— GAAP net income of $181 million, or $1.01 per diluted share —
— Adjusted diluted net operating income of $1.17 per diluted share —
— Provision for losses of $(83.8) million in the first quarter of 2022 favorably impacted by positive development on prior period defaults —
— Return on equity of 17.2% and adjusted net operating return on equity of 19.9% —
— PMIERs excess Available Assets of $1.6 billion (or 44% over the Minimum Required Assets) —
–Total holding company liquidity grows to $1.3 billion —
WAYNE, Pa.–(BUSINESS WIRE)–Radian Group Inc. (NYSE: RDN) today reported net income for the quarter ended March 31, 2022, of $181.1 million, or $1.01 per diluted share. This compares with net income for the quarter ended March 31, 2021, of $125.6 million, or $0.64 per diluted share.
Key Financial Highlights (dollars in millions, except per-share amounts)
Quarter ended
March 31, 2022
December 31, 2021
March 31, 2021
Net income (1)
$181.1
$193.4
$125.6
Diluted net income per share
$1.01
$1.07
$0.64
Consolidated pretax income
$234.1
$246.5
$161.2
Adjusted pretax operating income (2)
$264.9
$245.1
$167.3
Adjusted diluted net operating income per share (2)(3)
$1.17
$1.07
$0.68
Return on equity (1)(4)
17.2 %
18.2 %
11.8 %
Adjusted net operating return on equity (2)(3)
19.9 %
18.2 %
12.4 %
New Insurance Written (NIW) – mortgage insurance
$18,655
$23,710
$20,161
Net premiums earned – mortgage insurance
$245.2
$249.7
$264.7
New defaults (5)
9,393
9,342
11,851
Provision for losses – mortgage insurance
($84.2)
($46.6)
$45.9
homegenius revenues
$33.9
$44.7
$25.8
Book value per share
$23.75
$24.28
$22.14
Accumulated other comprehensive income
(loss) value per share (6)
($0.74)
$0.68
$0.61
PMIERs Available Assets (7)
$5,102
$5,406
$4,909
PMIERs excess Available Assets (8)
$1,560
$2,077
$1,451
Total Holding Company Liquidity (9)
$1,282
$880
$1,292
Total investments
$6,335
$6,514
$6,672
Primary mortgage insurance in force
$248,951
$245,972
$238,921
Percentage of primary loans in default (10)
2.6 %
2.9 %
4.9 %
Mortgage insurance loss reserves
$722
$823
$883
(1)
Net income for the first quarter of 2022 includes a pretax net loss on investments and other financial instruments of $29.5 million, compared with a $3.0 million pretax net gain on investments and other financial instruments in the fourth quarter of 2021 and a pretax net loss on investments and other financial instruments of $5.2 million for the first quarter of 2021.
(2)
Adjusted results, including adjusted pretax operating income, adjusted diluted net operating income per share and adjusted net operating return on equity, are non-GAAP financial measures. For definitions and reconciliations of these measures to the comparable GAAP measures, see Exhibits F and G.
(3)
Calculated using the company’s statutory tax rate of 21 percent.
(4)
Calculated by dividing annualized net income by average stockholders’ equity, based on the average of the beginning and ending balances for each period presented.
(5)
Represents the number of new defaults reported during the period on loans related to primary mortgage insurance policies.
(6)
Included in book value per share for each period presented.
(7)
Represents Radian Guaranty’s Available Assets, calculated in accordance with the Private Mortgage Insurer Eligibility Requirements (PMIERs) financial requirements in effect for each date shown.
(8)
Represents Radian Guaranty’s excess or “cushion” of Available Assets over its Minimum Required Assets, calculated in accordance with the PMIERs financial requirements in effect for each date shown.
(9)
Represents Radian Group’s total liquidity, including available capacity under its unsecured revolving credit facility.
(10)
Represents the number of primary loans in default as a percentage of the total number of insured primary loans.
Adjusted pretax operating income for the quarter ended March 31, 2022, was $264.9 million, or $1.17 per diluted share. This compares with adjusted pretax operating income for the quarter ended March 31, 2021, of $167.3 million, or $0.68 per diluted share.
Book value per share at March 31, 2022, was $23.75, compared to $24.28 at December 31, 2021 and $22.14 at March 31, 2021. This represents a 7.3 percent growth in book value per share at March 31, 2022 as compared to March 31, 2021, and includes accumulated other comprehensive income (loss) of $(0.74) per share as of March 31, 2022 and $0.61 per share as of March 31, 2021, which, if excluded as of both dates, would represent 13.7 percent growth for the period. Changes in accumulated other comprehensive income (loss) for the period are primarily from net unrealized losses on investments as a result of an increase in market interest rates during the period. We do not expect to realize these losses given that we have the ability and the expectation to hold these securities to maturity.
