Radian Completes a Series of Capital Actions to Enhance Financial Flexibility, Approves New $300 Million Share Repurchase Authorization and Sets Webcast of Fourth Quarter 2022 Financial Results for February 9, 2023
Radian Group Inc. (NYSE: RDN) announced today a series of capital actions to enhance financial flexibility that were completed as of year-end 2022. As a result of the favorable impact of these actions and Radian's financial outlook, the company expects Radian Guaranty Inc., the company's flagship mortgage insurance subsidiary, to begin paying recurring ordinary dividends to Radian Group with 2023 ordinary dividends projected to be between $300 to $400 million and ordinary dividends in future years expected to approximate Radian Guaranty's ongoing statutory earnings. In addition, the Board of Directors of Radian Group has approved a new share repurchase program of $300 million over two years. Radian will hold a conference call on Thursday, February 9, 2023, to discuss these items and other highlights from the company's fourth quarter and year-end 2022 financial results.
Chief Executive Officer Rick Thornberry commented, "We are delighted to start the new year in an even stronger position, as these capital actions underscore Radian's financial strength and flexibility. This is a significant milestone for our company, as the combination of these actions along with the expectation for recurring ordinary dividends from Radian Guaranty to Radian Group better position us to deliver even greater value for all of our stakeholders."
Summary of Fourth Quarter Capital Actions
Excluding the effects of other fourth quarter financial results that will be announced in February, per the details provided below, the series of actions noted above would have had the following effects on Radian's previously reported key financial metrics:
Resumption of Recurring Ordinary Dividends from Radian Guaranty to Radian Group
Radian Guaranty has not paid an ordinary dividend to Radian Group since the start of the financial crisis in 2007, due to its negative unassigned surplus and the restrictions for doing so under Pennsylvania's insurance laws. As a result of the favorable impact of these recent capital actions to Radian Guaranty's unassigned funds balance and the expectation for continued positive financial results for Radian Guaranty, the company expects Radian Guaranty to resume paying recurring ordinary dividends to Radian Group, without the need for prior regulatory approval, beginning in the first quarter of 2023.
Based on Radian Guaranty's unassigned funds balance and current financial projections, which are subject to certain risks and uncertainties, the company expects Radian Guaranty to pay total ordinary dividends to Radian Group during 2023 of approximately $300 to $400 million. Beginning in 2024, the company expects Radian Guaranty's ordinary dividend capacity to be primarily driven by the entity's ongoing statutory earnings, consistent with the limitations under Pennsylvania insurance laws.
The ordinary dividends that the company expects to be paid from Radian Guaranty to Radian Group are in addition to amounts that Radian Guaranty is expected to pay to Radian Group for its share of holding company-level expenses through the company's long-standing expense-sharing arrangements, and the payment of recurring ordinary dividends would not prohibit the company from seeking approval from the Pennsylvania Insurance Department to pay an extraordinary dividend. Refer to Note 16 of Notes to Consolidated Financial Statements in Radian's 2021 Form 10-K for more details on ordinary dividends and other distributions under Pennsylvania insurance laws.
Authorization of New $300 Million Share Repurchase Program
The Board of Directors has approved a new share repurchase program that enables the company to repurchase its common stock. The shares may be purchased in the open market or in privately negotiated transactions. The company's previous $400 million share repurchase program was fully utilized in October 2022. Over the past four years, the company repurchased 61.7 million shares, representing approximately 29 percent of total shares outstanding of Radian Group common stock as of December 31, 2018, for a total cost of approximately $1.3 billion. During the same period, the company also paid $338 million in dividends to stockholders.
The new authorization provides Radian the flexibility to repurchase shares opportunistically from time to time and spend up to $300 million, based on market and business conditions, stock price and other factors. The authorization is effective immediately and expires on January 31, 2025. Radian plans to utilize a Rule 10b5-1 plan, which would permit the company to purchase shares, at pre-determined price targets, when it may otherwise be precluded from doing so.
Webcast of Fourth Quarter and Year-end 2022 Financial Results
Radian will hold a conference call on Thursday, February 9, 2023, at 12:00 p.m. Eastern time to discuss the company's fourth quarter and year-end 2022 results, which will be announced after the market closes on Wednesday, February 8, 2023.
The conference call will be webcast live on the Company's website at https://radian.com/who-we-are/for-investors/webcasts or at www.radian.com. The webcast is listen-only. Those interested in participating in the question-and-answer session should follow the conference call dial-in instructions below.
The call may be accessed via telephone by registering for the call here to receive the dial-in numbers and unique PIN. It is recommended that you join 10 minutes prior to the event start (although you may register and dial in at any time during the call).
A digital replay of the webcast will be available on Radian's website approximately two hours after the live broadcast ends for a period of one year at https://radian.com/who-we-are/for-investors/webcasts.
In addition to the information provided in the company's earnings news release, other statistical and financial information, which is expected to be referred to during the conference call, will be available on Radian's website at www.radian.com, under For Investors.
Radian Group Inc. (NYSE: RDN) is ensuring the American dream of homeownership responsibly and sustainably through products and services that include industry-leading mortgage insurance and a comprehensive suite of mortgage, risk, title, valuation, asset management and other real estate services. We are powered by technology, informed by data and driven to deliver new and better ways to transact and manage risk. Visit radian.com and homegenius.com to learn more about how Radian and its pioneering homegenius platform are building a smarter future for mortgage and real estate services.
All statements in this press release that address events, developments or results that we expect or anticipate may occur in the future are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Exchange Act and the U.S. Private Securities Litigation Reform Act of 1995. In most cases, forward-looking statements may be identified by words such as "anticipate," "may," "will," "could," "should," "would," "expect," "intend," "plan," "goal," "contemplate," "believe," "estimate," "predict," "project," "potential," "continue," "seek," "strategy," "future," "likely" or the negative or other variations on these words and other similar expressions. These statements, which may include, without limitation, projections regarding our future performance and financial condition, are made on the basis of management's current views and assumptions with respect to future events. Any forward-looking statement is not a guarantee of future performance and actual results could differ materially from those contained in the forward-looking statement. These statements speak only as of the date they were made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We operate in a changing environment where new risks emerge from time to time and it is not possible for us to predict all risks that may affect us. Our ability and willingness to repurchase shares under the proposed repurchase program and Radian Guaranty's ability to pay ordinary dividends, as well as our ability to sustain growth in our businesses, are subject to risks and uncertainties including, without limitation: our ability to successfully execute and implement our capital plans and to maintain sufficient holding company liquidity to meet our liquidity needs; our ability to successfully execute and implement our business plans and strategies; our ability to maintain an adequate level of capital in our insurance subsidiaries to satisfy existing and future regulatory requirements; and changes in economic, market and political conditions that, among other things, may affect our capital resources, liquidity and financial resources. For more information regarding these risks and uncertainties as well as other additional risks that we face, you should refer to the Risk Factors detailed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021, and subsequent reports filed from time to time with the U.S. Securities and Exchange Commission.
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