10q10k10q10k.net

What changed in RADIAN GROUP INC's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of RADIAN GROUP INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+886 added−900 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in RADIAN GROUP INC's 2023 10-K

886 paragraphs added · 900 removed · 711 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

300 edited+71 added−81 removed154 unchanged
Biggest changeBusiness Key Accomplishments for 2022 ■ Delivered strong financial results, driven by improved credit performance in our Mortgage segment, while executing upon our long-term strategy ▪ Earned consolidated pretax income of $953 million and net income of $743 million, or $4.35 net income per diluted share, in 2022, compared to consolidated pretax income of $765 million and net income of $601 million, or $3.16 net income per diluted share, in 2021, aided by significant improvement in our provision for losses from $21 million in 2021 to a benefit of $338 million in 2022 ▪ Adjusted pretax operating income (1) was $1.1 billion, or $4.87 per diluted share, in 2022, compared to $758 million, or $3.15 per diluted share, in 2021 ▪ Wrote $68.0 billion of NIW, contributing to an increase in our IIF from $246.0 billion at December 31, 2021, to $261.0 billion at December 31, 2022 ■ Continued to grow and diversify our mortgage and real estate businesses through innovative business models ▪ Despite a challenging market environment, expanded our homegenius offerings through the development and launch of geniusprice (a SaaS property intelligence platform), homegeniusIQ (the real estate sector’s first automated valuation model that uses artificial intelligence and computer vision technology) and homegenius connect (a lender, real estate agent and consumer real estate referral network) ▪ Launched Radian Mortgage Capital, a mortgage conduit formed to provide residential mortgage lenders with an additional secondary-market option to sell eligible loans to us and ultimately to provide mortgage investors with another known sponsor of private label securitizations ■ Maintained a strong risk culture, as demonstrated by ongoing risk distribution strategies, disciplined and granular risk-based pricing and expanded use of data and analytics to inform decision making ▪ Entered into the 2022 QSR Agreement with a panel of third-party reinsurance providers to cede a portion of our NIW from January 2022 through June 2023 ▪ Continued to monitor and grow the economic value of our insured mortgage portfolio by leveraging granular, risk-adjusted pricing and new technologies to identify strategies to maximize the economic value of projected NIW ▪ Continued to enhance our risk analytics, including customer and servicer segmentation, loss mitigation reporting, servicer dashboards and underwriting surveillance ■ Further strengthened our capital and liquidity profile, while enhancing financial flexibility and returning value to stockholders ▪ Completed the $400 million share repurchase program that was approved in 2022, repurchasing 19.5 million shares in 2022 at an average share price of $20.52, including commissions ▪ Increased our quarterly cash dividend by 43% from $0.14 to $0.20 per share, beginning with the dividend declared in the first quarter of 2022 ▪ Completed a series of capital actions in the fourth quarter of 2022 focused on enhancing our financial flexibility and improving operational efficiency, which resulted in $382 million being distributed from Radian Guaranty to Radian Group and restored Radian Guaranty’s ability to pay ordinary dividends starting in the first quarter of 2023.
Biggest changeKey Accomplishments for 2023 ■ Delivered strong financial results, driven by continued favorable credit performance in our Mortgage Insurance segment, while executing upon our long-term strategy ▪ Earned consolidated pretax income of $767 million and net income of $603 million, or $3.77 net income per diluted share, in 2023, compared to consolidated pretax income of $953 million and net income of $743 million, or $4.35 net income per diluted share, in 2022, impacted by a reduction in the benefit from our provision for losses from $338 million in 2022 to $43 million in 2023 ▪ Adjusted pretax operating income (1) was $786 million, or $3.88 per diluted share, in 2023, compared to $1.1 billion, or $4.87 per diluted share, in 2022 ▪ Wrote $52.7 billion of NIW, contributing to an increase in our IIF from $261.0 billion at December 31, 2022, to $270.0 billion at December 31, 2023 ■ Maintained a strong risk culture, as demonstrated by ongoing risk distribution strategies, disciplined and granular risk-based pricing and strategic use of data and analytics to inform decision making ▪ Continued to monitor and grow the economic value of our insured mortgage portfolio by leveraging granular, risk-adjusted pricing and new technologies to identify strategies to maximize the economic value of NIW ▪ Entered into the 2023 QSR Agreement with a panel of third-party reinsurance providers to cede a portion of our NIW from July 2023 through June 2024 ▪ Entered into two excess-of-loss reinsurance transactions, one with Eagle Re 2023-1 Ltd. and the other with a panel of third-party reinsurance providers, that collectively provide Radian Guaranty with approximately $600 million of additional credit-risk protection, enhancing our PMIERs Cushion and improving our risk profile ▪ Continued to enhance our risk analytics, including customer and servicer segmentation, loss mitigation reporting, servicer dashboards and underwriting surveillance ■ Further strengthened our capital and liquidity profile, while enhancing financial flexibility and returning value to stockholders ▪ Repurchased 5.3 million shares in 2023 at an average share price of $25.32, including commissions ▪ Increased our quarterly cash dividend by 13% from $0.20 to $0.225 per share, beginning with the dividend declared in the first quarter of 2023 ▪ Increased PMIERs Cushion from $1.7 billion at December 31, 2022, to $2.3 billion at December 31, 2023 ▪ Increased available holding company liquidity from $903 million at December 31, 2022, to $992 million at December 31, 2023 ▪ Radian Guaranty paid $400 million in ordinary dividends to Radian Group in 2023 ▪ In June 2023, Eagle Re 2019-1 Ltd. and Eagle Re 2020-1 Ltd. conducted tender offers to purchase the mortgage insurance-linked notes that supported their reinsurance agreements with Radian Guaranty, which is expected to provide Radian Guaranty with significant savings over time as a result of the tender offers and termination of the corresponding portion of the reinsurance agreements. ■ Continued to prioritize the well-being and development of our people by promoting initiatives to increase inclusiveness and diversity and fostering a workplace that ensures that our employees can work in an agile manner that attracts and retains top talent ▪ Evolved our hybrid working model to ensure both flexibility and meaningful connections for our workforce that is proving to be attractive to current and prospective employees, as reflected by a low voluntary turnover rate in 2023 as well as strong participation and scores in our employee engagement surveys ▪ Completed annual talent reviews and succession planning for leaders throughout the Company to ensure development of our people and resiliency in our bench talent (1) Adjusted pretax operating income is a non-GAAP measure.
We are also focused on building the homegenius brand and developing our homegenius products and services to meet increased market demand for digital products and services across our title, real estate and technology business platforms.
We are also focused on building the homegenius brand and developing our homegenius products and services across our title, real estate and real estate technology business platforms to meet increased market demand for digital products and services.
The performance of our Mortgage business is particularly influenced by macroeconomic conditions and specific events that impact the housing finance and real estate markets, including seasonal fluctuations and other events that impact mortgage originations and the credit performance of our mortgage insurance portfolio, most of which are beyond our control, such as housing prices, inflationary pressures, unemployment levels, interest rate changes, the availability of credit and other national and regional economic conditions.
The performance of our Mortgage Insurance business is particularly influenced by macroeconomic conditions and specific events that impact the housing finance and real estate markets, including seasonal fluctuations and other events that impact mortgage originations and the credit performance of our mortgage insurance portfolio, most of which are beyond our control, such as housing prices, inflationary pressures, unemployment levels, interest rate changes, the availability of credit and other national and regional economic conditions.
While the majority of our policies terminate when certain criteria, such as prescribed LTV levels, are met, some of our products provide coverage for the life of the loan, subject to certain conditions.
While the majority of our policies terminate when certain criteria are met, such as prescribed LTV levels, some of our products provide coverage for the life of the loan, subject to certain conditions.
Business Defaults and Claims Defaults In our mortgage insurance business, the default and claim cycle begins with the receipt of a default notice from the loan servicer. We consider a loan to be in default for financial statement and internal tracking purposes upon receipt of notification by servicers that a borrower has missed two monthly payments.
Defaults and Claims Defaults In our mortgage insurance business, the default and claim cycle begins with the receipt of a default notice from the loan servicer. We consider a loan to be in default for financial statement and internal tracking purposes upon receipt of notification by servicers that a borrower has missed two monthly payments.
From time to time, claims management may result in disputes with our customers that ultimately produce litigation or other legal proceedings. See Note 13 of Notes to Consolidated Financial Statements. homegenius Overview Our homegenius businesses are comprised of title, real estate and technology products and services.
From time to time, claims management may result in disputes with our customers that ultimately produce litigation or other legal proceedings. See Note 13 of Notes to Consolidated Financial Statements. homegenius Overview Our homegenius businesses are comprised of title, real estate and real estate technology products and services.
