UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
Date
of report (Date of earliest event reported) January
28, 2016
Radian Group Inc.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware
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1-11356
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23-2691170
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(State or Other Jurisdiction of Incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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1601
Market Street, Philadelphia, Pennsylvania
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19103
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(215) 231 - 1000
(Registrant’s
Telephone Number, Including Area Code)
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction
A.2. below):
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On January 28, 2016, Radian Group Inc. issued a news release announcing
its financial results for the quarter ended December 31, 2015 and the
full year 2015. A copy of this news release is furnished as Exhibit 99.1
to this report.
The information included in, or furnished with, this report shall not be
deemed "filed" for purposes of Section 18 of the Securities Exchange Act
of 1934 (the "Exchange Act"), nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933 or the Exchange
Act, except as shall be expressly set forth by specific reference in
such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
99.1* Radian Group Inc. News Release dated January 28,
2016.
_____________________
* Furnished herewith.
SIGNATURES
Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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RADIAN GROUP INC.
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(Registrant)
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Date:
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January 28, 2016
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By:
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/s/ J. Franklin Hall
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J. Franklin Hall
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Chief Financial Officer
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EXHIBIT INDEX
Exhibit
No.
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Description
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99.1*
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Radian Group Inc. News Release dated January 28, 2016.
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* Furnished herewith.
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Exhibit 99.1
Radian
Announces Fourth Quarter and Full Year 2015 Financial Results
- Full
year 2015 net income of $287 million or $1.22 per diluted share –
- Full
year 2015 adjusted pretax operating income of $511 million or $1.40 per
diluted share –
- Book
value per share increases 10% year-over-year to $12.07 –
PHILADELPHIA--(BUSINESS WIRE)--January 28, 2016--Radian Group Inc.
(NYSE: RDN) today reported net income for the quarter ended December 31,
2015, of $74.5 million, or $0.32 per diluted share. Net income for the
full year 2015 was $286.9 million, or $1.22 per diluted share. GAAP net
income for 2015 and 2014 are not directly comparable due to the
significant impact in 2014 of the sale of Radian Asset Assurance Inc.,
Radian’s former financial guaranty subsidiary, and the reversal of the
company’s deferred tax asset (DTA) valuation allowance.
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Key Financial Highlights (dollars in millions, except
per share data)
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Quarter Ended
December 31, 2015
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Quarter Ended
December 31, 2014
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Percent
Change
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Net income from continuing operations
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$74.5
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$878.0
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(92%)
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Diluted net income per share from continuing operations
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$0.32
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$3.63
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(91%)
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Adjusted pretax operating income
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$124.1
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$58.4
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113%
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Adjusted diluted net operating income per share *
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$0.34
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$0.17
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100%
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Revenues
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$274.9
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$295.1
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(7%)
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Net premiums earned - insurance
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$226.4
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$224.3
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1%
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Income (loss) on discontinued operations, net of tax
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--
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($449.7)
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--
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Income tax benefit resulting from reversal of DTA valuation allowance
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--
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$815.6
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--
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Year Ended
December 31, 2015
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Year Ended
December 31, 2014
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Percent
Change
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Net income from continuing operations
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$281.5
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$1,259.6
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(78%)
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Diluted net income per share from continuing operations
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$1.20
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$5.44
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(78%)
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Adjusted pretax operating income
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$510.9
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$342.4
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49%
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Adjusted diluted net operating income per share *
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$1.40
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$1.01
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39%
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Revenues
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$1,193.3
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$1,072.7
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11%
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Net premiums earned - insurance
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$915.9
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$844.5
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8%
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Income (loss) on discontinued operations, net of tax
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$5.4
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($300.1)
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--
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Income tax benefit resulting from reversal of DTA valuation allowance
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--
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$995.0
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--
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Book value per share
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$12.07
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$10.98
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10%
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* Adjusted diluted net operating income per share is
calculated using the company’s statutory tax rate.
Adjusted pretax operating income for the quarter ended December 31,
2015, was $124.1 million, compared to $58.4 million for the same period
of 2014. Adjusted diluted net operating income per share for the quarter
ended December 31, 2015, was $0.34, compared to $0.17 for the same
period of 2014. Adjusted pretax operating income for the year ended
December 31, 2015, was $510.9 million, compared to $342.4 million for
the same period of 2014. Adjusted diluted net operating income per share
for the twelve months ended December 31, 2015, was $1.40, compared to
$1.01 for the same period of 2014. See “Non-GAAP Financial Measures”
below.
Book value per share at December 31, 2015, was $12.07, compared to
$11.77 at September 30, 2015, and $10.98 at December 31, 2014.
“Radian’s fourth quarter was a strong finish to an equally strong
full-year 2015,” said Radian’s Chief Executive Officer S.A. Ibrahim. “We
successfully grew adjusted pretax operating income by 49%
year-over-year, wrote an amount of high-quality and profitable flow MI
business that was among the highest in our company history, and improved
the credit profile of our MI portfolio. I am pleased to say that we
strongly believe Radian is better positioned today than ever before to
drive long-term stockholder value.”
FOURTH QUARTER AND FULL YEAR HIGHLIGHTS
Mortgage Insurance
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New mortgage insurance written (NIW) was $41.4 billion for the full
year 2015, compared to $37.3 billion for the prior-year period. NIW
was $9.1 billion for the quarter, compared to $11.2 billion in the
third quarter of 2015 and $10.0 billion in the prior-year quarter.
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Of the $9.1 billion in new business written in the fourth quarter
of 2015, 29 percent was written with single premiums, compared to
27 percent in the third quarter of 2015.
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Refinances accounted for 17 percent of total NIW in the fourth
quarter of 2015, compared to 13 percent in the third quarter of
2015, and 22 percent a year ago.
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NIW continued to consist of loans with excellent risk
characteristics.
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Total primary mortgage insurance in force as of December 31, 2015,
grew to $175.6 billion, compared to $174.9 billion as of September 30,
2015, and $171.8 billion as of December 31, 2014.
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Persistency, which is the percentage of mortgage insurance in
force that remains on the company’s books after a twelve-month
period, was 78.8 percent as of December 31, 2015, compared to 79.2
percent as of September 30, 2015, and 84.2 percent as of December
31, 2014.
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Annualized persistency for the three-months ended December 31,
2015, was 81.8 percent, compared to 80.5 percent for the
three-months ended September 30, 2015, and 83.3 percent for the
three-months ended December 31, 2014.
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Total net premiums earned were $226.4 million for the quarter ended
December 31, 2015, compared to $227.4 million for the quarter ended
September 30, 2015, and $224.3 million for the quarter ended December
31, 2014.
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The mortgage insurance provision for losses was $56.8 million in the
fourth quarter of 2015, compared to $64.1 million in the third quarter
of 2015, and $83.6 million in the prior-year period.
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The provision for losses in the fourth quarter included the
positive impact of a reduction in the company’s default to claim
rate assumption for new notices of default.
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The loss ratio in the fourth quarter was 25.1 percent, compared to
28.2 percent in the third quarter of 2015 and 36.9 percent in the
fourth quarter of 2014.
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Mortgage insurance loss reserves were $976.4 million as of
December 31, 2015, compared to $1,098.6 million as of September
30, 2015, and $1,560.0 million as of December 31, 2014.
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Primary reserve per primary default (excluding IBNR and other
reserves) was $24,019 as of December 31, 2015. This compares to
primary reserve per primary default of $26,237 as of September 30,
2015, and $27,683 as of December 31, 2014. In addition to the
reduction in the company's default to claim rate assumption, the
decrease in the primary reserve per primary default was the result
of a change in the mix of defaults from aged defaults to less aged
defaults, which require a comparatively smaller reserve.
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The total number of primary delinquent loans decreased by 2 percent in
the fourth quarter from the third quarter of 2015, and by 22 percent
from the fourth quarter of 2014. The primary mortgage insurance
delinquency rate decreased to 4.0 percent in the fourth quarter of
2015, compared to 4.1 percent in the third quarter of 2015, and 5.2
percent in the fourth quarter of 2014.
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Total mortgage insurance claims paid were $176.5 million in the fourth
quarter, compared to $169.1 million in the third quarter, and $117.2
million in the fourth quarter of 2014. For the full-year 2015, total
claims paid were $764.7 million, compared to $838.3 million for the
full-year 2014. Claims paid in 2015 included claims related to the
September 2014 BofA Settlement Agreement. The company continues to
expect claims paid for the full-year 2016 of approximately $400–450
million.
Mortgage and Real Estate Services
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On June 30, 2014, Radian completed the acquisition of Clayton Holdings
LLC, a leading provider of risk-based analytics, residential loan due
diligence, consulting, surveillance and staffing solutions. The
company also provides
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customized Real Estate Owned (REO) asset management and
single-family rental services through its Green River Capital
subsidiary;
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advanced Automated Valuation Models, Broker Price Opinions and
technology solutions to monitor loan portfolio performance,
acquire and track non-performing loans, and value and sell
residential real estate through its Red Bell Real Estate
subsidiary;
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valuation, title closing and settlement services as well as
technology solutions for vendor management through its ValuAmerica
subsidiary; and
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a global reach through its Clayton EuroRisk subsidiary.
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Total revenues were $157.4 million for the full year 2015, its first
full year of operations as a subsidiary of Radian. Total revenues for
the fourth quarter were $38.2 million, compared to $43.1 million for
the third quarter of 2015, and $35.4 million for the fourth quarter of
2014.
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Adjusted pretax operating income before corporate allocations for the
quarter ended December 31, 2015, was $3.6 million, compared to $5.7
million for the quarter ended September 30, 2015, and $7.3 million for
the quarter ended December 31, 2014. Earnings before interest, income
taxes, depreciation and amortization (EBITDA) for the quarter ended
December 31, 2015 was $4.2 million, compared to $6.3 million for the
quarter ended September 30, 2015, and $7.7 million for the quarter
ended December 31, 2014. You may find details regarding these non-GAAP
measures and their definition in Exhibits E, F and G.
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In October 2015, Clayton announced that it had acquired ValuAmerica,
Inc., a national title agency and appraisal management company with
coverage across all 3,143 counties in the U.S. In addition, the
company's award-winning technology platform, ValuNet xsp, helps
mortgage lenders and their vendors streamline and manage their supply
chains and operational workflow. The acquisition expands the scope of
title and valuation services Clayton offers to its mortgage clients
and is consistent with the company’s strategy of being a complete
solution provider to the mortgage and real estate industries.
Consolidated Expenses
Other operating expenses were $59.6 million in the fourth quarter,
compared to $65.1 million in the third quarter of 2015, and $85.8
million in the fourth quarter of last year.
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Operating expenses for the fourth quarter of 2015 were comprised of
$46.7 million for the Mortgage Insurance segment, compared to $51.5
million in the third quarter of 2015, and $76.3 million in the fourth
quarter of last year.
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Operating expenses for the fourth quarter of 2015 were comprised of
$12.7 million for the Services segment, compared to $13.1 million in
the third quarter of 2015, and $9.1 million in the fourth quarter of
last year.
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In the fourth quarter of 2014, other operating expenses of $85.8
million included $24.4 million related to long-term compensation
expenses and other year-end bonus accruals, a significant portion of
which was driven by the variable compensation expense related to an
increase in the company’s stock price.
CAPITAL AND LIQUIDITY UPDATE
Radian Group has approximately $340 million of currently available
liquidity.
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As previously announced, Radian Guaranty met the Private Mortgage
Insurer Eligibility Requirements (PMIERs) as of the December 31, 2015,
effective date by taking the following actions:
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Radian Group transferred $325 million of cash and marketable
securities to Radian Guaranty in exchange for a surplus note
issued by Radian Guaranty. The surplus note has a 0 percent
interest rate and is scheduled to mature on December 31, 2025.