“We had a strong start to our 45th year in business, growing net income year-over-year to $181 million, return on equity to 17.2 percent and book value per share to $23.75. Over the same period our primary mortgage insurance in force, which is the main driver of future earnings for our company, grew more than 4 percent and the total number of defaulted loans in our mortgage insurance portfolio declined by 49 percent,” said Radian’s Chief Executive Officer Rick Thornberry. “We continue to strategically manage capital by maintaining strong holding company liquidity and PMIERs cushion, repurchasing shares opportunistically and returning $116 million in dividends to stockholders over the past year.”
Thornberry continued, “We are proud of our history of ensuring affordable, sustainable and equitable homeownership for so many years and are even more excited about the promise of our future.”
FIRST QUARTER HIGHLIGHTS
NIW was $18.7 billion in the first quarter of 2022, compared to $23.7 billion in the fourth quarter of 2021, and $20.2 billion in the first quarter of 2021.
Purchase NIW decreased 21.0 percent in the first quarter of 2022 compared to the fourth quarter of 2021 and increased 43.1 percent compared to the first quarter of 2021.
Refinances accounted for 8.6 percent of total NIW in the first quarter of 2022, compared to 8.9 percent in the fourth quarter of 2021, and 40.9 percent in the first quarter of 2021.
Of the $18.7 billion in NIW in the first quarter of 2022, 94.5 percent was written with monthly and other recurring premiums, compared to 93.5 percent in the fourth quarter of 2021, and 90.2 percent in the first quarter of 2021.
Total primary mortgage insurance in force as of March 31, 2022, increased to $249.0 billion, an increase of 1.2 percent compared to $246.0 billion as of December 31, 2021, and an increase of 4.2 percent compared to $238.9 billion as of March 31, 2021. The year-over-year change reflects a 10.3 percent increase in monthly premium policy insurance in force and a 19.1 percent decline in single premium policy insurance in force.
Persistency, which is the percentage of mortgage insurance that remains in force after a twelve-month period, was 68.0 percent for the twelve months ended March 31, 2022, compared to 64.3 percent for the twelve months ended December 31, 2021, and 57.2 percent for the twelve months ended March 31, 2021.
Annualized persistency for the three months ended March 31, 2022, was 76.9 percent, compared to 71.7 percent for the three months ended December 31, 2021, and 62.5 percent for the three months ended March 31, 2021.
Net mortgage insurance premiums earned were $245.2 million for the quarter ended March 31, 2022, compared to $249.7 million for the quarter ended December 31, 2021, and $264.7 million for the quarter ended March 31, 2021.
Mortgage insurance in force portfolio premium yield was 39.6 basis points in the first quarter of 2022. This compares to 41.0 basis points in the fourth quarter of 2021, and 42.7 basis points in the first quarter of 2021.
The impact of single premium policy cancellations before consideration of reinsurance represented 2.4 basis points of direct premium yield in the first quarter of 2022, 3.4 basis points in the fourth quarter of 2021, and 6.4 basis points in the first quarter of 2021.
Total net mortgage insurance premium yield, which includes the impact of ceded premiums and accrued profit commission, was 39.6 basis points in the first quarter of 2022. This compares to 41.0 basis points in the fourth quarter of 2021, and 43.7 basis points in the first quarter of 2021.
Additional details regarding premiums earned may be found in Exhibit D.
The mortgage insurance provision for losses was a benefit of $84.2 million in the first quarter of 2022, and $46.6 million in the fourth quarter of 2021, compared to a provision of $45.9 million in the first quarter of 2021.
The decrease in the first quarter of 2022 compared to both the fourth quarter of 2021 and the first quarter of 2021 was primarily related to more favorable development on prior period reserves, as compared to the fourth quarter of 2021 and first quarter of 2021. All periods were impacted by more favorable trends in cures than originally estimated.
The number of primary delinquent loans was 25,510 as of March 31, 2022, compared to 29,061 as of December 31, 2021, and 50,106 as of March 31, 2021.
The loss ratio in the first quarter of 2022 was (34.3) percent, compared to (18.6) percent in the fourth quarter of 2021, and 17.3 percent in the first quarter of 2021.
Total mortgage insurance claims paid were $4.7 million in the first quarter of 2022, compared to $10.4 million in the fourth quarter of 2021, and $10.5 million in the first quarter of 2021. Excluding the impact of commutations and settlements, claims paid were $4.7 million in the first quarter of 2022, compared to $3.8 million in the fourth quarter of 2021, and $6.5 million in the first quarter of 2021.
