1.93
|
%
|
|
|
2.22
|
%
|
|
|
1.78
|
%
|
|
|
1.78
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alt-A and A minus and below
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of insured loans
|
|
|
38,892
|
|
|
|
40,661
|
|
|
|
42,318
|
|
|
|
45,555
|
|
|
|
48,953
|
|
Number of loans in default
|
|
|
6,239
|
|
|
|
6,710
|
|
|
|
7,653
|
|
|
|
7,873
|
|
|
|
8,091
|
|
Percentage of loans in default
|
|
|
16.04
|
%
|
|
|
16.50
|
%
|
|
|
18.08
|
%
|
|
|
17.28
|
%
|
|
|
16.53
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Primary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of insured loans
|
|
|
986,057
|
|
|
|
966,309
|
|
|
|
955,726
|
|
|
|
942,808
|
|
|
|
928,879
|
|
Number of loans in default (1)
|
|
|
22,088
|
|
|
|
24,597
|
|
|
|
27,922
|
|
|
|
23,826
|
|
|
|
23,755
|
|
Percentage of loans in default
|
|
|
2.24
|
%
|
|
|
2.55
|
%
|
|
|
2.92
|
%
|
|
|
2.53
|
%
|
|
|
2.56
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Included in this amount at June 30, 2018, March 31, 2018 and
December 31, 2017 are 4,132, 5,780 and 7,051 defaults,
respectively, related to the FEMA Designated Areas associated with
Hurricanes Harvey and Irma.
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Mortgage Insurance Supplemental Information - QSR Transactions,
Captives and Persistency
|
Exhibit L
|
|
|
|
|
2018
|
|
|
2017
|
($ in thousands)
|
|
|
Qtr 2
|
|
|
Qtr 1
|
|
|
Qtr 4
|
|
|
Qtr 3
|
|
|
Qtr 2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quota Share Reinsurance ("QSR") Program
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
QSR ceded premiums written (1)
|
|
|
$
|
3,516
|
|
|
|
$
|
3,931
|
|
|
|
$
|
4,219
|
|
|
|
$
|
4,621
|
|
|
|
$
|
5,059
|
|
% of premiums written
|
|
|
|
1.2
|
%
|
|
|
|
1.5
|
%
|
|
|
|
1.6
|
%
|
|
|
|
1.7
|
%
|
|
|
|
1.9
|
%
|
QSR ceded premiums earned (1)
|
|
|
$
|
5,258
|
|
|
|
$
|
5,612
|
|
|
|
$
|
6,439
|
|
|
|
$
|
6,826
|
|
|
|
$
|
7,404
|
|
% of premiums earned
|
|
|
|
2.0
|
%
|
|
|
|
2.2
|
%
|
|
|
|
2.5
|
%
|
|
|
|
2.7
|
%
|
|
|
|
3.1
|
%
|
Ceding commissions written
|
|
|
$
|
1,012
|
|
|
|
$
|
1,128
|
|
|
|
$
|
1,208
|
|
|
|
$
|
1,323
|
|
|
|
$
|
1,446
|
|
Ceding commissions earned (2)
|
|
|
$
|
2,896
|
|
|
|
$
|
3,548
|
|
|
|
$
|
2,924
|
|
|
|
$
|
2,925
|
|
|
|
$
|
3,379
|
|
Profit commission
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
RIF included in QSR Program (3)
|
|
|
$
|
1,044,463
|
|
|
|
$
|
1,135,597
|
|
|
|
$
|
1,207,426
|
|
|
|
$
|
1,298,954
|
|
|
|
$
|
1,393,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single Premium QSR Program
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
QSR ceded premiums written (1) (4)
|
|
|
$
|
28,107
|
|
|
|
$
|
15,791
|
|
|
|
$
|
157,453
|
|
|
|
$
|
13,248
|
|
|
|
$
|
13,856
|
|
% of premiums written
|
|
|
|
9.8
|
%
|
|
|
|
6.1
|
%
|
|
|
|
59.5
|
%
|
|
|
|
5.0
|
%
|
|
|
|
5.3
|
%
|
QSR ceded premiums earned (1)
|
|
|
$
|
11,160
|
|
|
|
$
|
10,377
|
|
|
|
$
|
8,342
|
|
|
|
$
|
6,771
|
|
|
|
$
|
6,311
|
|
% of premiums earned
|
|
|
|
4.2
|
%
|
|
|
|
4.0
|
%
|
|
|
|
3.2
|
%
|
|
|
|
2.7
|
%
|
|
|
|
2.6
|
%
|
Ceding commissions written
|
|
|
$
|
9,880
|
|
|
|
$
|
6,621
|
|
|
|
$
|
41,331
|
|
|
|
$
|
5,156
|
|
|
|
$
|
5,134
|
|
Ceding commissions earned (2)
|
|
|
$
|
5,643
|
|
|
|
$
|
5,268
|
|
|
|
$
|
4,053
|
|
|
|
$
|
3,536
|
|
|
|
$
|
3,248
|
|
Profit commission
|
|
|
$
|
11,414
|
|
|
|
$
|
10,693
|
|
|
|
$
|
7,870
|
|
|
|
$
|
7,373
|
|
|
|
$
|
6,682
|
|
RIF included in Single Premium QSR Program (3) (4)
|
|
|
$
|
7,614,614
|
|
|
|
$
|
7,176,662
|
|
|
|
$
|
6,941,781
|
|
|
|
$
|
4,286,529
|
|
|
|
$
|
4,103,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total RIF included in QSR Program and Single Premium QSR Program
|
|
|
$
|
8,659,077
|
|
|
|
$
|
8,312,259
|
|
|
|
$
|
8,149,207
|
|
|
|
$
|
5,585,483
|
|
|
|
$
|
5,496,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Lien Captives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned ceded to captives
|
|
|
$
|
31
|
|
|
|
$
|
35
|
|
|
|
$
|
57
|
|
|
|
$
|
68
|
|
|
|
$
|
242
|
|
% of total premiums earned
|
|
|
|
0.0
|
%
|
|
|
|
0.1
|
%
|
|
|
|
0.0
|
%
|
|
|
|
0.1
|
%
|
|
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Persistency Rate (12 months ended) (5) (6)
|
|
|
|
80.9
|
%
|
|
|
|
81.0
|
%
|
|
|
|
81.1
|
%
|
|
|
|
80.0
|
%
|
|
|
|
78.5
|
%
|
Persistency Rate (quarterly, annualized) (5) (6) (7)
|
|
|
|
82.3
|
%
|
|
|
|
84.3
|
%
|
|
|
|
79.4
|
%
|
|
|
|
80.4
|
%
|
|
|
|
82.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Net of profit commission.