Based on positive trends reflected in its capital projections,
Radian Guaranty expects to seek to redeem a portion and possibly
all of the surplus note in 2016, and any remaining amounts in
2017. Any redemption of the surplus note increases holding company
liquidity by the corresponding amount of the redemption.
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Radian Group contributed $50 million to an exclusive affiliated
reinsurer of Radian Guaranty. The combination of the surplus note
and capital contribution provides Radian Guaranty with an initial
cushion above the projected amount required to satisfy the PMIERs’
financial requirements. This cushion is expected to increase based
in part on expected future financial performance at Radian
Guaranty; as a result, Radian Guaranty is not expected to require
any additional capital contributions in order to remain compliant.
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In order to reduce the company’s required capital under PMIERs,
Radian Guaranty is pursuing a reinsurance transaction that is
intended to reduce the exposure on its single premium policies.
The company has made substantial progress toward a potential
transaction and may enter into such a program as early as the
first quarter of 2016.
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As of December 31, 2015, a total of $2.1 billion of risk in force
outstanding had been ceded under quota share reinsurance agreements in
order to proactively manage Radian Guaranty’s risk-to-capital
position. Radian has ceded the maximum amount of NIW under these
agreements and did not cede any premium on new business in 2015. On
December 31, 2015, Radian Guaranty had the option to recapture a
portion of the risk ceded under its existing Second Quota Share
Reinsurance Transaction. The company chose not to recapture that risk
and received a profit commission of approximately $8 million in 2015
based on performance to date. In addition, Radian Guaranty received an
$8.5 million prepaid supplemental ceding commission, the recognition
of which has been deferred and will be amortized over approximately
the next five years.
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As previously announced on January 15, 2016, Radian’s Board of
Directors approved a share repurchase program that authorizes the
company to purchase up to $100 million of its common stock through the
end of 2016. The shares may be purchased in the open market or in
privately negotiated transactions. The authorization provides Radian
the flexibility to repurchase shares opportunistically from time to
time, based on market and business conditions, stock price and other
factors. Radian may 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.
CONFERENCE CALL
Radian will discuss fourth quarter and year-end 2015 results in a
conference call today, Thursday, January 28, 2016, 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
800.288.8961 inside the U.S., or 612.332.0226 for international callers,
using passcode 383877 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 383877.
In addition to the information provided in the company's earnings news
release, other statistical and financial information, which is expected
to be referred to during the conference call, will be available on
Radian's website under Investors >Quarterly Results, or by clicking on http://www.radian.biz/page?name=QuarterlyResults.
NON-GAAP FINANCIAL MEASURES
Radian believes that adjusted pretax operating income and adjusted
diluted net operating income per share (non-GAAP measures) facilitate
evaluation of the company’s fundamental financial performance and
provide relevant and meaningful information to investors about the
ongoing operating results of the company. On a consolidated basis, these
measures are not recognized in accordance with accounting principles
generally accepted in the United States of America (GAAP) and should not
be viewed as alternatives to GAAP measures of performance. The measures
described below have been established in order to increase transparency
for the purpose of evaluating the company’s core 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) from continuing operations. Adjusted pretax operating
income adjusts GAAP pretax income from continuing operations to remove
the effects of: (i) net gains (losses) on investments and other
financial instruments; (ii) loss on induced conversion and debt
extinguishment; (iii) acquisition-related expenses; (iv) amortization
and impairment of intangible assets; and (v) net impairment losses
recognized in earnings. Adjusted diluted net operating income per share
represents a diluted net income per share calculation using as its basis
adjusted pretax operating income, net of taxes at the company’s
statutory tax rate for the period.
In addition to the above non-GAAP measures for the consolidated company,
the company also presents as supplemental information a non-GAAP measure
for the Services segment, representing earnings before interest, income
taxes, depreciation and amortization (EBITDA). Services EBITDA is
calculated 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. Services EBITDA is
presented to facilitate comparisons with other services companies, since
it is a widely accepted measure of performance in the services industry.
See Exhibit F or Radian’s website for a description of these items, as
well as Exhibit G for reconciliations to the most comparable
consolidated GAAP measures.
ABOUT RADIAN
Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia, provides
private mortgage insurance, risk management products and real estate
services to financial institutions. Radian offers products and services
through two business segments:
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Mortgage Insurance, through its principal mortgage insurance
subsidiary Radian Guaranty Inc. This private mortgage insurance
protects 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 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.
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FINANCIAL RESULTS AND SUPPLEMENTAL INFORMATION CONTENTS
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(Unaudited)
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For trend information on all schedules, refer to Radian’s quarterly
financial statistics at http://www.radian.biz/page?name=FinancialReportsCorporate.
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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 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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Discontinued Operations
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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 Measure
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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
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New Insurance Written
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Exhibit I:
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Mortgage Insurance Supplemental Information
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Primary Insurance in Force and Risk in Force by Product, Statutory
Capital Ratios
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Exhibit J:
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Mortgage Insurance Supplemental Information
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Percentage of Primary Risk in Force by FICO, LTV and Policy Year
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Exhibit K:
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Mortgage Insurance Supplemental Information
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Claims and Reserves
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Exhibit L:
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Mortgage Insurance Supplemental Information
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Default Statistics
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Exhibit M:
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Mortgage Insurance Supplemental Information
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Captives, QSR and Persistency
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Radian Group Inc. and Subsidiaries
Condensed Consolidated Statements of Operations Trend Schedule
Exhibit A (page 1 of 2)
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2015
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2014
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(In thousands, except per share amounts)
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Qtr 4
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Qtr 3
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Qtr 2
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Qtr 1
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Qtr 4
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Revenues:
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Net premiums earned - insurance
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$
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226,443
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$
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227,433
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$
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237,437
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$
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224,595
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$
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224,293
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Services revenue
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37,493
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42,189
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43,503
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30,630
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34,450
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Net investment income
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22,833
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22,091
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19,285
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17,328
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16,531
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Net (losses) gains on investments and other financial instruments
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(13,402
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)
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3,868
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28,448
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16,779
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17,983
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Other income
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1,515
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1,711
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1,743
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|
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1,331
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|
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1,793
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Total revenues
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274,882
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297,292
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330,416
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290,663
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|
|
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295,050
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Expenses:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for losses
|
|
|
|
56,805
|
|
|
|
|
64,192
|
|
|
|
|
32,560
|
|
|
|
|
45,028
|
|
|
|
|
82,867
|
|
Policy acquisition costs
|
|
|
|
4,831
|
|
|
|
|
2,880
|
|
|
|
|
6,963
|
|
|
|
|
7,750
|
|
|
|
|
6,443
|
|
Direct cost of services
|
|
|
|
22,241
|
|
|
|
|
24,949
|
|
|
|
|
23,520
|
|
|
|
|
19,253
|
|
|
|
|
19,709
|
|
Other operating expenses
|
|
|
|
59,570
|
|
|
|
|
65,082
|
|
|
|
|
67,731
|
|
|
|
|
53,774
|
|
|
|
|
85,800
|
|
Interest expense
|
|
|
|
20,996
|
|
|
|
|
21,220
|
|
|
|
|
24,501
|
|
|
|
|
24,385
|
|
|
|
|
24,200
|
|
Loss on induced conversion and debt extinguishment
|
|
|
|
2,320
|
|
|
|
|
11
|
|
|
|
|
91,876
|
|
|
|
|
—
|
|
|
|
|
—
|
|
Amortization and impairment of intangible assets
|
|
|
|
3,409
|
|
|
|
|
3,273
|
|
|
|
|
3,281
|
|
|
|
|
3,023
|
|
|
|
|
5,354
|
|
Total expenses
|
|
|
|
170,172
|
|
|
|
|
181,607
|
|
|
|
|
250,432
|
|
|
|
|
153,213
|
|
|
|
|
224,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax income from continuing operations
|
|
|
|
104,710
|
|
|
|
|
115,685
|
|
|
|
|
79,984
|
|
|
|
|
137,450
|
|
|
|
|
70,677
|
|
Income tax provision (benefit)
|
|
|
|
30,182
|
|
|
|
|
45,594
|
|
|
|
|
34,791
|
|
|
|
|
45,723
|
|
|
|
|
(807,349
|
)
|
Net income from continuing operations
|
|
|
|
74,528
|
|
|
|
|
70,091
|
|
|
|
|
45,193
|
|
|
|
|
91,727
|
|
|
|
|
878,026
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
4,855
|
|
|
|
|
530
|
|
|
|
|
(449,691
|
)
|
Net income
|
|
|
$
|
74,528
|
|
|
|
$
|
70,091
|
|
|
|
$
|
50,048
|
|
|
|
$
|
92,257
|
|
|
|
$
|
428,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations
|
|
|
$
|
0.32
|
|
|
|
$
|
0.29
|
|
|
|
$
|
0.20
|
|
|
|
$
|
0.39
|
|
|
|
$
|
3.63
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0.02
|
|
|
|
|
—
|
|
|
|
|
(1.85
|
)
|
Net income
|
|
|
$
|
0.32
|
|
|
|
$
|
0.29
|
|
|
|
$
|
0.22
|
|
|
|
$
|
0.39
|
|
|
|
$
|
1.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Mortgage Insurance Key Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio (1)
|
|
|
|
25.1
|
%
|
|
|
|
28.2
|
%
|
|
|
|
13.3
|
%
|
|
|
|
20.4
|
%
|
|
|
|
36.9
|
%
|
Expense ratio - NPE basis (1)
|
|
|
|
22.7
|
%
|
|
|
|
23.9
|
%
|
|
|
|
25.8
|
%
|
|
|
|
23.0
|
%
|
|
|
|
36.9
|
%
|
Expense ratio - NPW basis (2)
|
|
|
|
22.1
|
%
|
|
|
|
22.5
|
%
|
|
|
|
24.4
|
%
|
|
|
|
21.3
|
%
|
|
|
|
33.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Calculated on a GAAP basis using net premiums earned (“NPE”).
|
(2)
|
|
Calculated on a GAAP basis using net premiums written (“NPW”).
|
|
|
|
On April 1, 2015, Radian Guaranty completed the previously disclosed
sale of 100% of the issued and outstanding shares of Radian Asset
Assurance to Assured, pursuant to the Radian Asset Assurance Stock
Purchase Agreement dated as of December 22, 2014. As a result, the
operating results of Radian Asset Assurance are classified as
discontinued operations for all periods presented in our condensed
consolidated statements of operations. See Exhibit D for additional
information on discontinued operations.
|
Radian Group Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Exhibit A (page 2 of 2)
|
|
|
|
|
Year Ended December 31,
|
(In thousands, except per-share data)
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
Net premiums earned - insurance
|
|
|
$
|
915,908
|
|
|
|
$
|
844,528
|
|
Services revenue
|
|
|
|
153,815
|
|
|
|
|
76,693
|
|
Net investment income
|
|
|
|
81,537
|
|
|
|
|
65,655
|
|
Net gains on investments and other financial instruments
|
|
|
|
35,693
|
|
|
|
|
79,989
|
|
Other income
|
|
|
|
6,300
|
|
|
|
|
5,820
|
|
Total revenues
|
|
|
|
1,193,253
|
|
|
|
|
1,072,685
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
Provision for losses
|
|
|
|
198,585
|
|
|
|
|
246,083
|
|
Policy acquisition costs
|
|
|
|
22,424
|
|
|
|
|
24,446
|
|
Direct cost of services
|
|
|
|
89,963
|
|
|
|
|
43,605
|
|
Other operating expenses
|
|
|
|
246,157
|
|
|
|
|
252,283
|
|
Interest expense
|
|
|
|
91,102
|
|
|
|
|
90,464
|
|
Loss on induced conversion and debt extinguishment
|
|
|
|
94,207
|
|
|
|
|
—
|
|
Amortization and impairment of intangible assets
|
|
|
|
12,986
|
|
|
|
|
8,648
|
|
Total expenses
|
|
|
|
755,424
|
|
|
|
|
665,529
|
|
|
|
|
|
|
|
|
Pretax income from continuing operations
|
|
|
|
437,829
|
|
|
|
|
407,156
|
|
Income tax provision (benefit)
|
|
|
|
156,290
|
|
|
|
|
(852,418
|
)
|
Net income from continuing operations
|
|
|
|
281,539
|
|
|
|
|
1,259,574
|
|
Income (loss) from discontinued operations, net of tax (2)
|
|
|
|
5,385
|
|
|
|
|
(300,057
|
)
|
Net income
|
|
|
$
|
286,924
|
|
|
|
$
|
959,517
|
|
|
|
|
|
|
|
|
Diluted net income per share:
|
|
|
|
|
|
|
Net income from continuing operations
|
|
|
$
|
1.20
|
|
|
|
$
|
5.44
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
|
0.02
|
|
|
|
|
(1.28
|
)
|
Net income
|
|
|
$
|
1.22
|
|
|
|
$
|
4.16
|
|
|
|
|
|
|
|
|
Selected Mortgage Insurance Key Ratios
|
|
|
|
|
|
|
Loss ratio (1)
|
|
|
|
21.7
|
%
|
|
|
|
29.1
|
%
|
Expense ratio - NPE basis (1)
|
|
|
|
23.9
|
%
|
|
|
|
29.6
|
%
|
Expense ratio - NPW basis (2)
|
|
|
|
22.6
|
%
|
|
|
|
27.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Calculated on a GAAP basis using net premiums earned (“NPE”).
|
(2)
|
|
Calculated on a GAAP basis using net premiums written (“NPW”).