Radian’s homegenius segment offers an array of title, real estate and technology products and services to consumers, mortgage lenders, mortgage and real estate investors, GSEs, real estate brokers and agents.
Total homegenius segment revenues for the first quarter of 2022 were $33.9 million, compared to $44.7 million for the fourth quarter of 2021, and $25.8 million for the first quarter of 2021.
The 31.5 percent increase in revenues for the first quarter of 2022 compared to the first quarter of 2021 was primarily driven by a 100.4 percent increase in our real estate services businesses.
homegenius Performance Metrics
Adjusted pretax operating loss, our primary segment measure of profitability for the homegenius segment, for the quarter ended March 31, 2022 was $13.5 million, compared to $2.1 million for the quarter ended December 31, 2021, and $10.5 million for the quarter ended March 31, 2021.
Adjusted pretax operating loss before allocated corporate operating expenses for the homegenius segment for the quarter ended March 31, 2022 was $8.2 million, compared to income of $2.7 million for the quarter ended December 31, 2021, and a loss of $6.5 million for the quarter ended March 31, 2021.
Adjusted gross profit for the homegenius segment for the quarter ended March 31, 2022 was $12.1 million, compared to $19.7 million for the quarter ended December 31, 2021, and $8.5 million for the quarter ended March 31, 2021.
Additional details regarding these and other related non-GAAP measures may be found in Exhibits F and G.
Other operating expenses were $89.5 million in the first quarter of 2022, compared to $80.5 million in the fourth quarter of 2021, and $70.3 million in the first quarter of 2021.
The increase for the first quarter of 2022 compared to the first quarter of 2021 was driven primarily by an increase in variable incentive compensation expense and a decrease in ceding commissions. Additional details regarding other operating expenses by segment may be found in Exhibit E.
CAPITAL AND LIQUIDITY UPDATE
Radian Group
As of March 31, 2022, Radian Group maintained $1.0 billion of available liquidity. Total liquidity, which includes the company’s $275.0 million unsecured revolving credit facility, was $1.3 billion as of March 31, 2022.
During the first quarter of 2022, the company repurchased 0.9 million shares of Radian Group common stock at a total cost of $21.3 million, including commissions.
In addition, in April 2022 the Company purchased an additional 1.8 million shares, or approximately $39.3 million of Radian Group common stock, including commissions. After the repurchases in April, purchase authority of up to approximately $339.4 million remained available under the existing program.
On February 9, 2022, Radian Group’s board of directors authorized a regular quarterly dividend on its common stock in the amount of $0.20 per share and the dividend was paid on March 3, 2022.
Radian Guaranty
At March 31, 2022, Radian Guaranty’s Available Assets under PMIERs totaled approximately $5.1 billion, resulting in excess available resources or a “cushion” of $1.6 billion, or 44 percent, over its Minimum Required Assets.
As of March 31, 2022, 67 percent of Radian Guaranty’s primary mortgage insurance risk in force is subject to some form of risk distribution, providing a $1.2 billion reduction of Minimum Required Assets under PMIERs.
CONFERENCE CALL
Radian will discuss first quarter 2022 financial results in a conference call tomorrow, Wednesday, May 4, 2022, at 10:00 a.m. Eastern time. The conference call will be broadcast live over the Internet at https://radian.com/who-we-are/for-investors/webcasts or at www.radian.com. The call may also be accessed by dialing 877.742.9092 inside the U.S., or 270.833.1298 for international callers, using passcode 7364078 by referencing Radian.
A digital replay of the webcast will be available on the Radian website approximately two hours after the live broadcast ends for a period of two weeks at https://radian.com/who-we-are/for-investors/webcasts using passcode 7364078.
In addition to the information provided in the company’s earnings news release, other statistical and financial information, which is expected to be referred to during the conference call, will be available on Radian’s website at www.radian.com, under Investors.
NON-GAAP FINANCIAL MEASURES
Radian believes that adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity (non-GAAP measures) facilitate evaluation of the company’s fundamental financial performance and provide relevant and meaningful information to investors about the ongoing operating results of the company. On a consolidated basis, these measures are not recognized in accordance with accounting principles generally accepted in the United States of America (GAAP) and should not be considered in isolation or viewed as substitutes for GAAP measures of performance. The measures described below have been established in order to increase transparency for the purpose of evaluating the company’s operating trends and enabling more meaningful comparisons with Radian’s competitors.