See Note 4 of Notes to Consolidated Financial Statements for additional information regarding the basis of our segment reporting, including the related allocations. Competition Mortgage We operate in the highly competitive U.S. mortgage insurance industry. Our competitors primarily include other private mortgage insurers and federal and state governmental agencies, principally the FHA and VA.
See Note 4 of Notes to Consolidated Financial Statements for additional information regarding the basis of our segment reporting, including the related allocations. Competition Mortgage Insurance We operate in the highly competitive U.S. mortgage insurance industry. Our competitors primarily include other private mortgage insurers and federal and state governmental agencies, principally the FHA and VA.
In our mortgage insurance business, we use reinsurance as a capital and risk management tool to lower the risk profile and financial volatility of our mortgage insurance portfolio through economic cycles. We have distributed risk through third-party quota share and excess-of-loss reinsurance arrangements, including through the capital markets using mortgage insurance-linked notes transactions.
In our mortgage insurance business, we use reinsurance as a capital and risk management tool, including to lower the risk profile and financial volatility of our mortgage insurance portfolio through economic cycles. We have distributed risk through third-party quota share and excess-of-loss reinsurance arrangements, including through the capital markets using mortgage insurance-linked notes transactions.
Business Title Insurance Risk Management We take a prudent approach to assessing and managing risk in our title insurance business through the use of well-trained underwriters, stringent underwriting guidelines and the imposition of per file risk limits and third-party reinsurance on a per policy basis, over certain policy limits. Underwriting and Quality Assurance.
Title Insurance Risk Management We take a prudent approach to assessing and managing risk in our title insurance business through the use of well-trained underwriters, stringent underwriting guidelines and the imposition of per file risk limits and third-party reinsurance on a per policy basis, over certain policy limits. Underwriting and Quality Assurance.
In addition, state regulators may assess how rates are being charged to various customers based on whether they are “similarly situated” to other customers being charged various rates, and state regulators also may evaluate general default experience in the mortgage insurance industry in assessing the premium rates charged by mortgage insurers.
In addition, state regulators may assess how rates are being charged to various customers based on whether they are “similarly situated” to other customers, and state regulators also may evaluate general default experience in the mortgage insurance industry in assessing the premium rates charged by mortgage insurers.
Policy forms require approval to ensure that the coverage and exceptions conform to state insurance regulations. Premium rates subject to approval often must be supported by actuarial data or a study of financial impact of the premium rate on the insurer.
Policy forms require approval to ensure that the coverage and exceptions conform to state insurance regulations. Premium rates subject to approval often must be supported by actuarial data or a study of the financial impact of the premium rate on the insurer.
Each insurance subsidiary is required by the insurance regulatory authority of its state of domicile, and the insurance regulatory authority of each other jurisdiction in which it is licensed to transact business, to make various filings with those insurance regulatory authorities and with the NAIC, including quarterly and annual financial statements prepared in accordance with SAP.
Each insurance subsidiary is required by the insurance regulatory authority of its state of domicile, and the insurance regulatory authority of each other jurisdiction in which it is licensed to transact business, to make various filings with those authorities and with the NAIC, including quarterly and annual financial statements prepared in accordance with SAP.
Radian Guaranty is authorized to write insurance in all 50 states, the District of Columbia and Guam as a monoline insurer, restricted by the laws of certain states to writing first-lien residential mortgage guaranty insurance (or in states where there is no specific authorization for mortgage guaranty insurance, the applicable line of insurance under which mortgage guaranty insurance is regulated).
Radian Guaranty is authorized to write insurance in all 50 states, the District of Columbia and Guam as a monoline insurer, and is restricted by the laws of certain states to writing first-lien residential mortgage guaranty insurance (or in states where there is no specific authorization for mortgage guaranty insurance, the applicable line of insurance under which mortgage guaranty insurance is regulated).
Other Services In addition to our insurance subsidiaries, certain of our other subsidiaries are subject to regulation and oversight by the states in which they conduct their businesses, including requirements to be licensed and/or registered in these states. Our real estate brokerage business conducted through homegenius Real Estate provides services in all 50 states and the District of Columbia.
Other Businesses In addition to our insurance subsidiaries, certain of our other subsidiaries are subject to regulation and oversight by the states in which they conduct their businesses, including requirements to be licensed and/or registered in these states. Our real estate brokerage business conducted through homegenius Real Estate provides services in all 50 states and the District of Columbia.
Homeowner Assistance Programs The American Rescue Plan Act of 2021 authorizes approximately $9.9 billion to fund a Homeowner Assistance Fund for “the purpose of preventing homeowner mortgage delinquencies, defaults, foreclosures, loss of utilities or home energy services, and displacements of homeowners experiencing financial hardship after January 21, 2020.” Since the enactment of this legislation, Treasury has issued guidance on this program and announced allocations by state, with a statutory minimum requirement of $50 million for each state, the District of Columbia and Puerto Rico.
The American Rescue Plan Act of 2021 authorizes approximately $9.9 billion to fund a Homeowner Assistance Fund for “the purpose of preventing homeowner mortgage delinquencies, defaults, foreclosures, loss of utilities or home energy services, and displacements of homeowners experiencing financial hardship after January 21, 2020.” Since the enactment of this legislation, Treasury has issued guidance on this program and announced allocations by state, with a statutory minimum requirement of $50 million for each state, the District of Columbia and Puerto Rico.
The counterparty risk management team monitors trends at the customer level, identifies customers who may exceed certain risk tolerances and shares meaningful performance data with our customers to help them improve. The team is also responsible for lender corrective action in the event we discover credit performance issues, such as high early payment default levels. Portfolio Management.
The counterparty risk management team monitors trends at the customer level, identifies customers who may exceed certain risk tolerances and shares meaningful performance data with our customers to help them improve. The team is also responsible for taking lender corrective action in the event we discover credit performance issues, such as high early payment default levels. Portfolio Management.
Internal investment policy guidelines NAIC Designation Ratings Equivalent Internal Policy 1 “A-” and above At least 75% of the portfolio Fair Value 2 “BBB+” to “BBB-” Not more than 25% of portfolio Fair Value 3 to 6 “BB+” and below Not more than 10% of portfolio Fair Value Our portfolio has been constructed to maximize long-term expected returns while maintaining an acceptable risk level.
Business Internal investment policy guidelines NAIC Designation Ratings Equivalent Internal Policy 1 “A-” and above At least 75% of the portfolio Fair Value 2 “BBB+” to “BBB-” Not more than 25% of portfolio Fair Value 3 to 6 “BB+” and below Not more than 10% of portfolio Fair Value Our portfolio has been constructed to maximize long-term expected returns while maintaining an acceptable risk level.
The January 2021 amendment to the PSPAs restricted the GSEs’ acquisition of higher-risk single-family mortgage loans, including in particular the acquisition of investor loans and single-family mortgage loans with two or more higher risk characteristics (i.e., LTVs greater than 90%, debt-to-income ratios greater than 45% and FICO credit scores less than 680), to their then current levels.
The January 2021 PSPA amendment to the PSPAs restricted the GSEs’ acquisition of higher-risk single-family mortgage loans, including in particular the acquisition of investor loans and single-family mortgage loans with two or more higher risk characteristics (i.e., LTVs greater than 90%, debt-to-income ratios greater than 45% and FICO credit scores less than 680), to their then current levels.
As part of our ERM program, our businesses employ comprehensive risk management functions, which, in conjunction with the oversight of the Risk Committee of our board of directors, are responsible for monitoring compliance with our risk-related policies, managing our insured portfolios and the mortgage loans we purchase through our mortgage conduit and communicating credit-related issues to management, our board of directors and our customers.
As part of our ERM program, our businesses employ comprehensive risk management functions, which, in conjunction with oversight by the Risk Committee of our board of directors, are responsible for monitoring compliance with our risk-related policies, managing our insured portfolios and the mortgage loans we purchase through our mortgage conduit and communicating credit-related issues to management, our board of directors and our customers.
Mortgage Overview Private mortgage insurance plays an important role in the U.S. housing finance system because it promotes affordable homeownership, while helping to protect mortgage lenders, investors and the GSEs, who are the primary beneficiaries of our mortgage insurance, by mitigating default-related losses on residential mortgage loans.
Business Mortgage Insurance Overview Private mortgage insurance plays an important role in the U.S. housing finance system because it promotes affordable homeownership, while helping to protect mortgage lenders, investors and the GSEs, who are the primary beneficiaries of our mortgage insurance, by mitigating default-related losses on residential mortgage loans.
We also currently maintain an excess-of-loss policy with a third-party reinsurer that covers losses on our entire title insurance legacy portfolio above a specified limit. Mortgage Conduit Risk Management Credit Policy. Our risk management team reviews and approves new mortgage conduit loan programs, underwriting guideline changes and mortgage seller underwriting programs.