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Net Income Per Share Trend Schedule
|
Exhibit B (page 1 of 2)
|
|
The calculation of basic and diluted net income per share was as
follows:
|
|
|
|
|
2015
|
|
|
2014
|
|
(In thousands, except per share amounts)
|
|
|
Qtr 4
|
|
|
Qtr 3
|
|
|
Qtr 2
|
|
|
Qtr 1
|
|
|
Qtr 4
|
|
Net income from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations—basic
|
|
|
$
|
74,528
|
|
|
$
|
70,091
|
|
|
$
|
45,193
|
|
|
$
|
91,727
|
|
|
$
|
878,026
|
|
|
Adjustment for dilutive Convertible Senior Notes due 2019, net of
tax (1)
|
|
|
|
3,664
|
|
|
|
3,714
|
|
|
|
3,707
|
|
|
|
3,673
|
|
|
|
3,641
|
|
|
Net income from continuing operations—diluted
|
|
|
$
|
78,192
|
|
|
$
|
73,805
|
|
|
$
|
48,900
|
|
|
$
|
95,400
|
|
|
$
|
881,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations—basic
|
|
|
$
|
74,528
|
|
|
$
|
70,091
|
|
|
$
|
45,193
|
|
|
$
|
91,727
|
|
|
$
|
878,026
|
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,855
|
|
|
|
530
|
|
|
|
(449,691
|
)
|
|
Net income—basic
|
|
|
|
74,528
|
|
|
|
70,091
|
|
|
|
50,048
|
|
|
|
92,257
|
|
|
|
428,335
|
|
|
Adjustment for dilutive Convertible Senior Notes due 2019, net of
tax (1)
|
|
|
|
3,664
|
|
|
|
3,714
|
|
|
|
3,707
|
|
|
|
3,673
|
|
|
|
3,641
|
|
|
Net income—diluted
|
|
|
$
|
78,192
|
|
|
$
|
73,805
|
|
|
$
|
53,755
|
|
|
$
|
95,930
|
|
|
$
|
431,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common shares outstanding—basic
|
|
|
|
206,872
|
|
|
|
207,938
|
|
|
|
193,112
|
|
|
|
191,224
|
|
|
|
191,053
|
|
|
Dilutive effect of Convertible Senior Notes due 2017
|
|
|
|
1,057
|
|
|
|
1,798
|
|
|
|
12,438
|
|
|
|
10,886
|
|
|
|
10,590
|
|
|
Dilutive effect of Convertible Senior Notes due 2019
|
|
|
|
37,736
|
|
|
|
37,736
|
|
|
|
37,736
|
|
|
|
37,736
|
|
|
|
37,736
|
|
|
Dilutive effect of stock-based compensation arrangements (2)
|
|
|
|
2,316
|
|
|
|
3,323
|
|
|
|
3,364
|
|
|
|
3,202
|
|
|
|
3,422
|
|
|
Adjusted average common shares outstanding—diluted
|
|
|
|
247,981
|
|
|
|
250,795
|
|
|
|
246,650
|
|
|
|
243,048
|
|
|
|
242,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations
|
|
|
$
|
0.36
|
|
|
$
|
0.34
|
|
|
$
|
0.23
|
|
|
$
|
0.48
|
|
|
$
|
4.60
|
|
(3)
|
Income (loss) from discontinued operations, net of tax
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.03
|
|
|
|
—
|
|
|
|
(2.36
|
)
|
|
Net income
|
|
|
$
|
0.36
|
|
|
$
|
0.34
|
|
|
$
|
0.26
|
|
|
$
|
0.48
|
|
|
$
|
2.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations
|
|
|
$
|
0.32
|
|
|
$
|
0.29
|
|
|
$
|
0.20
|
|
|
$
|
0.39
|
|
|
$
|
3.63
|
|
(3)
|
Income (loss) from discontinued operations, net of tax
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.02
|
|
|
|
—
|
|
|
|
(1.85
|
)
|
|
Net income
|
|
|
$
|
0.32
|
|
|
$
|
0.29
|
|
|
$
|
0.22
|
|
|
$
|
0.39
|
|
|
$
|
1.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
As applicable, includes coupon interest, amortization of
discount and fees, and other changes in income or loss that would
result from the assumed conversion.
|
(2)
|
|
The following number of shares of our common stock equivalents
issued under our stock-based compensation arrangements were not
included in the calculation of diluted net income per share
because they were anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Qtr 4
|
|
|
|
|
Qtr 3
|
|
|
|
|
Qtr 2
|
|
|
|
|
Qtr 1
|
|
|
|
|
Qtr 4
|
Shares of common stock equivalents
|
|
|
|
|
|
|
|
|
|
|
728
|
|
|
|
|
469
|
|
|
|
|
264
|
|
|
|
|
540
|
|
|
|
|
542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
Includes the tax benefit of $3.36 per share realized relating
to the reversal of our valuation allowance in the 4th quarter of
2014.
|
|
|
|
|
Radian Group Inc. and Subsidiaries
Net Income (Loss) Per Share
Exhibit B (page 2 of 2)
|
|
|
|
|
Year Ended December 31,
|
|
(In thousands, except per share amounts)
|
|
|
2015
|
|
|
2014
|
|
Net income from continuing operations:
|
|
|
|
|
|
|
|
Net income from continuing operations - basic
|
|
|
$
|
281,539
|
|
|
$
|
1,259,574
|
|
|
Adjustment for dilutive Convertible Senior Notes due 2019, net of
tax (1)
|
|
|
|
14,758
|
|
|
|
14,372
|
|
|
Net income from continuing operations - diluted
|
|
|
$
|
296,297
|
|
|
$
|
1,273,946
|
|
|
|
|
|
|
|
|
|
|
Net income:
|
|
|
|
|
|
|
|
Net income from continuing operations - basic
|
|
|
$
|
281,539
|
|
|
$
|
1,259,574
|
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
|
5,385
|
|
|
|
(300,057
|
)
|
|
Net income - basic
|
|
|
|
286,924
|
|
|
|
959,517
|
|
|
Adjustment for dilutive Convertible Senior Notes due 2019, net
of tax (1)
|
|
|
|
14,758
|
|
|
|
14,372
|
|
|
Net income - diluted
|
|
|
$
|
301,682
|
|
|
$
|
973,889
|
|
|
|
|
|
|
|
|
|
|
Average common shares outstanding—basic
|
|
|
|
199,910
|
|
|
|
184,551
|
|
|
Dilutive effect of Convertible Senior Notes due 2017
|
|
|
|
6,293
|
|
|
|
8,465
|
|
|
Dilutive effect of Convertible Senior Notes due 2019
|
|
|
|
37,736
|
|
|
|
37,736
|
|
|
Dilutive effect of stock-based compensation arrangements (2)
|
|
|
|
2,393
|
|
|
|
3,150
|
|
|
Adjusted average common shares outstanding—diluted
|
|
|
|
246,332
|
|
|
|
233,902
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
Net income from continuing operations
|
|
|
$
|
1.41
|
|
|
$
|
6.83
|
|
(3)
|
Income (loss) from discontinued operations, net of tax
|
|
|
|
0.03
|
|
|
|
(1.63
|
)
|
|
Net income
|
|
|
$
|
1.44
|
|
|
$
|
5.20
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
Net income from continuing operations
|
|
|
$
|
1.20
|
|
|
$
|
5.44
|
|
(3)
|
Income (loss) from discontinued operations, net of tax
|
|
|
|
0.02
|
|
|
|
(1.28
|
)
|
|
Net income
|
|
|
$
|
1.22
|
|
|
$
|
4.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
As applicable, includes coupon interest, amortization of
discount and fees, and other changes in income or loss that would
result from the assumed conversion.
|
(2)
|
|
The following number of shares of our common stock equivalents
issued under our stock-based compensation arrangements were not
included in the calculation of diluted net income per share
because they were anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
Shares of common stock equivalents
|
|
|
|
|
|
|
|
|
|
|
|
728
|
|
|
|
|
542
|
(3)
|
|
Includes the tax benefit of $4.25 per share realized relating
to the reversal of our valuation allowance in 2014.