Adjusted pretax operating income (loss) is defined as GAAP consolidated pretax income (loss) excluding the effects of: (i) net gains (losses) on investments and other financial instruments, except for certain investments attributable to our reportable segments; (ii) loss on extinguishment of debt; (iii) amortization and impairment of goodwill and other acquired intangible assets; and (iv) impairment of other long-lived assets and other non-operating items, such as impairment of internal-use software, gains (losses) from the sale of lines of business and acquisition-related income and expenses. Adjusted diluted net operating income (loss) per share is calculated by dividing (i) adjusted pretax operating income (loss) attributable to common stockholders, net of taxes computed using the Company’s statutory tax rate, by (ii) the sum of the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. Adjusted net operating return on equity is calculated by dividing annualized adjusted pretax operating income (loss), net of taxes computed using the Company’s statutory tax rate, by average stockholders’ equity, based on the average of the beginning and ending balances for each period presented.
In addition to the above non-GAAP measures for the consolidated company, we also have presented as supplemental information non-GAAP measures for our homegenius segment of adjusted pretax operating income (loss) before allocated corporate operating expenses and adjusted gross profit. Adjusted pretax operating income (loss) before allocated corporate operating expenses is calculated as adjusted pretax operating income (loss) as described above (which is the segment’s ASC 280 GAAP measure of operating performance), adjusted to remove the impact of corporate allocations of other operating expenses for the homegenius segment. Adjusted gross profit is further adjusted to remove other operating expenses. In addition, homegenius adjusted pretax operating margin before allocated corporate operating expenses and adjusted gross profit margin are calculated by dividing homegenius adjusted pretax operating margin before allocated corporate operating expenses and adjusted gross profit, respectively, by GAAP total revenue for the homegenius segment. For the homegenius segment, adjusted pretax operating income (loss) before allocated corporate operating expenses, adjusted gross profit, and the related profit margins are used to facilitate comparisons with other services companies, since they are widely accepted measures of performance in the services industry and are used internally as supplemental measures to evaluate the performance of our homegenius segment.
See Exhibit F or Radian’s website for a description of these items, as well as Exhibit G for reconciliations to the most comparable consolidated GAAP measures.
ABOUT RADIAN
Radian Group Inc. (NYSE: RDN) is ensuring the American dream of homeownership responsibly and sustainably through products and services that include industry-leading mortgage insurance and a comprehensive suite of mortgage, risk, title, real estate and technology products and services. We are powered by technology, informed by data and driven to deliver new and better ways to transact and manage risk. Visit www.radian.com to learn more about how Radian is shaping the future of mortgage and real estate services.
FINANCIAL RESULTS AND SUPPLEMENTAL INFORMATION CONTENTS (Unaudited)
Exhibit A:
Condensed Consolidated Statements of Operations Trend Schedule
Exhibit B:
Net Income Per Share Trend Schedule
Exhibit C:
Condensed Consolidated Balance Sheets
Exhibit D:
Net Premiums Earned
Exhibit E:
Segment Information
Exhibit F:
Definition of Consolidated Non-GAAP Financial Measures
Exhibit G:
Consolidated Non-GAAP Financial Measure Reconciliations
Exhibit H:
Mortgage Supplemental Information
New Insurance Written
Exhibit I:
Mortgage Supplemental Information
Primary Insurance in Force and Risk in Force
Exhibit J:
Mortgage Supplemental Information
Claims and Reserves, Default Statistics
Exhibit K:
Mortgage Supplemental Information
Reinsurance Programs
Radian Group Inc. and Subsidiaries
Condensed Consolidated Statements of Operations Trend Schedule
Exhibit A
2022
2021
(In thousands, except per-share amounts)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Revenues:
Net premiums earned
$
254,190
$
261,437
$
249,118
$
254,756
$
271,872
Services revenue
29,348
35,693
37,773
29,464
22,895
Net investment income
38,196
37,407
35,960
36,291
38,251
Net gains (losses) on investments and other financial instruments
(29,457
)
3,025
2,098
15,661
(5,181
)
Other income
703
805
809
822
976
Total revenues
292,980
338,367
325,758
336,994
328,813
Expenses:
Provision for losses
(83,754
)
(46,219
)
17,305
3,648
46,143
Policy acquisition costs
6,605
7,271
7,924
4,838
8,996
Cost of services
24,753
28,333
30,520
24,615
20,246
Other operating expenses
89,541
80,476
86,479
86,469
70,262
Interest expense
20,846
21,137
21,027
21,065
21,115
Amortization of other acquired intangible assets
849
863
862
863
862
Total expenses
58,840
91,861
164,117
141,498
167,624
Pretax income
234,140
246,506
161,641
195,496
161,189
Income tax provision
53,009
53,061
35,229
40,290
35,581
Net income
$
181,131
$
193,445
$
126,412
$
155,206
$
125,608
Diluted net income per share
$
1.01
$
1.07
$
0.67
$
0.80
$
0.64
Selected Mortgage Key Ratios
2022
2021
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Loss ratio (1)
(34.3)%
(18.6)%
7.1 %
1.3 %
17.3 %
Expense ratio (2)
27.2 %
25.6 %
28.6 %
25.4 %
21.9 %
(1)
Calculated as provision for losses on a GAAP basis expressed as a percentage of net premiums earned.