We also currently maintain an excess-of-loss policy with a third-party reinsurer that covers losses on our entire title insurance legacy portfolio above a specified limit. Mortgage Conduit Risk Management Credit Policy. Our risk management team reviews and approves mortgage conduit loan programs, underwriting guideline changes and mortgage seller underwriting programs.
Business Historically, premiums in the mortgage insurance industry were primarily established through standard rate-cards filed with state insurance regulatory authorities, with limited flexibility to deviate. Beginning on a broad basis in 2019, the mortgage insurance industry began to widely use various pricing methodologies with differing degrees of risk-based granularity.
Historically, premiums in the mortgage insurance industry were primarily established through standard rate-cards filed with state insurance regulatory authorities, with limited flexibility to deviate. Beginning on a broad basis in 2019, the mortgage insurance industry began to widely use various pricing methodologies with differing degrees of risk-based granularity.
The macroeconomic conditions and specific events that impact the housing, mortgage finance and related real estate markets affect the demand for the products and services we offer through our homegenius businesses. Sales volume in our homegenius businesses varies based on the overall activity in the housing and mortgage finance markets and the health of related industries. See “Item 7.
The macroeconomic conditions and specific events that impact the housing, mortgage finance and related real estate markets also affect the demand for the products and services we offer through our homegenius businesses. Sales volume in our homegenius businesses varies based on the overall activity in the housing and mortgage finance markets and the health of related industries. See “Item 7.
These requirements and practices, as well as those of the federal regulators that oversee the GSEs and lenders, impact the operating results and financial performance of private mortgage insurers. See “Regulation” below for a comprehensive description of the significant state and federal regulations and other requirements of the GSEs that are applicable to our businesses.
These requirements and practices, as well as those of the federal regulators that oversee the GSEs and lenders, impact the operating results and financial performance of private mortgage insurers. See “Regulation” for a comprehensive description of the significant state and federal regulations and other requirements of the GSEs that are applicable to our businesses.
As part of our capital and risk management activities, including to manage Radian Guaranty’s capital position under the PMIERs financial requirements, we have distributed risk through third-party quota share and excess-of-loss reinsurance arrangements, including through the capital markets using insurance-linked-notes transactions.
As part of our capital and risk management activities, including to manage Radian Guaranty’s capital position under the PMIERs financial requirements, we have distributed risk through third-party quota share and excess-of-loss reinsurance arrangements, including through the capital markets using mortgage insurance-linked notes transactions.
Information Security The NYDFS has adopted cybersecurity regulations known as “Part 500” that apply to all financial institutions and insurance companies licensed under the New York Banking, Insurance, and Financial Services Laws, including Radian Guaranty and certain of our other subsidiaries.
Business Information Security The NYDFS has adopted cybersecurity regulations known as “Part 500” that apply to all financial institutions and insurance companies licensed under the New York Banking, Insurance, and Financial Services Laws, including Radian Guaranty and certain of our other subsidiaries.
Department of Justice, state attorneys general and state insurance commissioners to bring civil enforcement actions, and also provides for criminal penalties and private rights of action. Mortgage insurance, title insurance and other products and services provided by Radian’s affiliates are considered settlement services for purposes of RESPA.
Department of Justice, state attorneys general and state insurance commissioners to bring civil enforcement actions, and also provides for criminal penalties and private rights of action. Mortgage insurance, title insurance, brokerage services and other products and services provided by Radian’s affiliates are considered settlement services for purposes of RESPA.
Consistent with these objectives, our business strategy, as highlighted below, is focused on growing our businesses, diversifying our revenue sources and seeking to optimize our capital and liquidity, while maintaining an emphasis on risk management, human capital management and long-term profitability.
Consistent with these objectives, our business strategy, as highlighted below, is focused on growing our businesses, diversifying our revenue sources and seeking to optimize our capital and liquidity, while maintaining an emphasis on risk management, human capital management, long-term profitability and growth.
Most often, a Claim Denial is the result of a servicer’s failure to provide the loan origination file or other critical servicing documents for review. If, after requests by us, the loan origination file or other servicing documents are not provided to us, we generally deny the claim.
Most often, a Claim Denial is the result of a servicer’s failure to provide the loan origination file or other critical servicing documents for review. If, after multiple requests by us, the loan origination file or other servicing documents are not provided to us, we generally deny the claim.
Provided that all required premiums are paid, coverage for a loan under our Master Policy generally will be cancelled on the first of the following to occur: (i) the loan insured under the certificate is paid in full, including in the event of a refinance transaction; (ii) we settle a claim with respect to the certificate; (iii) we act upon the insured’s or its servicer’s instruction to cancel coverage under the certificate, including as may be required by the HPA or pursuant to GSE guidelines; (iv) the term of coverage expires under the premium plan or upon the terms specified in the certificate; or (v) we cancel, rescind or deny coverage under the certificate.
Provided that all required premiums are paid, coverage for a loan under our Master Policy generally will be canceled on the first of the following to occur: (i) the loan insured under the certificate is paid in full, including in the event of a refinance transaction; (ii) we settle a claim with respect to the certificate; (iii) we act upon the insured’s or its servicer’s instruction to cancel coverage under the certificate, including as may be required by the HPA or pursuant to GSE guidelines; (iv) the term of coverage expires under the premium plan or upon the terms specified in the certificate; or (v) we cancel or rescind coverage or deny a claim under the certificate.
Our Pricing and Risk Committee, Capital and Liquidity Review Committee and Model Governance Committee (these committees collectively comprise our Asset Liability Committee) focus on identifying risks and decision making related to pricing, credit, capital, liquidity and model risk management, including risk/return analysis associated with different business opportunities.
Our Pricing and Risk Committee, Capital and Liquidity Committee and Model Governance Committee (these committees collectively comprise our Asset Liability Committee) focus on identifying risks and decision making related to pricing, credit, capital, liquidity and model risk management, including risk/return analysis associated with different business opportunities.
Under the COVID-19 Amendment, the Disaster Related Capital Charge currently is applied to COVID-19 Defaulted Loans for the period of time that the loan is subject to a forbearance plan, repayment plan or loan modification trial period granted in response to a financial hardship related to COVID-19.
Under the COVID-19 Amendment, the Disaster Related Capital Charge is applied to COVID-19 Defaulted Loans for the period of time that the loan is subject to a forbearance plan, repayment plan or loan modification trial period granted in response to a financial hardship related to COVID-19.
In contrast, under Director Thompson, the FHFA has been focused on increasing the equitable accessibility and affordability of mortgage credit, in particular to low- and moderate-income borrowers and underserved communities, while also continuing to ensure the safety and soundness of the GSEs.
Under Director Thompson, the FHFA has been focused on increasing the equitable accessibility and affordability of mortgage credit, in particular to low- and moderate-income borrowers and underserved communities, while also continuing to ensure the safety and soundness of the GSEs.
HUD/FHA Private mortgage insurance competes for a share of the insurable mortgage market with the single-family mortgage insurance programs of the FHA, including on the basis of loan limits, pricing, credit guidelines, terms of insurance policies and loss mitigation practices.
HUD/FHA/VA Private mortgage insurance competes for a share of the insurable mortgage market with the single-family mortgage insurance programs of the FHA, including on the basis of loan limits, pricing, credit guidelines, terms of insurance policies and loss mitigation practices.
Through our delegated underwriting program, we approve insured lenders to underwrite mortgage loan insurance applications based on our mortgage insurance underwriting guidelines. Each lender participating in the delegated underwriting program must be approved by our risk management group.
Through our delegated underwriting program, we approve lenders to underwrite mortgage loan insurance applications based on our mortgage insurance underwriting guidelines. Each lender participating in the delegated underwriting program must be approved by our risk management group.
With respect to defaulted loans, the PMIERs recognize that loans that have become non-performing as a result of a FEMA Declared Major Disaster eligible for individual assistance (e.g., due to a natural disaster) generally have a higher likelihood of curing following the conclusion of the event, and therefore applies a Disaster Related Capital Charge for a period of time and subject to certain limitations, to reduce the Minimum Required Asset factor for these loans.
With respect to defaulted loans, the PMIERs recognize that loans that have become non-performing as a result of a FEMA Declared Major Disaster eligible for individual assistance (e.g., due to a natural disaster) generally have a higher likelihood of curing following the conclusion of the event, and therefore apply a Disaster Related Capital Charge for a period of time and subject to certain limitations, to reduce the Minimum Required Asset factor for these loans.
We believe that the VA remains a strong participant in the overall market because the VA insures 100% LTV loans, which is unavailable through private mortgage insurance and the FHA, charges a one-time funding fee that can be included in the loan amount with no separate monthly payment, and because of an increase in the number of borrowers that are eligible for the VA’s program.
We believe that the VA remains a strong participant in the overall market because of the number of borrowers that are eligible for the VA’s program, and because the VA insures 100% LTV loans, which is unavailable through private mortgage insurance and the FHA, and charges a one-time funding fee that can be included in the loan amount with no separate monthly payment.