|
|
Radian Group Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
Exhibit C
|
|
|
|
|
December 31,
|
|
|
September 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
|
December 31,
|
(In thousands, except per share data)
|
|
|
2015
|
|
|
2015
|
|
|
2015
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
$
|
4,298,686
|
|
|
|
$
|
4,376,771
|
|
|
|
$
|
4,309,148
|
|
|
|
$
|
3,621,646
|
|
|
$
|
3,629,299
|
Cash
|
|
|
|
46,898
|
|
|
|
|
69,030
|
|
|
|
|
51,381
|
|
|
|
|
57,204
|
|
|
|
30,465
|
Restricted cash
|
|
|
|
13,000
|
|
|
|
|
10,280
|
|
|
|
|
12,633
|
|
|
|
|
14,220
|
|
|
|
14,031
|
Accounts and notes receivable
|
|
|
|
61,734
|
|
|
|
|
65,951
|
|
|
|
|
72,093
|
|
|
|
|
64,405
|
|
|
|
85,792
|
Deferred income taxes, net
|
|
|
|
577,945
|
|
|
|
|
601,893
|
|
|
|
|
651,238
|
|
|
|
|
649,996
|
|
|
|
700,201
|
Goodwill and other intangible assets, net
|
|
|
|
289,417
|
|
|
|
|
287,334
|
|
|
|
|
290,640
|
|
|
|
|
293,798
|
|
|
|
288,240
|
Other assets
|
|
|
|
364,108
|
|
|
|
|
349,657
|
|
|
|
|
349,371
|
|
|
|
|
340,276
|
|
|
|
357,864
|
Assets held for sale
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
1,755,873
|
|
|
|
1,736,444
|
Total assets
|
|
|
$
|
5,651,788
|
|
|
|
$
|
5,760,916
|
|
|
|
$
|
5,736,504
|
|
|
|
$
|
6,797,418
|
|
|
$
|
6,842,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned premiums
|
|
|
$
|
680,300
|
|
|
|
$
|
676,938
|
|
|
|
$
|
665,947
|
|
|
|
$
|
657,555
|
|
|
$
|
644,504
|
Reserve for losses and loss adjustment expenses
|
|
|
|
976,399
|
|
|
|
|
1,098,570
|
|
|
|
|
1,204,792
|
|
|
|
|
1,384,714
|
|
|
|
1,560,032
|
Long-term debt
|
|
|
|
1,219,454
|
|
|
|
|
1,230,246
|
|
|
|
|
1,224,892
|
|
|
|
|
1,202,535
|
|
|
|
1,192,299
|
Other liabilities
|
|
|
|
278,704
|
|
|
|
|
311,855
|
|
|
|
|
278,929
|
|
|
|
|
310,642
|
|
|
|
326,743
|
Liabilities held for sale
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
966,078
|
|
|
|
947,008
|
Total liabilities
|
|
|
|
3,154,857
|
|
|
|
|
3,317,609
|
|
|
|
|
3,374,560
|
|
|
|
|
4,521,524
|
|
|
|
4,670,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity component of currently redeemable convertible senior notes
|
|
|
|
—
|
|
|
|
|
7,737
|
|
|
|
|
8,546
|
|
|
|
|
68,982
|
|
|
|
74,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
224
|
|
|
|
|
224
|
|
|
|
|
226
|
|
|
|
|
209
|
|
|
|
209
|
Additional paid-in capital
|
|
|
|
1,823,442
|
|
|
|
|
1,825,034
|
|
|
|
|
1,816,545
|
|
|
|
|
1,648,436
|
|
|
|
1,638,552
|
Retained earnings
|
|
|
|
691,742
|
|
|
|
|
617,731
|
|
|
|
|
548,161
|
|
|
|
|
498,593
|
|
|
|
406,814
|
Accumulated other comprehensive (loss) income
|
|
|
|
(18,477
|
)
|
|
|
|
(7,419
|
)
|
|
|
|
(11,534
|
)
|
|
|
|
59,674
|
|
|
|
51,485
|
Total common stockholders’ equity
|
|
|
|
2,496,931
|
|
|
|
|
2,435,570
|
|
|
|
|
2,353,398
|
|
|
|
|
2,206,912
|
|
|
|
2,097,060
|
Total liabilities and stockholders’ equity
|
|
|
$
|
5,651,788
|
|
|
|
$
|
5,760,916
|
|
|
|
$
|
5,736,504
|
|
|
|
$
|
6,797,418
|
|
|
$
|
6,842,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding
|
|
|
|
206,872
|
|
|
|
|
206,870
|
|
|
|
|
208,587
|
|
|
|
|
191,416
|
|
|
|
191,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share
|
|
|
$
|
12.07
|
|
|
|
$
|
11.77
|
|
|
|
$
|
11.28
|
|
|
|
$
|
11.53
|
|
|
$
|
10.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Discontinued Operations
|
Exhibit D
|
|
The income from discontinued operations, net of tax consisted of the
following components for the periods indicated:
|
|
|
|
|
|
|
|
2015
|
(In thousands)
|
|
|
Qtr 2
|
|
|
Qtr 1
|
Net premiums earned
|
|
|
$
|
—
|
|
|
|
$
|
1,007
|
|
Net investment income
|
|
|
|
—
|
|
|
|
|
9,153
|
|
Net gains on investments and other financial instruments
|
|
|
|
7,818
|
|
|
|
|
13,668
|
|
Change in fair value of derivative instruments
|
|
|
|
—
|
|
|
|
|
2,625
|
|
Total revenues
|
|
|
|
7,818
|
|
|
|
|
26,453
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for losses
|
|
|
|
—
|
|
|
|
|
502
|
|
Policy acquisition costs
|
|
|
|
—
|
|
|
|
|
(191
|
)
|
Other operating expense
|
|
|
|
—
|
|
|
|
|
4,107
|
|
Total expenses
|
|
|
|
—
|
|
|
|
|
4,418
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in net loss of affiliates
|
|
|
|
—
|
|
|
|
|
(13
|
)
|
Income from operations of businesses held for sale
|
|
|
|
7,818
|
|
|
|
|
22,022
|
|
Loss on sale
|
|
|
|
(350
|
)
|
|
|
|
(13,930
|
)
|
Income tax provision
|
|
|
|
2,613
|
|
|
|
|
7,562
|
|
Income from discontinued operations, net of tax
|
|
|
$
|
4,855
|
|
|
|
$
|
530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Segment Information
|
Exhibit E (page 1 of 3)
|
|
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 reconciliations to
consolidated GAAP measures, see Exhibits F and G.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage Insurance
|
|
|
|
2015
|
|
|
2014
|
(In thousands)
|
|
|
Qtr 4
|
|
|
Qtr 3
|
|
|
Qtr 2
|
|
|
Qtr 1
|
|
|
Qtr 4
|
Net premiums written - insurance
|
|
|
$
|
233,347
|
|
|
|
$
|
242,168
|
|
|
|
$
|
251,082
|
|
|
|
$
|
241,908
|
|
|
|
$
|
244,506
|
|
Increase in unearned premiums
|
|
|
|
(6,904
|
)
|
|
|
|
(14,735
|
)
|
|
|
|
(13,645
|
)
|
|
|
|
(17,313
|
)
|
|
|
|
(20,213
|
)
|
Net premiums earned - insurance
|
|
|
|
226,443
|
|
|
|
|
227,433
|
|
|
|
|
237,437
|
|
|
|
|
224,595
|
|
|
|
|
224,293
|
|
Net investment income (1)
|
|
|
|
22,833
|
|
|
|
|
22,091
|
|
|
|
|
19,285
|
|
|
|
|
17,328
|
|
|
|
|
16,531
|
|
Other income (1)
|
|
|
|
1,515
|
|
|
|
|
1,711
|
|
|
|
|
1,743
|
|
|
|
|
1,331
|
|
|
|
|
1,668
|
|
Total
|
|
|
|
250,791
|
|
|
|
|
251,235
|
|
|
|
|
258,465
|
|
|
|
|
243,254
|
|
|
|
|
242,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for losses
|
|
|
|
56,817
|
|
|
|
|
64,128
|
|
|
|
|
31,637
|
|
|
|
|
45,851
|
|
|
|
|
83,649
|
|
Change in expected economic loss or recovery for consolidated VIEs
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(16
|
)
|
Policy acquisition costs
|
|
|
|
4,831
|
|
|
|
|
2,880
|
|
|
|
|
6,963
|
|
|
|
|
7,750
|
|
|
|
|
6,443
|
|
Other operating expenses before corporate allocations
|
|
|
|
37,406
|
|
|
|
|
36,632
|
|
|
|
|
41,853
|
|
|
|
|
34,050
|
|
|
|
|
62,591
|
|
Total
|
|
|
|
99,054
|
|
|
|
|
103,640
|
|
|
|
|
80,453
|
|
|
|
|
87,651
|
|
|
|
|
152,667
|
|
Adjusted pretax operating income before corporate allocations
|
|
|
|
151,737
|
|
|
|
|
147,595
|
|
|
|
|
178,012
|
|
|
|
|
155,603
|
|
|
|
|
89,825
|
|
Allocation of corporate operating expenses (1)
|
|
|
|
9,251
|
|
|
|
|
14,893
|
|
|
|
|
12,516
|
|
|
|
|
9,758
|
|
|
|
|
13,729
|
|
Allocation of interest expense (1)
|
|
|
|
16,582
|
|
|
|
|
16,797
|
|
|
|
|
20,070
|
|
|
|
|
19,953
|
|
|
|
|
19,760
|
|
Adjusted pretax operating income
|
|
|
$
|
125,904
|
|
|
|
$
|
115,905
|
|
|
|
$
|
145,426
|
|
|
|
$
|
125,892
|
|
|
|
$
|
56,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
|
|
2015
|
|
|
2014
|
(In thousands)
|
|
|
Qtr 4
|
|
|
Qtr 3
|
|
|
Qtr 2
|
|
|
Qtr 1
|
|
|
Qtr 4
|
Services revenue
|
|
|
$
|
38,175
|
|
|
|
$
|
43,114
|
|
|
|
$
|
44,595
|
|
|
|
$
|
31,532
|
|
|
|
$
|
34,466
|
|
Other income
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
891
|
|
Total
|
|
|
|
38,175
|
|
|
|
|
43,114
|
|
|
|
|
44,595
|
|
|
|
|
31,532
|
|
|
|
|
35,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct cost of services
|
|
|
|
22,880
|
|
|
|
|
25,870
|
|
|
|
|
25,501
|
|
|
|
|
19,253
|
|
|
|
|
19,709
|
|
Other operating expenses before corporate allocations
|
|
|
|
11,710
|
|
|
|
|
11,533
|
|
|
|
|
11,522
|
|
|
|
|
8,857
|
|
|
|
|
8,360
|
|
Total
|
|
|
|
34,590
|
|
|
|
|
37,403
|
|
|
|
|
37,023
|
|
|
|
|
28,110
|
|
|
|
|
28,069
|
|
Adjusted pretax operating income before corporate allocations
|
|
|
|
3,585
|
|
|
|
|
5,711
|
|
|
|
|
7,572
|
|
|
|
|
3,422
|
|
|
|
|
7,288
|
|
Allocation of corporate operating expenses
|
|
|
|
968
|
|
|
|
|
1,567
|
|
|
|
|
1,307
|
|
|
|
|
981
|
|
|
|
|
740
|
|
Allocation of interest expense
|
|
|
|
4,414
|
|
|
|
|
4,423
|
|
|
|
|
4,431
|
|
|
|
|
4,432
|
|
|
|
|
4,440
|
|
Adjusted pretax operating (loss) income
|
|
|
$
|
(1,797
|
)
|
|
|
$
|
(279
|
)
|
|
|
$
|
1,834
|
|
|
|
$
|
(1,991
|
)
|
|
|
$
|
2,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
For periods prior to the quarter ended June 30, 2015, includes
certain corporate income and expenses that have been reallocated
from our prior financial guaranty segment to the Mortgage
Insurance segment and that were not reclassified to discontinued
operations.
|
|
|
|
|
Radian Group Inc. and Subsidiaries
Segment Information
Exhibit E (page 2 of 3)
|
|
|
|
|
Mortgage Insurance
|
|
|
|
Year Ended December 31,
|
(In thousands)
|
|
|
2015
|
|
|
2014
|
Net premiums written - insurance
|
|
|
$
|
968,505
|
|
|
|
$
|
925,181
|
|
Increase in unearned premiums
|
|
|
|
(52,597
|
)
|
|
|
|
(80,653
|
)
|
Net premiums earned - insurance
|
|
|
|
915,908
|
|
|
|
|
844,528
|
|
Net investment income (1)
|
|
|
|
81,537
|
|
|
|
|
65,655
|
|
Other income (1)
|
|
|
|
6,300
|
|
|
|
|
5,321
|
|
Total
|
|
|
|
1,003,745
|
|
|
|
|
915,504
|
|
|
|
|
|
|
|
|
Provision for losses
|
|
|
|
198,433
|
|
|
|
|
246,865
|
|
Change in expected economic loss or recovery for consolidated VIEs
|
|
|
|
—
|
|
|
|
|
113
|
|
Policy acquisition costs
|
|
|
|
22,424
|
|
|
|
|
24,446
|
|
Other operating expenses before corporate allocations
|
|
|
|
149,941
|
|
|
|
|
170,390
|
|
Total
|
|
|
|
370,798
|
|
|
|
|
441,814
|
|
Adjusted pretax operating income before corporate allocations
|
|
|
|
632,947
|
|
|
|
|
473,690
|
|
Allocation of corporate operating expenses (1)
|
|
|
|
46,418
|
|
|
|
|
55,154
|
|
Allocation of interest expense (1)
|
|
|
|
73,402
|
|
|
|
|
81,600
|
|
Adjusted pretax operating income
|
|
|
$
|
513,127
|
|
|
|
$
|
336,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
|
|
Year Ended December 31,
|
(In thousands)
|
|
|
2015
|
|
|
2014(2)
|
Services revenue
|
|
|
$
|
157,416
|
|
|
|
$
|
76,709
|
|
Other income
|
|
|
|
—
|
|
|
|
|
1,265
|
|
Total
|
|
|
|
157,416
|
|
|
|
|
77,974
|
|
|
|
|
|
|
|
|
Direct cost of services
|
|
|
|
93,504
|
|
|
|
|
43,605
|
|
Other operating expenses before corporate allocations
|
|
|
|
43,622
|
|
|
|
|
18,915
|
|
Total
|
|
|
|
137,126
|
|
|
|
|
62,520
|
|
Adjusted pretax operating income before corporate allocations
|
|
|
|
20,290
|
|
|
|
|
15,454
|
|
Allocation of corporate operating expenses
|
|
|
|
4,823
|
|
|
|
|
1,144
|
|
Allocation of interest expense
|
|
|
|
17,700
|
|
|
|
|
8,864
|
|
Adjusted pretax operating (loss) income
|
|
|
$
|
(2,233
|
)
|
|
|
$
|
5,446
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
For periods prior to the quarter ended June 30, 2015, includes
certain corporate income and expenses that have been reallocated
from our prior financial guaranty segment to the Mortgage
Insurance segment and that were not reclassified to discontinued
operations.