(2)
Calculated as operating expenses (which include policy acquisition costs and other operating expenses, as well as allocated corporate operating expenses) on a GAAP basis expressed as a percentage of net premiums earned.
Radian Group Inc. and Subsidiaries
Net Income Per Share Trend Schedule
Exhibit B
The calculation of basic and diluted net income per share was as follows:
2022
2021
(In thousands, except per-share amounts)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Net income —basic and diluted
$
181,131
$
193,445
$
126,412
$
155,206
$
125,608
Average common shares outstanding—basic
176,816
179,500
186,741
193,436
193,439
Dilutive effect of stock-based compensation arrangements (1)
2,263
1,628
1,301
1,202
1,764
Adjusted average common shares outstanding—diluted
179,079
181,128
188,042
194,638
195,203
Basic net income per share
$
1.02
$
1.08
$
0.68
$
0.80
$
0.65
Diluted net income per share
$
1.01
$
1.07
$
0.67
$
0.80
$
0.64
(1)
The following number of shares of our common stock equivalents issued under our share-based compensation arrangements were not included in the calculation of diluted net income (loss) per share because they were anti-dilutive:
2022
2021
(In thousands)
Qtr 1
Qtr 4
Qtr 3
Qtr 2
Qtr 1
Shares of common stock equivalents
—
35
—
—
—
Radian Group Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
Exhibit C
March 31,
December 31,
September 30,
June 30,
March 31,
(In thousands, except per-share amounts)
2022
2021
2021
2021
2021
Assets:
Investments
$
6,334,950
$
6,513,542
$
6,658,487
$
6,681,659
$
6,671,874
Cash
131,853
151,145
154,709
134,939
102,776
Restricted cash
1,651
1,475
1,866
2,968
20,987
Accrued investment income
35,531
32,812
33,258
32,223
34,841
Accounts and notes receivable
142,579
124,016
166,730
153,128
134,075
Reinsurance recoverables
55,015
67,896
76,048
75,411
76,664
Deferred policy acquisition costs
16,383
16,317
16,823
17,873
15,652
Property and equipment, net
75,275
75,086
74,170
74,288
78,309
Goodwill and other acquired intangible assets, net
18,744
19,593
20,456
21,318
22,181
Other assets
803,765
837,303
839,061
815,261
763,502
Total assets
$
7,615,746
$
7,839,185
$
8,041,608
$
8,009,068
$
7,920,861
Liabilities and stockholders’ equity:
Unearned premiums
$
312,013
$
329,090
$
348,322
$
373,031
$
406,689
Reserve for losses and loss adjustment expense
727,247
828,642
893,155
885,498
887,355
Senior notes
1,410,458
1,409,473
1,408,502
1,407,545
1,406,603
FHLB advances
148,983
150,983
172,649
153,983
138,833
Reinsurance funds withheld
225,363
228,078
290,502
285,406
282,345
Net deferred tax liability
324,004
337,509
286,957
266,330
210,571
Other liabilities
320,114
296,614
383,585
303,442
353,173
Total liabilities
3,468,182
3,580,389
3,783,672
3,675,235
3,685,569
Common stock
193
194
200
207
210
Treasury stock
(920,958
)
(920,798
)
(920,355
)
(920,225
)
(910,347
)
Additional paid-in capital
1,871,763
1,878,372
2,012,870
2,161,857
2,242,950
Retained earnings
3,326,119
3,180,935
3,012,997
2,913,138
2,785,744
Accumulated other comprehensive income (loss)
(129,553
)
120,093
152,224
178,856
116,735
Total stockholders’ equity
4,147,564
4,258,796
4,257,936
4,333,833
4,235,292
Total liabilities and stockholders’ equity
$
7,615,746
$
7,839,185
$
8,041,608
$
8,009,068
$
7,920,861
Shares outstanding
174,648
175,421
181,336
188,290
191,311
Book value per share
$
23.75
$
24.28
$
23.48
$
23.02
$
22.14
Contacts
For Investors:
John Damian – Phone: 215.231.1383
email: john.damian@radian.com
For Media:
Rashi Iyer – Phone 215.231.1167
email: rashi.iyer@radian.com