|
(2)
|
|
Includes amounts reported in policy acquisition costs and other
operating expenses. Operating expenses include the following
ceding commissions, net of deferred policy acquisition costs, for
the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
($ in thousands)
|
|
|
Qtr 2
|
|
|
Qtr 1
|
|
|
Qtr 4
|
|
|
Qtr 3
|
|
|
Qtr 2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ceding commissions
|
|
|
$
|
(6,085
|
)
|
|
|
$
|
(5,812
|
)
|
|
|
$
|
(4,624
|
)
|
|
|
$
|
(4,231
|
)
|
|
|
$
|
(4,064
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
Included in primary RIF.
|
(4)
|
|
Effective December 31, 2017, we amended the 2016 Single Premium
QSR Agreement to increase the amount of ceded risk for 2015
through 2017 vintages under the agreement from 35% to 65%,
resulting in ceded premiums written of $145.7 million for the
fourth quarter of 2017 and an increase of $2.5 billion in ceded
RIF at December 31, 2017.
|
(5)
|
|
During the fourth quarter of 2017, 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.
|
(6)
|
|
During the third quarter of 2017, the final settlement date
under the Freddie Mac Agreement was reached, resulting in a
negative impact to the Persistency Rate due to the removal from
RIF and IIF of most of the loans subject to the Freddie Mac
Agreement.
|
(7)
|
|
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 report 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 economic and political conditions that impact the size of
the insurable market, the credit performance of our insured portfolio,
and our business prospects;
-
changes in the way customers, investors, ratings agencies, regulators
or legislators perceive our performance, financial strength and future
prospects;
-
Radian Guaranty's ability to remain eligible under the PMIERs and
other applicable requirements imposed by the FHFA and by the 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 to reposition our
Services segment as well as plans and strategies that require GSE
and/or regulatory approvals and licenses;
-
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, which may include
changes in the requirements to remain an approved insurer to the GSEs,
the GSEs' interpretation and application of the PMIERs, as well as
potential future changes to the PMIERs requirements which, among other
things, may be impacted by the general economic environment and
housing market, as well as the proposed Conservator Capital Framework
("CCF") that would establish capital requirements for the GSEs, if and
when the CCF is finalized;
-
changes in the current housing finance system in the U.S., including
the role of the 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 on monthly premium products;
-
competition in our mortgage insurance business, including price
competition and competition from the FHA and VA as well as from other
forms of credit enhancement;
-
the effect of the Dodd-Frank Wall Street Reform and Consumer
Protection Act on the financial services industry in general, and on
our businesses in particular;
-
legislative and regulatory activity (or inactivity), including the
adoption of (or failure to adopt) new laws and regulations, or changes
in existing laws and regulations, or the way they are interpreted or
applied, including interpretations and guidance pertaining to recently
enacted tax reform legislation;
-
legal and regulatory claims, assertions, 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 settlements, payments or
adjustments associated with federal or other tax examinations,
including, with respect to the IRS matter, our ability to obtain
approval from the U.S. Tax court for the settlement terms and the
possibility that our estimated liability may not be accurate due to,
among other things, the IRS assessing interest at an amount that is
different than our current estimated liability and potential
additional true-ups of the settlement amounts;
-
the possibility that we may fail to estimate accurately the
likelihood, magnitude and timing of losses in establishing loss
reserves for our mortgage insurance business or in assessing our
ability to comply with the proposed PMIERs when implemented, including
the accuracy of our estimates of our Available Assets and Minimum
Required Assets under the proposed PMIERs, which will be impacted by,
among other things, the size and mix of our IIF, the level of defaults
in our portfolio, and the level of cash flow generated by our
insurance operations;
-
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;
-
potential future impairment charges related to our goodwill and other
intangible assets, and uncertainties regarding our ability to execute
our restructuring plans within expected costs;
-
changes in GAAP or SAPP rules and guidance, or their interpretation;
-
our ability to attract and retain key employees; and
-
legal and other limitations on dividends and other amounts we may
receive from our subsidiaries.
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 2017 Form 10-K, and to subsequent
reports filed from time to time with the SEC. 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 report. 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: https://www.businesswire.com/news/home/20180726005186/en/
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