|
(2)
|
|
Primarily represents the activity of Clayton; Clayton was
acquired on June 30, 2014.
|
|
|
|
|
Radian Group Inc. and Subsidiaries
Segment Information
Exhibit E (page 3 of 3)
Inter-segment information:
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
Qtr 4
|
|
|
Qtr 3
|
|
|
Qtr 2
|
|
|
Qtr 1
|
|
|
Qtr 4
|
Inter-segment expense included in Mortgage Insurance segment
|
|
|
$
|
682
|
|
|
$
|
925
|
|
|
$
|
1,092
|
|
|
$
|
902
|
|
|
$
|
782
|
Inter-segment revenue included in Services segment
|
|
|
|
682
|
|
|
|
925
|
|
|
|
1,092
|
|
|
|
902
|
|
|
|
782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information for Services EBITDA (see definition in
Exhibit F):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
Qtr 4
|
|
|
Qtr 3
|
|
|
Qtr 2
|
|
|
Qtr 1
|
|
|
Qtr 4
|
Adjusted pretax operating income before corporate allocations
|
|
|
$
|
3,585
|
|
|
$
|
5,711
|
|
|
$
|
7,572
|
|
|
$
|
3,422
|
|
|
$
|
7,288
|
Depreciation and amortization
|
|
|
|
612
|
|
|
|
555
|
|
|
|
482
|
|
|
|
449
|
|
|
|
442
|
Services EBITDA
|
|
|
$
|
4,197
|
|
|
$
|
6,266
|
|
|
$
|
8,054
|
|
|
$
|
3,871
|
|
|
$
|
7,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected balance sheet information for our segments as of the
periods indicated, is a follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
(In thousands)
|
|
|
Mortgage
Insurance
|
|
|
Services
|
|
|
Total
|
Total assets
|
|
|
$
|
5,291,284
|
|
|
$
|
360,504
|
|
|
$
|
5,651,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2014
|
(In thousands)
|
|
|
Mortgage
Insurance
|
|
|
Services
|
|
|
Total
|
Assets held for sale (1)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,736,444
|
Total assets
|
|
|
|
4,769,014
|
|
|
|
336,878
|
|
|
|
6,842,336
|
|
(1) Assets held for sale are not part of the Mortgage
Insurance or Services segments.
|
|
|
Radian Group Inc. and Subsidiaries
|
Definition of Consolidated Non-GAAP Financial Measure
|
Exhibit F (page 1 of 2)
|
|
Use of Non-GAAP Financial Measure
|
|
In addition to the traditional GAAP financial measures, we have
presented non-GAAP financial measures for the consolidated company,
“adjusted pretax operating income (loss)” and “adjusted diluted net
operating income (loss) per share,” 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 core operating trends and enabling more
meaningful comparisons with our peers. Although on a consolidated basis
“adjusted pretax operating income (loss)” and “adjusted diluted net
operating income (loss) per share” are non-GAAP financial measures, we
believe these measures aid in understanding the underlying performance
of our operations. Our senior management, including our Chief Executive
Officer (the Company’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 (loss) is defined as GAAP pretax income
(loss) from continuing operations excluding the effects of net gains
(losses) on investments and other financial instruments, loss on induced
conversion and debt extinguishment, acquisition-related expenses,
amortization and impairment of intangible assets and net impairment
losses recognized in earnings. Adjusted diluted net operating income
(loss) per share is calculated by dividing (i) adjusted pretax operating
income (loss) 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 stock-based
compensation arrangements have been reflected in the per share
calculations consistent with the accounting standard regarding earnings
per share, whenever the impact is dilutive.
Although adjusted pretax operating income (loss) excludes certain items
that have occurred in the past and are expected to occur in the future,
the excluded items represent those that are: (1) not viewed as part of
the operating performance of our primary activities; or (2) not expected
to result in an economic impact equal to the amount reflected in pretax
income (loss) from continuing operations. 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. These valuation
adjustments may not necessarily result in 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). However, we include the change in expected economic
loss or recovery associated with our consolidated VIEs, if any, in
the calculation of adjusted pretax operating income (loss).
|
|
|
|
(2)
|
|
Loss on induced conversion and debt extinguishment. Gains
or losses on early extinguishment of debt or losses incurred to
induce conversion of convertible debt prior to maturity are
discretionary activities that are undertaken in order to take
advantage of market opportunities to strengthen our financial
position; therefore, these activities are not viewed 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).
|
|
|
|
(4)
|
|
Amortization and impairment of intangible assets.
Amortization of intangible assets represents the periodic expense
required to amortize the cost of intangible assets over their
estimated useful lives. Intangible assets with an indefinite
useful life are also periodically reviewed for potential
impairment, and impairment adjustments are made whenever
appropriate. These charges are not viewed as part of the operating
performance of our primary activities and therefore are excluded
from our calculation of adjusted pretax operating income (loss).
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Definition of Consolidated Non-GAAP Financial Measure
|
Exhibit F (page 2 of 2)
|
|
|
|
(5)
|
|
Net impairment losses recognized in earnings. The
recognition of net impairment losses on investments can vary
significantly in both size and timing, depending on market credit
cycles. We do not view these impairment losses to be indicative of
our fundamental operating activities. Therefore, whenever these
losses occur, we exclude them from our calculation of adjusted
pretax operating income (loss).
|
|
|
|
In addition to the above non-GAAP measures for the consolidated company,
we also have presented as supplemental information a non-GAAP measure
for our Services segment, representing earnings before interest, income
taxes, depreciation and amortization (“EBITDA”). We calculate Services
EBITDA by using adjusted pretax operating income as described above,
further adjusted to remove the impact of depreciation and corporate
allocations for interest and operating expenses. We have presented
Services EBITDA to facilitate comparisons with other services companies,
since it is a widely accepted measure of performance in the services
industry.
See Exhibit G for the reconciliation of our non-GAAP financial measures
for the consolidated company, adjusted pretax operating income and
adjusted diluted net operating income per share, to the most comparable
GAAP measures, pretax income from continuing operations and net income
per share from continuing operations, respectively. Exhibit G also
contains the reconciliation of Services EBITDA to the most comparable
GAAP measure, pretax income from continuing operations.
Total adjusted pretax operating income (loss), adjusted diluted net
operating income (loss) per share and Services EBITDA are not measures
of total profitability, and therefore should not be viewed as
substitutes for GAAP pretax income (loss) from continuing operations or
net income (loss) per share from continuing operations. Our definitions
of adjusted pretax operating income (loss), adjusted diluted net
operating income (loss) per share or EBITDA may not be comparable to
similarly-named measures reported by other companies.
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Consolidated Non-GAAP Financial Measure Reconciliations
|
Exhibit G (page 1 of 3)
|
|
Reconciliation of Adjusted Pretax Operating Income (Loss) to
Consolidated Pretax Income
|
from Continuing Operations
|
|
|
|
|
|
|
|
2015
|
|
2014
|
(In thousands)
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
|
Qtr 4
|
Adjusted pretax operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
Mortgage Insurance (1)
|
|
$
|
125,904
|
|
|
$
|
115,905
|
|
|
$
|
145,426
|
|
|
$
|
125,892
|
|
|
$
|
56,336
|
|
Services (2)
|
|
(1,797
|
)
|
|
(279
|
)
|
|
1,834
|
|
|
(1,991
|
)
|
|
2,108
|
|
Total adjusted pretax operating income
|
|
124,107
|
|
|
115,626
|
|
|
147,260
|
|
|
123,901
|
|
|
58,444
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (losses) gains on investments and other financial
instruments (3)
|
|
(13,402
|
)
|
|
3,868
|
|
|
28,448
|
|
|
16,779
|
|
|
17,967
|
|
Loss on induced conversion and debt extinguishment
|
|
(2,320
|
)
|
|
(11
|
)
|
|
(91,876
|
)
|
|
—
|
|
|
—
|
|
Acquisition-related expenses (4)
|
|
(266
|
)
|
|
(525
|
)
|
|
(567
|
)
|
|
(207
|
)
|
|
(380
|
)
|
Amortization and impairment of intangible assets (4)
|
|
(3,409
|
)
|
|
(3,273
|
)
|
|
(3,281
|
)
|
|
(3,023
|
)
|
|
(5,354
|
)
|
Consolidated pretax income from continuing operations
|
|
$
|
104,710
|
|
|
$
|
115,685
|
|
|
$
|
79,984
|
|
|
$
|
137,450
|
|
|
$
|
70,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
For periods prior to the quarter ended June 30, 2015, includes
certain corporate income and expenses that have been reallocated
from our prior financial guaranty segment to the Mortgage
Insurance segment and that were not reclassified to discontinued
operations.
|
(2)
|
|
Effective with the fourth quarter of 2014, the Services segment
undertook the management responsibilities of certain additional
loan servicer surveillance functions previously considered part of
the Mortgage Insurance segment. As a result, these activities are
now reported in the Services segment for all periods presented.
|
(3)
|
|
This line item includes a de minimis amount of expected
economic loss or recovery associated with our previously
consolidated VIEs that is included in adjusted pretax operating
income above.
|
(4)
|
|
Please see Exhibit F for the definition of this line item.