The HPA also provides that, in general, within 45 days after termination or cancellation of a private mortgage insurance policy in accordance with the requirements of the relevant section of the HPA, all unearned premiums for private mortgage insurance must be returned to the borrower by the servicer, and that within 30 days after notification by the servicer, a mortgage insurer that is in possession of any unearned premiums of the borrower must transfer to the servicer an amount equal to the amount of unearned premiums for repayment.
The HPA also provides that, in general, within 45 days after termination or cancellation of a borrower-paid private mortgage insurance policy in accordance with the requirements of the relevant section of the HPA, all remaining unearned premiums for private mortgage insurance must be returned to the borrower by the servicer, and that within 30 days after notification by the servicer, a mortgage insurer that is in possession of any unearned premiums of the borrower must transfer to the servicer an amount equal to the amount of unearned premiums for repayment.
Business addition, the introduction of alternatives to traditional title insurance into the market such as the recent offering of attorney opinion letters in lieu of traditional title policies, which is being accepted by the GSEs, subject to certain conditions, could provide additional competition. See “Regulation—Federal Regulation—Housing Finance Reform and the GSEs’ Business Practices” for additional information.
In addition, the introduction of alternatives to traditional title insurance into the market such as the offering of attorney opinion letters in lieu of traditional title policies, which is being accepted by the GSEs, subject to certain conditions, could provide additional competition in the future. See “Regulation—Federal Regulation—Housing Finance Reform and the GSEs’ Business Practices” for additional information.
We provide mortgage insurance and other products and services to the real estate and mortgage finance industries through our two business segments—Mortgage and homegenius. While we manage and report on these two segments separately, we take an enterprise approach under our “One Radian” strategy, which leverages the value of our employees across our diversified businesses to better serve our customers.
We provide mortgage insurance and other products and services to the real estate and mortgage finance industries primarily through two business segments—Mortgage Insurance and homegenius. While we manage and report on our segments separately, we take an enterprise approach under our “One Radian” strategy, which leverages the value of our employees across our diversified businesses to better serve our customers.
The CCPA provides a private right of action for data breaches, including statutory or actual damages, and public enforcement by the California Attorney General for other violations. On January 1, 2023, California adopted the California Privacy Rights Act (“CPRA”), which amended the CCPA to enhance certain of the privacy protections for California consumers that were created by the CCPA.
The CCPA provides a private right of action for data breaches, including statutory or actual damages, and public enforcement by the California Attorney General for other violations. On January 1, 2023, California adopted the California Privacy Rights Act (“CPRA”), which amended the CCPA to enhance certain of the privacy protections for California residents that were created by the CCPA.
In many states, the filed forms allow for a deviation from the filed rates within a certain range to take into consideration various factors linked to the credit being insured. As to title insurance, premium rates and policy forms must be filed with state insurance regulatory authorities and, in some states, must also be approved before their use.
In many states, the filed forms allow for a deviation from the filed rates within a certain range to take into consideration various factors linked to the risk being insured. As to title insurance, premium rates and policy forms must be filed with state insurance regulatory authorities and, in some states, must also be approved before their use.
Due, in part, to the transactional nature of the business, revenues for our homegenius segment are subject to fluctuations from period to period, including fluctuations that reflect the seasonal volume fluctuations in these markets. Sales volume is also affected by the number of competing companies and alternative products offered in the market.
Due, in part, to the transactional nature of the business, revenues for our homegenius segment are subject to fluctuations from period to period, including fluctuations that reflect the seasonal volume fluctuations in these markets. Sales volume is also affected by the number of competing companies and alternative products offered in the market. In “Item 1A.
Risk Factors” see “— Our mortgage insurance business faces intense competition. ” Underwriting Mortgage loan applications are underwritten to determine whether they are eligible for our mortgage insurance. We perform this function directly or, alternatively, we delegate to our insured lenders the ability to underwrite the mortgage loans on our behalf. Delegated Underwriting.
Risk Factors” see “ Our mortgage insurance business faces intense competition. ” Underwriting Mortgage loan applications are underwritten to determine whether they are eligible for our mortgage insurance. We perform this function directly or, alternatively, we delegate to our approved lenders the ability to underwrite the mortgage loans on our behalf. Delegated Underwriting.
Home price appreciation as well as pre-foreclosure sales, acquisitions and other early workout efforts help to reduce overall Claim Severity, as do actions we may take to reduce a claim payment due to servicer negligence, as discussed below in “—Claims Management.” See “Item 7.
Home price appreciation as well as pre-foreclosure sales, acquisitions and other early workout efforts help to reduce overall Claim Severity, as do actions we may take to reduce a claim payment due to servicer negligence, as discussed below in “Claims Management.” See “Item 7.
Depending on the outcome of such dialogue, one or both of the GSEs, together or in conjunction with one or more private mortgage insurers, could implement further initiatives in pursuit of housing policy objectives that could require changes to the GSEs’ business practices and impact our businesses. In “Item 1A.
Depending on the outcome of such dialogue, one or both of the GSEs, together or in conjunction with one or more private mortgage insurers, could implement further initiatives in pursuit of housing policy objectives that could require changes to the GSEs’ business practices and impact our businesses.
In addition to the laws and regulations discussed elsewhere in this Regulation section, these laws may include: ■ The Truth in Lending Act and Regulation Z, requiring disclosures of mortgage loan costs and other notices to consumers, prohibiting certain compensation to loan originators, steering and other loan origination practices, establishing a number of requirements for mortgage servicers and imposing requirements on loan owners for loan ownership transfers; ■ The Fair Debt Collection Practices Act, regulating debt collection communications and other activities; ■ Prohibition on Unfair, Deceptive or Abusive Acts or Practices, prohibiting unfair, deceptive or abusive acts or practices in connection with any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service; ■ CAN-SPAM Act, regulating commercial and marketing email, including the right of recipients to have the sender stop sending emails; ■ The Telephone Consumer Protection Act and Do Not Call regulations, regulating and restricts certain marketing-related phone calls, text messages and facsimiles; and ■ Electronic Signatures in Global and National Commerce Act (E-Sign Act), allowing the use of electronic records to satisfy requirements that must be provided in writing if the consumer has affirmatively consented.
In addition to the laws and regulations discussed elsewhere in this Regulation section, these laws may include: ■ The Truth in Lending Act and Regulation Z, requiring disclosures of mortgage loan costs and other notices to consumers, prohibiting certain compensation to loan originators, steering and other loan origination practices, establishing a number of requirements for mortgage servicers and imposing requirements on loan owners for loan ownership transfers; ■ The Fair Debt Collection Practices Act, regulating debt collection communications and other activities; ■ Prohibition on Unfair, Deceptive or Abusive Acts or Practices, prohibiting unfair, deceptive or abusive acts or practices in connection with any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service; ■ CAN-SPAM Act, regulating commercial and marketing email, including the right of recipients to have the sender stop sending emails; ■ The Telephone Consumer Protection Act and Do Not Call regulations, regulating and restricts certain marketing-related phone calls, text messages and facsimiles; and ■ Electronic Signatures in Global and National Commerce Act (E-Sign Act), allowing the use of electronic records to satisfy requirements that must be provided in writing if the consumer has affirmatively consented. 42 Table of Contents Glossary Part I.
Radian Guaranty has entered into a Factored Claim Administration Agreement with Fannie Mae that applies to certain loans owned by Fannie Mae that were insured under our Master Policies for which a claim is submitted on or after October 1, 2018.
Item 1. Business Radian Guaranty has entered into a Factored Claim Administration Agreement with Fannie Mae that applies to certain loans owned by Fannie Mae that were insured under our Master Policies for which a claim is submitted on or after October 1, 2018.
The credit policy function works closely with our mortgage insurance underwriters to ensure that underwriting decisions align with risk tolerances and principles. Quality Assurance. Our quality assurance function supports our credit analytics function by auditing individual loan files to examine underwriting decisions for compliance with agreed-upon underwriting guidelines.
The credit policy function works closely with our mortgage insurance underwriters to ensure that underwriting decisions align with risk tolerances and policies. Quality Assurance. Our quality assurance function supports our credit analytics function by auditing individual loan files to examine underwriting decisions for compliance with agreed-upon underwriting guidelines.
Our risk modeling team uses analytical techniques to develop and maintain economic scenario generation models and loan level default and prepayment models for a wide range of risk management applications, including portfolio analysis, credit decision making, forecasting and loss reserving. Risk Distribution.
Our risk modeling team uses analytical techniques to develop and maintain economic scenario generation models and loan level default and prepayment models across a wide range of risk management applications, including portfolio analysis, credit decision making, forecasting and loss reserving. Risk Distribution.