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted Diluted Net Operating Income Per
Share (1) to Net Income Per Share
|
from Continuing Operations
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
|
Qtr 4
|
|
Adjusted diluted net operating income per share
|
|
$
|
0.34
|
|
|
$
|
0.31
|
|
|
$
|
0.40
|
|
|
$
|
0.35
|
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After tax per share impact:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on investments and other financial instruments
|
|
(0.03
|
)
|
|
0.01
|
|
|
0.07
|
|
|
0.04
|
|
|
0.05
|
|
|
Loss on induced conversion and debt extinguishment
|
|
(0.01
|
)
|
|
—
|
|
|
(0.28
|
)
|
|
—
|
|
|
—
|
|
|
Acquisition-related expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Amortization and impairment of intangible assets
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
Difference between statutory and effective tax rate
|
|
0.03
|
|
|
(0.02
|
)
|
|
0.02
|
|
|
0.01
|
|
|
3.42
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share from continuing operations
|
|
$
|
0.32
|
|
|
$
|
0.29
|
|
|
$
|
0.20
|
|
|
$
|
0.39
|
|
|
$
|
3.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Calculated using the company’s statutory tax rate.
|
(2)
|
|
Includes the tax benefit of $3.36 per share realized relating
to the reversal of our valuation allowance in the 4th quarter of
2014.
|
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Consolidated Non-GAAP Financial Measure Reconciliations
|
Exhibit G (page 2 of 3)
|
|
Reconciliation of Adjusted Pretax Operating Income (Loss) to
Consolidated Pretax Income
|
from Continuing Operations
|
|
|
|
|
|
Year Ended December 31,
|
(In thousands)
|
|
2015
|
|
2014
|
Adjusted pretax operating income (loss):
|
|
|
|
|
Mortgage Insurance (1)
|
|
$
|
513,127
|
|
|
$
|
336,936
|
|
Services (2)
|
|
(2,233
|
)
|
|
5,446
|
|
Total adjusted pretax operating income
|
|
510,894
|
|
|
342,382
|
|
|
|
|
|
|
Net gains (losses) on investments and other financial instruments
(3)
|
|
35,693
|
|
|
80,102
|
|
Loss on induced conversion and debt extinguishment
|
|
(94,207
|
)
|
|
—
|
|
Acquisition-related expenses (4)
|
|
(1,565
|
)
|
|
(6,680
|
)
|
Amortization and impairment of intangible assets (4)
|
|
(12,986
|
)
|
|
(8,648
|
)
|
Consolidated pretax income from continuing operations
|
|
$
|
437,829
|
|
|
$
|
407,156
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
For periods prior to the quarter ended June 30, 2015, includes
certain corporate income and expenses that have been reallocated
from our prior financial guaranty segment to the Mortgage
Insurance segment and that were not reclassified to discontinued
operations.
|
(2)
|
|
Effective with the fourth quarter of 2014, the Services segment
undertook the management responsibilities of certain additional
loan servicer surveillance functions previously considered part of
the Mortgage Insurance segment. As a result, these activities are
now reported in the Services segment for all periods presented.
|
(3)
|
|
This line item includes a de minimis amount of expected
economic loss or recovery associated with our previously
consolidated VIEs that is included in adjusted pretax operating
income above.
|
(4)
|
|
Please see Exhibit F for the definition of this line item.
|
|
|
|
|
|
|
|
Reconciliation of Adjusted Diluted Net Operating Income Per
Share (1) to Net Income Per Share
|
from Continuing Operations
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2015
|
|
2014
|
|
Adjusted diluted net operating income per share
|
|
$
|
1.40
|
|
|
$
|
1.01
|
|
|
|
|
|
|
|
|
After tax per share impact:
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on investments and other financial instruments
|
|
0.09
|
|
|
0.22
|
|
|
Loss on induced conversion and debt extinguishment
|
|
(0.29
|
)
|
|
—
|
|
|
Acquisition-related expenses
|
|
—
|
|
|
(0.02
|
)
|
|
Amortization and impairment of intangible assets
|
|
(0.04
|
)
|
|
(0.02
|
)
|
|
Difference between statutory and effective tax rate
|
|
0.04
|
|
|
4.25
|
|
(2)
|
|
|
|
|
|
|
Net income per share from continuing operations
|
|
$
|
1.20
|
|
|
$
|
5.44
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Calculated using the company’s statutory tax rate.
|
(2)
|
|
Includes the tax benefit of $4.25 per share realized relating
to the reversal of our valuation allowance in 2014.
|
|
|
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Consolidated Non-GAAP Financial Measure Reconciliations
|
Exhibit G (page 3 of 3)
|
|
|
Reconciliation of Services Segment EBITDA to Consolidated Pretax
Income
|
from Continuing Operations
|
|
|
|
|
|
|
|
2015
|
|
2014
|
(In thousands)
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
|
Qtr 4
|
|
|
|
|
|
|
|
|
|
|
|
Services EBITDA
|
|
$
|
4,197
|
|
|
$
|
6,266
|
|
|
$
|
8,054
|
|
|
$
|
3,871
|
|
|
$
|
7,730
|
|
Allocation of corporate operating expenses to Services
|
|
(968
|
)
|
|
(1,567
|
)
|
|
(1,307
|
)
|
|
(981
|
)
|
|
(740
|
)
|
Allocation of corporate interest expenses to Services
|
|
(4,414
|
)
|
|
(4,423
|
)
|
|
(4,431
|
)
|
|
(4,432
|
)
|
|
(4,440
|
)
|
Services depreciation and amortization
|
|
(612
|
)
|
|
(555
|
)
|
|
(482
|
)
|
|
(449
|
)
|
|
(442
|
)
|
Services adjusted pretax operating (loss) income
|
|
(1,797
|
)
|
|
(279
|
)
|
|
1,834
|
|
|
(1,991
|
)
|
|
2,108
|
|
Mortgage Insurance adjusted pretax operating income
|
|
125,904
|
|
|
115,905
|
|
|
145,426
|
|
|
125,892
|
|
|
56,336
|
|
Total adjusted pretax operating income
|
|
124,107
|
|
|
115,626
|
|
|
147,260
|
|
|
123,901
|
|
|
58,444
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (losses) gains on investments and other financial
instruments
|
|
(13,402
|
)
|
|
3,868
|
|
|
28,448
|
|
|
16,779
|
|
|
17,967
|
|
Loss on induced conversion and debt extinguishment
|
|
(2,320
|
)
|
|
(11
|
)
|
|
(91,876
|
)
|
|
—
|
|
|
—
|
|
Acquisition-related expenses
|
|
(266
|
)
|
|
(525
|
)
|
|
(567
|
)
|
|
(207
|
)
|
|
(380
|
)
|
Amortization and impairment of intangible assets
|
|
(3,409
|
)
|
|
(3,273
|
)
|
|
(3,281
|
)
|
|
(3,023
|
)
|
|
(5,354
|
)
|
Consolidated pretax income from continuing operations
|
|
$
|
104,710
|
|
|
$
|
115,685
|
|
|
$
|
79,984
|
|
|
$
|
137,450
|
|
|
$
|
70,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On a consolidated basis, “adjusted pretax operating income” and
“adjusted diluted net operating income per share” are measures not
determined in accordance with GAAP. These measures are not
representative of total profitability, and therefore should not be
viewed as substitutes for GAAP pretax income from continuing operations
or net income per share from continuing operations. Our definitions of
adjusted pretax operating income and adjusted diluted net operating
income per share 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
|
|
|
|
|
|
|
|
2015
|
|
2014
|
($ in millions)
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
|
Qtr 4
|
|
|
|
|
|
|
|
|
|
|
|
Total primary new insurance written
|
|
$
|
9,099
|
|
|
$
|
11,176
|
|
|
$
|
11,751
|
|
|
$
|
9,385
|
|
|
$
|
10,009
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of primary new insurance written by FICO score
|
|
|
|
|
|
|
|
|
|
|
>=740
|
|
60.3
|
%
|
|
61.0
|
%
|
|
63.0
|
%
|
|
63.6
|
%
|
|
60.2
|
%
|
680-739
|
|
32.2
|
|
|
31.9
|
|
|
30.8
|
|
|
30.3
|
|
|
32.6
|
|
620-679
|
|
7.5
|
|
|
7.1
|
|
|
6.2
|
|
|
6.1
|
|
|
7.2
|
|
Total Primary
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of primary new insurance written
|
|
|
|
|
|
|
|
|
|
|
Monthly and other premiums
|
|
71
|
%
|
|
73
|
%
|
|
68
|
%
|
|
63
|
%
|
|
69
|
%
|
Single premiums
|
|
29
|
%
|
|
27
|
%
|
|
32
|
%
|
|
37
|
%
|
|
31
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Refinances
|
|
17
|
%
|
|
13
|
%
|
|
23
|
%
|
|
33
|
%
|
|
22
|
%
|
LTV
|
|
|
|
|
|
|
|
|
|
|
95.01% and above
|
|
3.6
|
%
|
|
3.5
|
%
|
|
3.2
|
%
|
|
1.8
|
%
|
|
0.5
|
%
|
90.01% to 95.00%
|
|
49.5
|
%
|
|
51.5
|
%
|
|
49.4
|
%
|
|
48.4
|
%
|
|
51.7
|
%
|
85.01% to 90.00%
|
|
34.4
|
%
|
|
34.1
|
%
|
|
34.0
|
%
|
|
33.3
|
%
|
|
33.2
|
%
|
85.00% and below
|
|
12.5
|
%
|
|
10.9
|
%
|
|
13.4
|
%
|
|
16.5
|
%
|
|
14.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Mortgage Insurance Supplemental Information - Primary Insurance
in Force and Risk in Force by Product, Statutory Capital Ratios
|
Exhibit I
|
|
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
($ in millions)
|
|
2015
|
|
2015
|
|
2015
|
|
2015
|
|
2014
|
Primary insurance in force (1)
|
|
|
|
|
|
|
|
|
|
|
Flow
|
|
$
|
167,469
|
|
|
$
|
166,527
|
|
|
$
|
164,137
|
|
|
$
|
162,832
|
|
|
$
|
162,302
|
|
Structured
|
|
8,115
|
|
|
8,339
|
|
|
8,555
|
|
|
9,309
|
|
|
9,508
|
|
Total Primary
|
|
$
|
175,584
|
|
|
$
|
174,866
|
|
|
$
|
172,692
|
|
|
$
|
172,141
|
|
|
$
|
171,810
|
|
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
$
|
165,291
|
|
|
$
|
164,060
|
|
|
$
|
161,397
|
|
|
$
|
160,452
|
|
|
$
|
159,647
|
|
Alt-A
|
|
6,176
|
|
|
6,531
|
|
|
6,857
|
|
|
7,122
|
|
|
7,412
|
|
A minus and below
|
|
4,117
|
|
|
4,275
|
|
|
4,438
|
|
|
4,567
|
|
|
4,751
|
|
Total Primary
|
|
$
|
175,584
|
|
|
$
|
174,866
|
|
|
$
|
172,692
|
|
|
$
|
172,141
|
|
|
$
|
171,810
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary risk in force (1) (2)
|
|
|
|
|
|
|
|
|
|
|
Flow
|
|
$
|
42,771
|
|
|
$
|
42,454
|
|
|
$
|
41,706
|
|
|
$
|
41,256
|
|
|
$
|
41,071
|
|
Structured
|
|
1,856
|
|
|
1,910
|
|
|
1,957
|
|
|
2,133
|
|
|
2,168
|
|
Total Primary
|
|
$
|
44,627
|
|
|
$
|
44,364
|
|
|
$
|
43,663
|
|
|
$
|
43,389
|
|
|
$
|
43,239
|
|
|
|
|
|
|
|
|
|
|
|
|
Flow
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
$
|
41,036
|
|
|
$
|
40,629
|
|
|
$
|
39,781
|
|
|
$
|
39,251
|
|
|
$
|
38,977
|
|
Alt-A
|
|
1,061
|
|
|
1,124
|
|
|
1,191
|
|
|
1,243
|
|
|
1,295
|
|
A minus and below
|
|
674
|
|
|
701
|
|
|
734
|
|
|
762
|
|
|
799
|
|
Total Flow
|
|
$
|
42,771
|
|
|
$
|
42,454
|
|
|
$
|
41,706
|
|
|
$
|
41,256
|
|
|
$
|
41,071
|
|
|
|
|
|
|
|
|
|
|
|
|
Structured
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
$
|
1,134
|
|
|
$
|
1,155
|
|
|
$
|
1,182
|
|
|
$
|
1,341
|
|
|
$
|
1,349
|
|
Alt-A
|
|
366
|
|
|
386
|
|
|
397
|
|
|
410
|
|
|
425
|
|
A minus and below
|
|
356
|
|
|
369
|
|
|
378
|
|
|
382
|
|
|
394
|
|
Total Structured
|
|
$
|
1,856
|
|
|
$
|
1,910
|
|
|
$
|
1,957
|
|
|
$
|
2,133
|
|
|
$
|
2,168
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
$
|
42,170
|
|
|
$
|
41,784
|
|
|
$
|
40,963
|
|
|
$
|
40,592
|
|
|
$
|
40,326
|
|
Alt-A
|
|
1,427
|
|
|
1,510
|
|
|
1,588
|
|
|
1,653
|
|
|
1,720
|
|
A minus and below
|
|
1,030
|
|
|
1,070
|
|
|
1,112
|
|
|
1,144
|
|
|
1,193
|
|
Total Primary
|
|
$
|
44,627
|
|
|
$
|
44,364
|
|
|
$
|
43,663
|
|
|
$
|
43,389
|
|
|
$
|
43,239
|
|
|
|
|
|
|
|
|
|
|
|
|
Statutory Capital Ratios
|
|
|
|
|
|
|
|
|
|
|
Risk to capital ratio-Radian Guaranty only
|
|
14.3
|
:1
|
(3)
|
16.5
|
:1
|
|
16.5
|
:1
|
|
17.1
|
:1
|
|
17.9
|
:1
|
Risk to capital ratio-Mortgage Insurance combined
|
|
14.6
|
:1
|
(3)
|
17.9
|
:1
|
|
18.0
|
:1
|
|
19.1
|
:1
|
|
20.3
|
:1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes amounts ceded under our reinsurance agreements, as
well as amounts related to the Freddie Mac Agreement.
|
(2)
|
|
Does not include pool risk in force or other risk in force,
which combined represent less than 3.0% of our total risk in force
for all periods presented.
|
(3)
|
|
Preliminary.
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Mortgage Insurance Supplemental Information - Percentage of
Primary Risk in Force by FICO, LTV and Policy Year
|
Exhibit J
|
|
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
($ in millions)
|
|
2015
|
|
2015
|
|
2015
|
|
2015
|
|
2014
|
Percentage of primary risk in force by FICO score
|
|
|
|
|
|
|
|
|
|
|
Flow
|
|
|
|
|
|
|
|
|
|
|
>=740
|
|
58.3
|
%
|
|
58.2
|
%
|
|
58.1
|
%
|
|
58.1
|
%
|
|
58.1
|
%
|
680-739
|
|
30.5
|
|
|
30.3
|
|
|
30.2
|
|
|
30.0
|
|
|
29.7
|
|
620-679
|
|
10.1
|
|
|
10.3
|
|
|
10.5
|
|
|
10.6
|
|
|
10.8
|
|
<=619
|
|
1.1
|
|
|
1.2
|
|
|
1.2
|
|
|
1.3
|
|
|
1.4
|
|
Total Flow
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Structured
|
|
|
|
|
|
|
|
|
|
|
>=740
|
|
29.4
|
%
|
|
28.9
|
%
|
|
28.7
|
%
|
|
31.1
|
%
|
|
30.3
|
%
|
680-739
|
|
27.7
|
|
|
27.9
|
|
|
27.9
|
|
|
28.1
|
|
|
28.5
|
|
620-679
|
|
25.0
|
|
|
25.2
|
|
|
25.4
|
|
|
24.1
|
|
|
24.3
|
|
<=619
|
|
17.9
|
|
|
18.0
|
|
|
18.0
|
|
|
16.7
|
|
|
16.9
|
|
Total Structured
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
>=740
|
|
57.1
|
%
|
|
57.0
|
%
|
|
56.7
|
%
|
|
56.8
|
%
|
|
56.7
|
%
|
680-739
|
|
30.3
|
|
|
30.2
|
|
|
30.1
|
|
|
29.8
|
|
|
29.6
|
|
620-679
|
|
10.8
|
|
|
10.9
|
|
|
11.2
|
|
|
11.3
|
|
|
11.6
|
|
<=619
|
|
1.8
|
|
|
1.9
|
|
|
2.0
|
|
|
2.1
|
|
|
2.1
|
|
Total Primary
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of primary risk in force by LTV
|
|
|
|
|
|
|
|
|
|
|
95.01% and above
|
|
7.3
|
%
|
|
7.4
|
%
|
|
7.6
|
%
|
|
7.9
|
%
|
|
8.2
|
%
|
90.01% to 95.00%
|
|
50.4
|
|
|
49.8
|
|
|
49.0
|
|
|
48.2
|
|
|
47.5
|
|
85.01% to 90.00%
|
|
34.0
|
|
|
34.3
|
|
|
34.6
|
|
|
35.0
|
|
|
35.4
|
|
85.00% and below
|
|
8.3
|
|
|
8.5
|
|
|
8.8
|
|
|
8.9
|
|
|
8.9
|
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of primary risk in force by policy year
|
|
|
|
|
|
|
|
|
|
|
2005 and prior
|
|
6.3
|
%
|
|
6.8
|
%
|
|
7.3
|
%
|
|
7.8
|
%
|
|
8.2
|
%
|
2006
|
|
3.7
|
|
|
3.9
|
|
|
4.2
|
|
|
4.4
|
|
|
4.6
|
|
2007
|
|
8.7
|
|
|
9.1
|
|
|
9.6
|
|
|
10.2
|
|
|
10.6
|
|
2008
|
|
6.3
|
|
|
6.6
|
|
|
7.0
|
|
|
7.5
|
|
|
7.9
|
|
2009
|
|
1.7
|
|
|
1.8
|
|
|
2.0
|
|
|
2.3
|
|
|
2.5
|
|
2010
|
|
1.4
|
|
|
1.5
|
|
|
1.7
|
|
|
2.0
|
|
|
2.1
|
|
2011
|
|
2.9
|
|
|
3.1
|
|
|
3.5
|
|
|
3.9
|
|
|
4.2
|
|
2012
|
|
11.2
|
|
|
12.0
|
|
|
13.0
|
|
|
14.2
|
|
|
15.1
|
|
2013
|
|
18.1
|
|
|
19.2
|
|
|
20.8
|
|
|
22.4
|
|
|
23.8
|
|
2014
|
|
17.1
|
|
|
18.0
|
|
|
19.0
|
|
|
20.0
|
|
|
21.0
|
|
2015
|
|
22.6
|
|
|
18.0
|
|
|
11.9
|
|
|
5.3
|
|
|
—
|
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Primary risk in force on defaulted loans (1)
|
|
$
|
1,625
|
|
|
$
|
1,666
|
|
|
$
|
1,753
|
|
|
$
|
1,883
|
|
|
$
|
2,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Excludes risk related to loans subject to the Freddie Mac
Agreement.
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Mortgage Insurance Supplemental Information - Claims and Reserves
|
Exhibit K
|
|
|
|
2015
|
|
|
2014
|
($ in thousands)
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
|
|
Qtr 4
|
|
|
|
|
|
|
|
|
|
|
|
|
Net claims paid
|
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
$
|
56,900
|
|
|
$
|
65,396
|
|
|
$
|
83,489
|
|
|
$
|
76,186
|
|
|
$
|
74,342
|
Alt-A
|
|
|
21,343
|
|
|
|
18,966
|
|
|
|
23,260
|
|
|
|
19,999
|
|
|
|
21,909
|
A minus and below
|
|
|
11,530
|
|
|
|
14,028
|
|
|
|
14,965
|
|
|
|
15,141
|
|
|
|
12,600
|
Total primary claims paid
|
|
|
89,773
|
|
|
|
98,390
|
|
|
|
121,714
|
|
|
|
111,326
|
|
|
|
108,851
|
Pool
|
|
|
6,477
|
|
|
|
8,721
|
|
|
|
10,798
|
|
|
|
8,874
|
|
|
|
8,086
|
Second-lien and other
|
|
|
(143
|
)
|
|
|
(16
|
)
|
|
|
(53
|
)
|
|
|
(111
|
)
|
|
|
283
|
Subtotal
|
|
|
96,107
|
|
|
|
107,095
|
|
|
|
132,459
|
|
|
|
120,089
|
|
|
|
117,220
|
Impact of captive terminations
|
|
|
(65
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(12,000
|
)
|
|
|
—
|
Impact of settlements
|
|
|
80,426
|
|
|
|
61,994
|
|
|
|
79,557
|
|
|
|
99,006
|
|
|
|
—
|
Total
|
|
$
|
176,468
|
|
|
$
|
169,089
|
|
|
$
|
212,016
|
|
|
$
|
207,095
|
|
|
$
|
117,220
|
|
|
|
|
|
|
|
|
|
|
|
|
Average claim paid (1)
|
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
$
|
46.9
|
|
|
$
|
46.2
|
|
|
$
|
48.1
|
|
|
$
|
44.0
|
|
|
$
|
48.7
|
Alt-A
|
|
|
61.7
|
|
|
|
60.2
|
|
|
|
59.5
|
|
|
|
54.6
|
|
|
|
58.7
|
A minus and below
|
|
|
40.6
|
|
|
|
42.5
|
|
|
|
40.1
|
|
|
|
35.9
|
|
|
|
39.3
|
Total primary average claims paid
|
|
|
48.7
|
|
|
|
47.8
|
|
|
|
48.7
|
|
|
|
44.2
|
|
|
|
49.0
|
Pool
|
|
|
56.3
|
|
|
|
51.3
|
|
|
|
69.7
|
|
|
|
51.5
|
|
|
|
46.5
|
Total
|
|
$
|
48.9
|
|
|
$
|
47.8
|
|
|
$
|
49.6
|
|
|
$
|
44.5
|
|
|
$
|
48.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Average primary claim paid (2)
|
|
$
|
50.5
|
|
|
$
|
48.5
|
|
|
$
|
49.6
|
|
|
$
|
45.3
|
|
|
$
|
50.4
|
Average total claim paid (2)
|
|
$
|
50.6
|
|
|
$
|
48.5
|
|
|
$
|
50.4
|
|
|
$
|
45.5
|
|
|
$
|
49.4
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands, except primary reserve per
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
|
December 31,
|
primary default amounts)
|
|
2015
|
|
2015
|
|
2015
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for losses by category
|
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
$
|
480,481
|
|
|
$
|
519,572
|
|
|
$
|
562,918
|
|
|
$
|
640,919
|
|
|
$
|
700,174
|
Alt-A
|
|
|
203,706
|
|
|
|
234,772
|
|
|
|
256,854
|
|
|
|
278,350
|
|
|
|
292,293
|
A minus and below
|
|
|
129,352
|
|
|
|
137,441
|
|
|
|
148,043
|
|
|
|
163,390
|
|
|
|
179,103
|
IBNR and other
|
|
|
83,066
|
|
|
|
107,179
|
|
|
|
125,038
|
|
|
|
167,204
|
|
|
|
223,114
|
LAE
|
|
|
26,108
|
|
|
|
41,464
|
|
|
|
48,141
|
|
|
|
53,210
|
|
|
|
56,164
|
Reinsurance recoverable (3)
|
|
|
8,286
|
|
|
|
11,071
|
|
|
|
11,677
|
|
|
|
13,365
|
|
|
|
26,665
|
Total primary reserves
|
|
|
930,999
|
|
|
|
1,051,499
|
|
|
|
1,152,671
|
|
|
|
1,316,438
|
|
|
|
1,477,513
|
Pool insurance
|
|
|
42,084
|
|
|
|
43,234
|
|
|
|
47,902
|
|
|
|
62,943
|
|
|
|
75,785
|
IBNR and other
|
|
|
1,118
|
|
|
|
949
|
|
|
|
891
|
|
|
|
1,227
|
|
|
|
1,775
|
LAE
|
|
|
1,335
|
|
|
|
1,983
|
|
|
|
2,353
|
|
|
|
3,051
|
|
|
|
3,542
|
Total pool reserves
|
|
|
44,537
|
|
|
|
46,166
|
|
|
|
51,146
|
|
|
|
67,221
|
|
|
|
81,102
|
Total 1st lien reserves
|
|
|
975,536
|
|
|
|
1,097,665
|
|
|
|
1,203,817
|
|
|
|
1,383,659
|
|
|
|
1,558,615
|
Second-lien and other
|
|
|
863
|
|
|
|
905
|
|
|
|
975
|
|
|
|
1,055
|
|
|
|
1,417
|
Total reserves
|
|
$
|
976,399
|
|
|
$
|
1,098,570
|
|
|
$
|
1,204,792
|
|
|
$
|
1,384,714
|
|
|
$
|
1,560,032
|
|
|
|
|
|
|
|
|
|
|
|
|
1st lien reserve per default
|
|
|
|
|
|
|
|
|
|
|
|
Primary reserve per primary default excluding IBNR and other
|
|
$
|
24,019
|
|
|
$
|
26,237
|
|
|
$
|
27,279
|
|
|
$
|
28,423
|
|
|
$
|
27,683
|
(1)
|
|
Net of reinsurance recoveries and without giving effect to the
impact of captive terminations and settlements.