We also have the following alternative settlement options under our Master Policies: (i) Approved Sale Option: Subject to any reduction provided for in our Master Policies, we may pay the claim amount (not to exceed the lender’s entire loss or our maximum liability under the Percentage Option) by taking into account the net proceeds received by the lender following an approved sale such as a “short sale” or “deed-in-lieu” transaction; (ii) Acquisition Option: Subject to any reduction provided for elsewhere in our Master Policies, we may pay the entire claim amount (as described above but without application of the coverage percentage) upon the conveyance to us of good and marketable title to the property; or (iii) Anticipated Loss Option: In certain circumstances, as outlined in our Master Policies, this claim settlement option is primarily based on the claim amount minus the net proceeds we reasonably anticipate would be generated if the property, in its original condition on the effective insurance commitment date, reasonable wear and tear excepted, were sold to a third party for fair market value.
We also have the following alternative settlement options under our Master Policies: (i) Third-Party Sale/Approved Sale Option: Subject to any reduction provided for in our Master Policies, we may pay the claim amount (not to exceed the lender’s entire loss or our maximum liability under the Percentage Option) by taking into account the net proceeds received by the lender following an approved sale, including a “short sale” or “deed-in-lieu” transaction; (ii) Acquisition Option: Subject to any reduction provided for elsewhere in our Master Policies, we may pay the entire claim amount (as described above but without application of the coverage percentage) and acquire good and marketable title to the property; or (iii) Anticipated Loss Option: In certain circumstances, as outlined in our Master Policies, this claim settlement option is primarily based on the claim amount minus the net proceeds we reasonably anticipate would be generated if the property, in its original condition on the effective insurance commitment date, reasonable wear and tear excepted, were sold to a third party for fair market value.
Risk Factors,” see “— A decrease in the volume of mortgage originations could result in fewer opportunities for us to write new mortgage insurance business and conduct our homegenius businesses. ” Qualified Residential Mortgage Regulations—Securitization Risk Retention Requirements The Dodd-Frank Act requires securitizers to retain at least 5% of the credit risk associated with mortgage loans that they transfer, sell or convey, unless the mortgage loans are qualified residential mortgages (“QRMs”) or are insured by the FHA or another federal agency (the “QRM Rule”).
Risk Factors,” see “ A decrease in the volume of mortgage originations could result in fewer opportunities for us to write new mortgage insurance business and conduct our homegenius businesses. ” Qualified Residential Mortgage Regulations—Securitization Risk Retention Requirements The Dodd-Frank Act requires securitizers to retain at least 5% of the credit risk associated with mortgage loans that they transfer, sell or convey, unless the mortgage loans are qualified residential mortgages (“QRMs”) or are insured by the FHA, another federal agency or are backed by the GSEs while in conservatorship (the “QRM Rule”).
We have an established Diversity, Equity and Inclusion (“DEI”) Council that is sponsored by our CEO, led by senior management and comprised of leaders and employees from across the Company to advance the program and its efforts.
We have an employee council, the Diversity, Equity and Inclusion (“DEI”) Council, that is sponsored by our CEO, led by senior management and comprised of leaders and employees from across the Company to advance the program and its efforts.
If the competitive position of the FHA is enhanced, it could have a negative effect on our ability to compete with the FHA. See “Regulation—Federal Regulation—Housing Finance Reform and the GSEs’ Business Practices” for a discussion of factors that could enhance the FHA’s competitive position relative to private mortgage insurance. We also have faced increasing competition from the VA.
Business If the competitive position of the FHA is enhanced, it could have a negative effect on our ability to compete with the FHA. See “Regulation—Federal Regulation—Housing Finance Reform and the GSEs’ Business Practices” for a discussion of factors that could enhance the FHA’s competitive position relative to private mortgage insurance. We also face competition from the VA.
Similarly, the Equal Credit Opportunity Act and Regulation B make it unlawful for a creditor to discriminate in any aspect of a credit transaction against an applicant on a prohibited basis during any aspect of a consumer or business credit transaction or make any oral or written statement to applicants or prospective applicants that would discourage on a prohibited basis a reasonable person from making or pursuing an application.
Similarly, the Equal Credit Opportunity Act (“ECOA”) and Regulation B under ECOA make it unlawful for a creditor to discriminate in any aspect of a credit transaction against an applicant on a prohibited basis during any aspect of a consumer or business credit transaction or make any oral or written statement to applicants or prospective applicants that would discourage on a prohibited basis a reasonable person from making or pursuing an application.
As the largest purchasers of conventional mortgage loans, and therefore, the main beneficiaries of private mortgage insurance, the GSEs impose eligibility requirements, known as PMIERs, that private mortgage insurers must satisfy in order to be approved to insure loans purchased by the GSEs.
As the largest purchasers of conventional mortgage loans, and therefore, the main beneficiaries of private mortgage insurance, the GSEs impose eligibility requirements, known as PMIERs, that private mortgage insurers must satisfy to be approved to insure loans purchased by the GSEs.
We leverage loan application data and analytics to categorize mortgage insurance applications based on credit risk and underwriting complexity to improve efficiency in our process and to ensure a heightened focus on the higher-risk, complex applications. We also use quality control sampling, loan performance monitoring and training to manage the risks associated with our non-delegated underwriting program.
To improve efficiency in our underwriting process, we leverage loan application data and analytics to categorize mortgage insurance applications based on credit risk and underwriting complexity, which allows us to ensure a heightened focus on the higher-risk, complex applications. We also use quality control sampling, loan performance monitoring and training to manage the risks associated with our non-delegated underwriting program.
Risk Categories Our risk appetite, or the amount of risk we are willing to take on in pursuit of value, is driven by our business strategy, which is established by executive management and overseen by our board of directors.
Item 1. Business Risk Categories Our risk appetite, or the amount of risk we are willing to take on in pursuit of value, is driven by our business strategy, which is established by executive management and overseen by our board of directors.
The HPA further provides that private mortgage insurance on most loans is subject to final termination following the date that is the midpoint of the loan’s amortization period (or, if the loan is not current on that date, on the date that the loan becomes current).
The HPA further provides that borrower-paid private mortgage insurance on most loans is subject to final termination following the date that is the midpoint of the loan’s amortization period (or, if the loan is not current on that date, on the date that the loan becomes current).
The following goals guide our strategy and actions as a risk management organization: ■ Embed and continually reinforce a disciplined, corporate-wide risk culture that utilizes an understanding of risk/return trade-offs to drive quality decisions and achieve long-term, through-the-cycle profitability; ■ Maintain credit, underwriting, pricing and risk/return disciplines based on sound data and analytics and continuous feedback throughout the organization; ■ Proactively monitor business, counterparty, economic, housing and regulatory trends to identify and mitigate emerging risks; ■ Continually refine analytical and technological capabilities, processes and systems to effectively identify, assess and manage risks; and ■ Develop and leverage tools and capabilities to inform and optimize capital allocation within our risk appetite in support of our corporate strategy.
The following goals guide our strategy and actions as a risk management organization: ■ Embed and continually reinforce a disciplined, corporate-wide risk culture that utilizes an understanding of risk/return trade-offs to drive quality decisions and achieve long-term, through-the-cycle profitability; ■ Maintain credit, underwriting, pricing and risk/return disciplines based on sound data and analytics and continuous feedback throughout the organization; ■ Proactively monitor business, counterparty, economic, housing and regulatory trends to identify and mitigate emerging risks; ■ Continually refine analytical and technological capabilities, processes and systems to effectively identify, assess and manage risks; and ■ Develop and leverage tools and capabilities to inform and optimize capital allocation within our risk appetite in support of our corporate strategy. 27 Table of Contents Glossary Part I.
Our counterparty risk management team has also developed risk thresholds for our mortgage conduit business that align with the Company’s overall risk and return tolerances. Quality Assurance. Our quality assurance function audits individual loan files purchased by Radian Mortgage Capital to assess compliance with the applicable underwriting guidelines and regulatory compliance requirements.
Our counterparty risk management team has also developed risk thresholds for our mortgage conduit business that align with the Company’s overall risk and return tolerances. Quality Assurance. Our quality assurance function audits a sample of individual loan files purchased by Radian Mortgage Capital to assess compliance with the applicable underwriting guidelines and regulatory compliance requirements.
Insurance regulations address, among other things, the licensing of companies to transact business, claims handling, credit for reinsurance, premium rates and policy forms, financial statements, periodic reporting, permissible investments and adherence to financial standards relating to surplus, dividends and other measures of solvency intended to assure the satisfaction of obligations to policyholders.