|
(2)
|
|
Before reinsurance recoveries and without giving effect to the
impact of captive terminations and settlements.
|
(3)
|
|
Primarily represents ceded losses on captive transactions and
quota share reinsurance transactions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Mortgage Insurance Supplemental Information - Default Statistics
|
Exhibit L
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
|
2015
|
|
2015
|
|
2015
|
|
2015
|
|
2014
|
Default Statistics
|
|
|
|
|
|
|
|
|
|
|
Primary Insurance:
|
|
|
|
|
|
|
|
|
|
|
Prime
|
|
|
|
|
|
|
|
|
|
|
Number of insured loans
|
|
816,797
|
|
|
812,657
|
|
|
802,719
|
|
|
801,332
|
|
|
797,436
|
|
Number of loans in default
|
|
22,223
|
|
|
22,328
|
|
|
23,237
|
|
|
25,114
|
|
|
28,246
|
|
Percentage of loans in default
|
|
2.72
|
%
|
|
2.75
|
%
|
|
2.89
|
%
|
|
3.13
|
%
|
|
3.54
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Alt-A
|
|
|
|
|
|
|
|
|
|
|
Number of insured loans
|
|
32,411
|
|
|
34,166
|
|
|
35,927
|
|
|
37,468
|
|
|
38,953
|
|
Number of loans in default
|
|
5,813
|
|
|
6,318
|
|
|
6,949
|
|
|
7,480
|
|
|
8,136
|
|
Percentage of loans in default
|
|
17.94
|
%
|
|
18.49
|
%
|
|
19.34
|
%
|
|
19.96
|
%
|
|
20.89
|
%
|
|
|
|
|
|
|
|
|
|
|
|
A minus and below
|
|
|
|
|
|
|
|
|
|
|
Number of insured loans
|
|
31,902
|
|
|
33,018
|
|
|
34,224
|
|
|
35,425
|
|
|
36,688
|
|
Number of loans in default
|
|
7,267
|
|
|
7,229
|
|
|
7,490
|
|
|
7,846
|
|
|
8,937
|
|
Percentage of loans in default
|
|
22.78
|
%
|
|
21.89
|
%
|
|
21.89
|
%
|
|
22.15
|
%
|
|
24.36
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total Primary
|
|
|
|
|
|
|
|
|
|
|
Number of insured loans
|
|
881,110
|
|
|
879,841
|
|
|
872,870
|
|
|
874,225
|
|
|
873,077
|
|
Number of loans in default (1)
|
|
35,303
|
|
|
35,875
|
|
|
37,676
|
|
|
40,440
|
|
|
45,319
|
|
Percentage of loans in default
|
|
4.01
|
%
|
|
4.08
|
%
|
|
4.32
|
%
|
|
4.63
|
%
|
|
5.19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Excludes the following number of loans subject to the Freddie
Mac Agreement that are in default as we no longer have claims
exposure on these loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
|
2015
|
|
2015
|
|
2015
|
|
2015
|
|
2014
|
Number of loans in default
|
|
2,821
|
|
|
2,993
|
|
|
3,246
|
|
|
3,715
|
|
|
4,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radian Group Inc. and Subsidiaries
|
Mortgage Insurance Supplemental Information - Captives, QSR and
Persistency
|
Exhibit M
|
|
|
|
|
|
|
|
2015
|
|
2014
|
($ in thousands)
|
|
Qtr 4
|
|
Qtr 3
|
|
Qtr 2
|
|
Qtr 1
|
|
Qtr 4
|
1st Lien Captives
|
|
|
|
|
|
|
|
|
|
|
Premiums ceded to captives
|
|
$
|
2,268
|
|
|
$
|
2,434
|
|
|
$
|
2,700
|
|
|
$
|
2,585
|
|
|
$
|
3,078
|
|
% of total premiums
|
|
1.0
|
%
|
|
1.0
|
%
|
|
1.1
|
%
|
|
1.1
|
%
|
|
1.3
|
%
|
Insurance in force included in captives (1)
|
|
2.1
|
%
|
|
2.2
|
%
|
|
2.4
|
%
|
|
2.5
|
%
|
|
2.8
|
%
|
Risk in force included in captives (1)
|
|
1.9
|
%
|
|
2.1
|
%
|
|
2.2
|
%
|
|
2.4
|
%
|
|
2.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Initial Quota Share Reinsurance (“QSR”) Transaction
|
|
|
|
|
|
|
|
|
|
|
QSR ceded premiums written
|
|
$
|
3,145
|
|
|
$
|
3,437
|
|
|
$
|
3,822
|
|
|
$
|
4,067
|
|
|
$
|
(4,801
|
)
|
% of premiums written
|
|
1.3
|
%
|
|
1.4
|
%
|
|
1.5
|
%
|
|
1.6
|
%
|
|
(1.9
|
)%
|
QSR ceded premiums earned
|
|
$
|
4,647
|
|
|
$
|
5,067
|
|
|
$
|
6,425
|
|
|
$
|
6,018
|
|
|
$
|
(2,869
|
)
|
% of premiums earned
|
|
1.9
|
%
|
|
2.1
|
%
|
|
2.6
|
%
|
|
2.5
|
%
|
|
(1.2
|
)%
|
Ceding commissions
|
|
$
|
681
|
|
|
$
|
745
|
|
|
$
|
828
|
|
|
$
|
880
|
|
|
$
|
1,108
|
|
Risk in force included in QSR (2)
|
|
$
|
836,192
|
|
|
$
|
889,298
|
|
|
$
|
954,673
|
|
|
$
|
1,041,383
|
|
|
$
|
1,105,545
|
|
|
|
|
|
|
|
|
|
|
|
|
Second QSR Transaction
|
|
|
|
|
|
|
|
|
|
|
QSR ceded premiums written
|
|
$
|
3,789
|
|
|
$
|
5,030
|
|
|
$
|
394
|
|
|
$
|
6,529
|
|
|
$
|
9,303
|
|
% of premiums written
|
|
1.6
|
%
|
|
2.0
|
%
|
|
0.2
|
%
|
|
2.6
|
%
|
|
3.7
|
%
|
QSR ceded premiums earned
|
|
$
|
5,876
|
|
|
$
|
7,134
|
|
|
$
|
3,040
|
|
|
$
|
8,768
|
|
|
$
|
8,339
|
|
% of premiums earned
|
|
2.5
|
%
|
|
3.0
|
%
|
|
1.2
|
%
|
|
3.6
|
%
|
|
3.6
|
%
|
Ceding commissions
|
|
$
|
1,872
|
|
|
$
|
1,998
|
|
|
$
|
2,154
|
|
|
$
|
2,285
|
|
|
$
|
3,256
|
|
Risk in force included in QSR (2)
|
|
$
|
1,294,838
|
|
|
$
|
1,364,615
|
|
|
$
|
1,440,312
|
|
|
$
|
1,533,677
|
|
|
$
|
1,615,554
|
|
|
|
|
|
|
|
|
|
|
|
|
Persistency (twelve months ended) (3)
|
|
78.8
|
%
|
|
79.2
|
%
|
|
80.1
|
%
|
|
82.6
|
%
|
|
84.2
|
%
|
Persistency (quarterly, annualized)
|
|
81.8
|
%
|
|
80.5
|
%
|
|
76.2
|
%
|
|
80.3
|
%
|
|
83.3
|
%
|
|
(1)
|
|
Radian reinsures the middle layer risk positions, while
retaining a significant portion of the total risk comprising the
first loss and most remote risk positions.
|
(2)
|
|
Included in primary risk in force.
|
(3)
|
|
Effective March 31, 2015, we refined our persistency
calculation to incorporate loan level detail rather than
aggregated portfolio data. Prior periods have been recalculated
and reflect the current calculation methodology.
|
|
|
|
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. 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 including:
-
changes in general economic and political conditions, including in
particular but without limitation, unemployment rates and changes in
housing markets and mortgage credit markets;
-
changes in the way customers, investors, regulators or legislators
perceive the strength of private mortgage insurers;
-
Radian Guaranty Inc.’s ability to remain eligible under the Private
Mortgage Insurer Eligibility Requirements (“PMIERs”) and other
applicable requirements imposed by the Federal Housing Finance Agency
(“FHFA”) and by Fannie Mae and Freddie Mac (collectively, the “GSEs”)
to insure loans purchased by the GSEs;
-
our ability to maintain sufficient holding company liquidity to meet
our short- and long-term liquidity needs and to successfully execute
and implement actions and activities related to our capital plans,
including our ability to enter into and receive GSE approval for a
reinsurance transaction to reduce exposure to our single premium
policies, which we may not be able to do on favorable terms, if at all;
-
our ability to successfully execute and implement our business plans
and strategies, including in particular but without limitation, plans
and strategies that require GSE approval;
-
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;
-
any disruption in the servicing of mortgages covered by our insurance
policies, as well as poor servicer performance;
-
a decrease in the persistency rates of our mortgage insurance policies;
-
heightened competition in our mortgage insurance business, including
in particular but without limitation, increased price competition;
-
changes to the current system of housing finance;
-
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;
-
the adoption of new laws and regulations, or changes in existing laws
and regulations, or the way they are interpreted;
-
the amount and timing of potential payments or adjustments associated
with federal or other tax examinations, including deficiencies
assessed by the Internal Revenue Service (“IRS”) resulting from the
examination of our 2000 through 2007 tax years, which we are currently
contesting;
-
the possibility that we may fail to estimate accurately the
likelihood, magnitude and timing of losses in connection with
establishing loss reserves for our mortgage insurance business;
-
volatility in our results of operations caused by changes in the fair
value of our assets and liabilities, including a significant portion
of our investment portfolio;
-
changes in “GAAP” (accounting principles generally accepted in the
U.S.) or “SAP” (statutory accounting practices including those
required or permitted, if applicable, by the insurance departments of
the respective states of domicile of our insurance subsidiaries) rules
and guidance, or their interpretation;
-
legal and other limitations on amounts we may receive from our
subsidiaries; and
-
the possibility that we may need to impair the estimated fair value of
goodwill established in connection with our acquisition of Clayton
Holdings LLC.
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 Part I of our Annual Report on Form 10-K
for the year ended December 31, 2014 and in our subsequent reports and
registration statements filed from time to time with the U.S. Securities
and Exchange Commission. We caution you not to place undue reliance on
these forward-looking statements, which are current only as of the date
on which we issued this press release. We do not intend to, and we
disclaim any duty or obligation to, update or revise any forward-looking
statements to reflect new information or future events or for any other
reason.
CONTACT:
Radian Group Inc.
Emily Riley, 215-231-1035
emily.riley@radian.biz
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