Insurance regulations address, among other things, the licensing of companies to transact business, claims handling, credit for reinsurance, premium rates and policy forms, sales and marketing activity, financial statements, periodic reporting, permissible investments and adherence to financial standards relating to surplus, dividends and other measures of solvency intended to assure the satisfaction of obligations to policyholders.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Mortgage—Year Ended December 31, 2022, Compared to Year Ended December 31, 2021—Expenses— Provision for Losses .” Claims Management Our claims management process is focused on analyzing and processing claims to ensure that we pay valid claims in accordance with our policies.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Mortgage Insurance—Year Ended December 31, 2023, Compared to Year Ended December 31, 2022—Expenses— Provision for Losses .” Claims Management Our claims management process is focused on analyzing and processing claims to ensure that we pay valid claims in accordance with our policies.
For more information, in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” see “—Key Factors Affecting Our Results—Mortgage—IIF and Related Drivers” and “—Mortgage Insurance Portfolio—Insurance and Risk in Force.” Historically, there has been a close correlation between interest rates and Persistency Rates.
For more information, in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” see “Key Factors Affecting Our Results—Mortgage Insurance—IIF and Related Drivers” and “Mortgage Insurance Portfolio—Insurance and Risk in Force.” Historically, there has been a close correlation between interest rates and Persistency Rates.
Based on our policies and risk tolerances, our credit policy function develops and updates our mortgage insurance eligibility requirements and guidelines through regular monitoring of competitor offerings, customer input regarding lending needs, analysis of historical performance and portfolio trends, quality assurance results and underwriter experience and observations.
Based on our policies and risk tolerances, our credit policy function develops and updates our mortgage insurance eligibility requirements and guidelines through regular monitoring of competitor offerings, GSE programs and GSE guideline updates, customer input regarding lending needs, analysis of historical performance and portfolio trends, quality assurance results and underwriter experience and observations.
While we are not aware of any other single company that provides a comparable range of services to the residential mortgage and real estate industries, our homegenius businesses have multiple significant competitors within each of its individual lines of business.
While we are not aware of any other single company that provides a comparable range of services to the residential mortgage and real estate industries, our homegenius businesses have multiple significant competitors within each of its individual lines of business. Significant competitors for our homegenius businesses include: Title.
In January 2021, the PSPAs were amended to allow the GSEs to continue to retain capital up to the amounts prescribed in the newly revised GSE capital requirements set forth in the ERCF, as discussed below.
In January 2021, the PSPAs were amended to allow the GSEs to continue to retain capital up to the amounts prescribed in the GSE capital requirements set forth in the ERCF, as discussed below.
Our Mortgage segment aggregates, manages and distributes U.S. mortgage credit risk for the benefit of mortgage lending institutions and mortgage credit investors, principally through private mortgage insurance on residential first-lien mortgage loans, and also provides contract underwriting and other credit risk management solutions to our customers.
Our Mortgage Insurance segment aggregates, manages and distributes U.S. mortgage credit risk for the benefit of mortgage lending institutions and mortgage credit investors, principally through private mortgage insurance on residential first-lien mortgage loans, and also offers other credit risk management solutions, including contract underwriting, to our customers.
Our investment objectives are to utilize appropriate risk management oversight to optimize after-tax returns, while preserving capital. We calibrate the level of our short-term investments based on our overall investment portfolio duration, risk appetite and expected short-term cash requirements.
Our investment objectives are to utilize appropriate risk management oversight to optimize after-tax returns, while preserving capital. We calibrate the level of our short-term investments based on our overall investment portfolio duration, risk appetite and expected short-term cash requirements. In “Item 1A.
Risk Factors,” see “—Investments to grow our existing businesses, pursue new lines of business or new products and services within existing lines of business subject us to additional risks and uncertainties.” Radian Lender Services LLC provides third-party mortgage underwriting and mortgage processing services to lenders.
Risk Factors,” see “ Investments to grow our existing businesses, pursue new lines of business or new products and services within existing lines of business subject us to additional risks and uncertainties .” Radian Lender Services LLC provides third-party mortgage underwriting and has also provided mortgage processing services to lenders.
It is difficult to predict what types of new products and activities may be proposed in the future and, if applicable, whether they may be approved by the FHFA, including programs that may provide an alternative to traditional private mortgage insurance.
It is difficult to predict what types of new products and activities may be proposed by the GSEs in the future and, if applicable, whether they may be approved by the FHFA, including programs that may provide an alternative to traditional private mortgage insurance or title insurance.
Other management committees focused on risk management include, but are not limited to, our ERM Council, Executive Information Security Committee, Resilience Executive Committee and Enterprise Information Governance Committee.
Other management committees focused on risk management include, but are not limited to, our ERM Council, Executive Information Security Committee, Enterprise Compliance Oversight Council, Resilience Executive Committee and Enterprise Information Governance Committee.
We value our employees by supporting a healthy work-life balance and a team-oriented, One Radian environment. We strive to offer competitive compensation and benefits programs as well as career development opportunities, while fostering a community where everyone feels included and empowered to do their best work and is encouraged to give back to their communities to make a social impact.
We value our employees by supporting a healthy work-life balance and a team-oriented, “One Radian” environment. We strive to offer competitive compensation and benefits programs as well as career development opportunities, while fostering a community where everyone feels included and empowered to do their best work and is encouraged to give back to their communities to make a social impact.
Qualified Mortgage Requirements—Ability to Repay Requirements The Ability to Repay Rule requires mortgage lenders to make a reasonable and good faith determination that, at the time a loan is consummated, the consumer has a reasonable ability to repay the loan.
The Ability to Repay Rule requires mortgage lenders to make a reasonable and good faith determination that, at the time a loan is consummated, the consumer has a reasonable ability to repay the loan.
Our principal customers (non-affiliated) are: ■ Mortgage originators such as mortgage banks, commercial banks, savings institutions, credit unions and community banks; ■ Aggregators, issuers and investors in RMBS, whole loans and other mortgage-related debt instruments, including the GSEs, private equity and hedge funds, real estate investment trusts and investment banks; ■ Single-family rental warehouse lenders, owner/operators, builders, capital markets institutional investors and securitization issuers; ■ Mortgage servicers; ■ Real estate brokers and agents; and ■ Consumers.
Our principal customers (non-affiliated) are: ■ Mortgage originators such as mortgage bankers, commercial banks, savings institutions, credit unions and community banks; ■ Aggregators, issuers and investors in RMBS, whole loans and other mortgage-related debt instruments, including the GSEs, private equity and hedge funds, real estate investment trusts and investment banks; ■ Single-family rental warehouse lenders, owner/operators, builders, capital markets institutional investors and securitization issuers; ■ Mortgage servicers; ■ Real estate brokers and agents; ■ Corporations for their employees; and ■ Consumers.
For Radian, customer service also includes our ability to offer products and services through our homegenius businesses that are relevant to our mortgage insurance customers and complement our mortgage insurance products.
For Radian, customer service also includes our ability to offer products and services through our other businesses that are relevant to our mortgage insurance customers and complement our mortgage insurance products.
Our largest single mortgage insurance customer (including branches and affiliates) measured by NIW, accounted for 8% of NIW during 2022, compared to 14% and 13% in 2021 and 2020, respectively. The percentage of NIW generated by our top 10 customers was 34% in 2022.
Our largest single mortgage insurance customer (including branches and affiliates) measured by NIW, accounted for 8% of NIW during 2023, compared to 8% and 14% in 2022 and 2021, respectively. The percentage of NIW generated by our top 10 customers was 34% in 2023.
Talent development, annual performance reviews that are focused in part on living our company values and succession planning are all important aspects of this investment. These processes help management identify and nurture top talent for leadership opportunities and support the growth and development of knowledge and skills of our employees, managers and leaders.
Programs such as our talent development strategy, annual performance reviews that are focused in part on living our company values and succession planning are all important aspects of this investment. These processes help management identify and nurture top talent for leadership opportunities and support the growth and development of knowledge and skills of our employees, managers and leaders.
The most common Statutory RBC Requirement is that a mortgage insurer’s Risk-to-capital may not exceed 25 to 1, while in certain other RBC States, Radian Guaranty must satisfy a MPP Requirement. As of December 31, 2022, Radian Guaranty’s Risk-to-capital was 10.7 to 1, and Radian Guaranty was in compliance with all applicable Statutory RBC Requirements.
The most common Statutory RBC Requirement is that a mortgage insurer’s Risk-to-capital may not exceed 25 to 1, while in certain other RBC States, Radian Guaranty must satisfy a MPP Requirement. As of December 31, 2023, Radian Guaranty’s Risk-to-capital was 10.4 to 1, and Radian Guaranty was in compliance with all applicable Statutory RBC Requirements.
This projected economic value is then discounted to arrive at an estimated present value of the long-term economic value of our insured portfolio. We use this economic value to assist us in evaluating various portfolio strategies and identifying opportunities to create stockholder value.
This projected economic value is then discounted to arrive at an estimated present value of the long-term economic value of our insured portfolio. We use this economic value to assist us in evaluating various portfolio strategies and identifying opportunities to grow the economic value of our insured portfolio.

… 372 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

159 edited+44 added−60 removed121 unchanged
Biggest changeRisk Factors ■ the terms on which mortgage insurance coverage may be canceled before reaching the cancellation thresholds established by law; ■ the terms required to be included in master mortgage insurance policies that cover the loans they acquire, including limitations on the ability of mortgage insurers to mitigate losses on insured mortgages that are in default; ■ the amount of loan level price adjustments or guarantee fees, which may result in a higher cost to borrowers, that the GSEs charge on loans that require mortgage insurance; and ■ the degree of influence that the GSEs have over a mortgage lender’s selection of the mortgage insurer providing coverage.
Biggest changeExamples of potential changes that could impact our business may include, without limitation: ■ eligibility requirements for a mortgage insurer to become and remain an approved eligible insurer for the GSEs; ■ underwriting standards on mortgages they purchase; ■ policies or requirements that may result in a reduction in the number of mortgages they acquire, including benchmarks established by the FHFA for the amount of certain loans that may be purchased by the GSEs; ■ the national conforming loan limit for mortgages they acquire, in particular as this limit compares to loan limits set by the FHA; ■ the level of mortgage insurance they require; ■ the terms on which mortgage insurance coverage may be canceled before reaching the cancellation thresholds established by law, including if the GSEs change or expand their cancellation practices as a result of policy goals, changing risk tolerances or otherwise; ■ the terms required to be included in mortgage insurance policies that cover the loans they acquire, including limitations on the ability of mortgage insurers to mitigate losses on insured mortgages that are in default; ■ the programs established by the GSEs that are intended to avoid or mitigate loss on insured loans; ■ the amount of loan level price adjustments or guarantee fees, which may result in a higher cost to borrowers, that the GSEs charge on loans that require mortgage insurance; and ■ the degree of influence that the GSEs have over a mortgage lender’s selection of the mortgage insurer providing coverage.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Mortgage,” as well as Note 16 of Notes to Consolidated Financial Statements. The mortgage insurance industry has always been highly competitive with respect to pricing.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Mortgage Insurance,” as well as Note 16 of Notes to Consolidated Financial Statements. The mortgage insurance industry has always been highly competitive with respect to pricing.
Mortgage loan originations may fluctuate from period to period, and a reduced volume of loan originations that satisfy our acquisition guidelines may make it difficult for us to acquire loans. ■ When we purchase mortgage loans, representations and warranties are made to us by sellers regarding, among other things, certain characteristics of those mortgage loans, which we seek to verify through underwriting and due diligence.
Mortgage loan originations fluctuate from period to period, and a reduced volume of loan originations that satisfy our acquisition guidelines may make it difficult for us to acquire loans. ■ When we purchase mortgage loans, representations and warranties are made to us by sellers regarding, among other things, certain characteristics of those mortgage loans, which we seek to verify through underwriting and due diligence.
Risk Factors The PMIERs prohibit Radian Guaranty from engaging in certain activities such as insuring loans originated or serviced by an affiliate (except under certain circumstances) and require Radian Guaranty to obtain the prior consent of the GSEs before taking many actions, which may include, among other things, entering into certain intercompany agreements, settling loss mitigation disputes with customers and commuting risk.
The PMIERs prohibit Radian Guaranty from engaging in certain activities such as insuring loans originated or serviced by an affiliate (except under certain circumstances) and require Radian Guaranty to obtain the prior consent of the GSEs before taking many actions, which may include, among other things, entering into certain intercompany agreements, settling loss mitigation disputes with customers and commuting risk.
Our success depends, in part, upon our intellectual property rights. We rely primarily on a combination of patents, copyrights, trade secrets, trademarks, nondisclosure and other contractual restrictions on copying, distributing and creating derivative products to protect our proprietary technology and information. This protection is limited, and our intellectual property could be used by others without our consent.
Our success depends, in part, upon our intellectual property rights. We rely primarily on a combination of copyrights, trade secrets, trademarks, nondisclosure and other contractual restrictions on copying, distributing and creating derivative products to protect our proprietary technology and information. This protection is limited, and our intellectual property could be used by others without our consent.
In many cases, we may not be aware that information reported to us is incorrect until such time as a claim is made against us under the relevant insurance policy. We do not receive monthly information from servicers for single premium policies, and may not be aware that the mortgage loans insured by such policies have been repaid.
In many cases, we may not be aware that information reported to us is incorrect until such time as a claim is made against us under the relevant insurance policy. We may not receive monthly information from servicers for single premium policies, and may not be aware that the mortgage loans insured by such policies have been repaid.
The volume of mortgage originations is impacted by macroeconomic conditions and specific events that impact the housing finance and real estate markets, most of which are beyond our control, including housing prices, inflationary pressures, unemployment levels, interest rate changes, the availability of credit and other national and regional economic conditions. In “Item 7.
The volume of mortgage originations is impacted by macroeconomic conditions and specific events that impact the housing finance and real estate markets, most of which are beyond our control, including housing prices, inflationary pressures, unemployment levels, interest rate changes, the availability of credit, other national and regional economic conditions and geopolitical events. In “Item 7.
For the significant portion of our investment portfolio held by our insurance subsidiaries, to receive favorable treatment under insurance regulatory requirements and full credit as Available Assets under the PMIERs, we generally are limited to investing in investment grade fixed income investments with yields that reflect their lower credit risk profile.
Risk Factors For the significant portion of our investment portfolio held by our insurance subsidiaries, to receive favorable treatment under insurance regulatory requirements and full credit as Available Assets under the PMIERs, we generally are limited to investing in investment grade fixed income investments with yields that reflect their lower credit risk profile.
Our revolving credit facility and the Parent Guarantees we provide for the Master Repurchase Agreements to finance loan purchases in our mortgage conduit business contain restrictive covenants that could limit our operating flexibility. A default under our credit facility or these Parent Guarantees could trigger an event of default under the terms of our senior notes.
Our revolving credit facility and the Parent Guarantees we provide for the Master Repurchase Agreements to finance loan purchases in our mortgage conduit business contain covenants that are restrictive and could limit our operating flexibility. A default under our credit facility or these Parent Guarantees could trigger an event of default under the terms of our senior notes.
See Note 12 of Notes to Consolidated Financial Statements for more information on the carrying value of our senior notes. In connection with our new mortgage conduit, Radian Group has entered into the Parent Guarantees that guarantee the obligations of certain of its subsidiaries pursuant to the Master Repurchase Agreements.
See Note 12 of Notes to Consolidated Financial Statements for more information on the carrying value of our senior notes. In connection with our mortgage conduit, Radian Group has entered into the Parent Guarantees that guarantee the obligations of certain of its subsidiaries pursuant to the Master Repurchase Agreements.
Our homegenius revenue is dependent on a limited number of large customers that represent a significant proportion of our homegenius total revenues. The loss or reduction of business from one or more of these significant customers could adversely affect the level of our homegenius revenues. In addition, Radian Guaranty does business with many of these significant customers.
Our homegenius revenue currently is dependent on a limited number of large customers that represent a significant proportion of our homegenius total revenues. The loss or reduction of business from one or more of these significant customers could adversely affect the level of our homegenius revenues. In addition, Radian Guaranty does business with many of these significant customers.
We rely on information technology systems to process, transmit, store and protect the electronic information, financial data and proprietary models that are critical to our business. Furthermore, a significant portion of the communications between us and our employees, customers, business partners and service providers depends on information technology and electronic information exchange.
We rely on information technology systems to process, transmit, store and protect the electronic information, financial data and proprietary models that are critical to our business. Furthermore, a significant portion of the communications and business transmissions between us and our employees, customers, business partners and service providers depends on information technology and electronic information exchange.
Among other things, our failure to maintain adequate levels of capital in our mortgage insurance and title insurance subsidiaries could lead to intervention by the various insurance regulatory authorities, which could materially and adversely affect our business, business prospects and financial condition.
Among other things, our failure to maintain adequate levels of capital in our mortgage insurance or title insurance subsidiaries could lead to intervention by the various insurance regulatory authorities, which could materially and adversely affect our business, business prospects and financial condition.
As future defaults are not currently reflected in our mortgage insurance loss reserves, our loss reserves could increase significantly in future periods if we experience a high volume of new defaults in future periods, which would negatively impact our results of operations and financial condition.
As future defaults are not reflected in our mortgage insurance loss reserves, our loss reserves could increase significantly in future periods if we experience a high volume of new defaults in future periods, which would negatively impact our results of operations and financial condition.
Additionally, in accordance with industry practice, we do not establish reserves in our mortgage insurance business until we are notified that a borrower has failed to make at least two monthly payments when due.
Additionally, in accordance with industry practice, we generally do not establish reserves in our mortgage insurance business until we are notified that a borrower has failed to make at least two monthly payments when due.
High levels of defaults and corresponding delays in foreclosures could delay our receipt of claims, resulting in an increase in the period of time that a loan remains in our inventory of defaulted mortgage loans, and as a result, the Claim Severity.
High levels of defaults and delays in foreclosures could delay our receipt of claims, resulting in an increase in the period of time that a loan remains in our inventory of defaulted mortgage loans, and as a result, the Claim Severity.
Additionally, our ability to meet the needs of our customers depends on our ability to keep pace with technological advances and to invest in new technology as it becomes available or to otherwise upgrade our technological capabilities.
Our ability to meet the needs of our customers depends on our ability to keep pace with technological advances and to invest in new technology as it becomes available or to otherwise upgrade our technological capabilities.
An increase in interest rates generally increases the overall cost to finance our acquisitions of mortgage loans and reduces the fair value of mortgage loans pledged as collateral for our payment obligations. ■ We have an interest rate risk hedging program and seek to hedge interest rate risks associated with our acquisition of mortgage assets; however, changes in interest rates, securities spreads and other factors could cause net losses on the mortgage assets and our hedge position.
An increase in interest rates generally increases the overall cost to finance our acquisitions of mortgage loans and reduces the fair value of mortgage loans pledged as collateral for our payment obligations. ▪ We have an interest rate risk hedging program and seek to hedge interest rate risks associated with our acquisition and temporary retention of mortgage assets; however, changes in interest rates, securities spreads and other factors could cause net losses on the mortgage assets and our hedge position.
As a result of our entry into this business, we are exposed to certain risks that may negatively affect our results of operations and financial condition, including, among others, the following: ■ Potential breaches of the financial and other covenants under our Master Repurchase Agreements could result in our being required to immediately repay all outstanding amounts borrowed under these facilities and these facilities being unavailable to use for future financing needs, as well as potentially triggering cross-defaults under other debt agreements. ■ Interest rate fluctuations can negatively impact our mortgage conduit business. ■ Changes in interest rates and other factors could cause the cost of financing a mortgage asset to exceed the income generated by that mortgage asset.
As a result of our mortgage conduit business, we are exposed to certain risks that may negatively affect our results of operations and financial condition, including, among others, the following: ■ Potential breaches of the financial and other covenants under our Master Repurchase Agreements could result in our being required to immediately repay all outstanding amounts borrowed under these facilities and these facilities being unavailable to use for future financing needs, as well as potentially triggering cross-defaults under other debt agreements. ■ Interest rate fluctuations can negatively impact our mortgage conduit business. ▪ Changes in interest rates and other factors could cause the cost of financing a mortgage asset to exceed the income generated by that mortgage asset.
We intend to conduct our businesses and operations so Radian Mortgage Capital is not required to register as an investment company under the Investment Company Act of 1940.
We intend to conduct our businesses and operations so that Radian Mortgage Capital is not required to register as an investment company under the Investment Company Act of 1940.
Radian Guaranty’s ability to continue to comply with the PMIERs financial requirements could be impacted by, among other factors: (i) the volume and product mix of our NIW; (ii) factors affecting the performance of our mortgage insurance portfolio, including the level of new defaults and prepayments; (iii) for existing defaults, the aging of these existing defaults and whether they are subject to, and remain in, mortgage forbearance programs, and the ultimate losses we incur on new or existing defaults; (iv) the amount of credit that we receive under the PMIERs financial requirements for our third-party reinsurance transactions; and (v) potential amendments or updates to the PMIERs.
Radian Guaranty’s PMIERs cushion, and ultimately, its ability to continue to comply with the PMIERs financial requirements could be impacted by, among other factors: (i) the volume and product mix of our NIW; (ii) factors affecting the performance of our mortgage insurance portfolio, including the level of new defaults and prepayments; (iii) for existing defaults, the aging of these existing defaults and whether they are subject to, and remain in, mortgage forbearance programs, and the ultimate losses we incur on new or existing defaults; (iv) the amount of credit that we receive under the PMIERs financial requirements for our third-party reinsurance transactions; and (v) potential amendments or updates to the PMIERs.
Our homegenius businesses expose us to certain risks that may negatively affect our results of operations and financial condition, including, among others, the following: ■ Our homegenius businesses are heavily focused on digital products and services, including software as a service solutions and proprietary technology platforms that depend on our ability to develop, launch and implement new and innovative technologies and digital solutions.
Our homegenius businesses expose us to certain risks that may negatively affect our results of operations and financial condition, including, among others, the following: ■ Our homegenius businesses are heavily focused on digital products and services, including proprietary platforms as a service solutions, that depend on our ability to develop, launch and implement new and innovative technologies and digital solutions.
We may not have access to funding under our credit facility when we require it. Radian Group is a party to a $275 million unsecured revolving credit facility with a syndicate of bank lenders. As of December 31, 2022, no borrowings were outstanding under the credit facility. The credit facility contains customary representations, warranties, covenants, terms and conditions.
We may not have access to funding under our credit facility when we require it. Radian Group is a party to a $275 million unsecured revolving credit facility with a syndicate of bank lenders. As of December 31, 2023, no borrowings were outstanding under the credit facility. The credit facility contains customary representations, warranties, covenants, terms and conditions.
However, if a defaulted loan then cures, all mortgage insurance premiums must be brought current for our insurance coverage to continue, including all premiums that were not paid during the period following the event of default and through the date of cure.
However, if a defaulted loan then cures and becomes current, all mortgage insurance premiums must also be brought current for our insurance coverage to continue, including all premiums that were not paid during the period following the event of default and through the date of cure.
If the indebtedness under the credit facility, the guarantees or our senior notes is accelerated, we may not be able to repay our debt or borrow sufficient funds to refinance it. 60 Table of Contents Glossary Part I. Item 1A.
If the indebtedness under the credit facility, the guarantees or our senior notes is accelerated, we may not be able to repay our debt or borrow sufficient funds to refinance it. 58 Table of Contents Glossary Part I. Item 1A.
Because we rely on our information technology systems for many critical functions, including connecting with our customers, if such systems were to fail, experience a prolonged interruption or become outmoded, we may experience a significant disruption in our operations and in the business we receive, which could have a material adverse effect on our business, financial condition and operating results.
Because we rely on our information technology systems for many critical functions, including connecting with our customers, if such systems were to fail, experience a prolonged interruption or become outmoded, we may experience a significant disruption in our operations and in the business we receive, which could have a material adverse effect on our business, reputation and future prospects, financial condition and operating results.
Risk Factors We believe that financial strength ratings would represent a significant consideration for participants should they seek to secure credit enhancement in the non-GSE mortgage market, which includes most non-QM loans.
We believe that financial strength ratings would represent a significant consideration for participants should they seek to secure credit enhancement in the non-GSE mortgage market, which includes most non-QM loans.
Our reliance on third-party servicers exposes us to certain risks, including the risk that the subservicer may not properly service the loan in compliance with applicable laws and regulations or the contractual provisions governing their subservicing role, in which case we may be held liable for the subservicer’s improper acts or omissions.
Our reliance on this third-party servicer exposes us to certain risks, including the risk that the subservicer may not properly service the loan in compliance with applicable laws and regulations or the contractual provisions governing their subservicing role, in which case we may be held liable for the subservicer’s improper acts or omissions.
The outcome of existing and future legal and regulatory proceedings and inquiries and other matters could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief which could require significant expenditures or have a material adverse effect on our business prospects, results of operations and financial condition. See “Item 3.
The outcome of existing and future legal and regulatory proceedings and inquiries and other matters could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief which could require significant expenditures or have a material adverse effect on our business prospects, results of operations and financial condition. See “Item 1. Business—Regulation,” “Item 3.
Similarly, our title insurance subsidiary is required to maintain statutory premium reserves that vary by state and are subject to periodic reviews of certain financial performance ratios, the results of which could result in additional capital requirements in states where it is licensed. See “Item 1.
Similarly, our title insurance subsidiary is required to maintain statutory premium reserves that vary by state and are subject to periodic reviews of certain financial performance ratios, the results of which could result in additional capital requirements in states where it is licensed.
If these or other factors cause a decrease in the length of time that our Recurring Premium Policies, for which we expect to receive premiums in the future, remain in force, our future revenues could be negatively impacted, which could negatively impact our results of operations and financial condition.
Item 1A. Risk Factors If these or other factors cause a decrease in the length of time that our Recurring Premium Policies, for which we expect to receive premiums in the future, remain in force, our future revenues could be negatively impacted, which could negatively impact our results of operations and financial condition.
We do not believe our ratings have had a material adverse effect on our relationships with existing customers. However, if financial strength ratings become a more prominent consideration for lenders, we may be competitively disadvantaged by customers choosing to do business with private mortgage insurers that have higher financial strength ratings.
We do not believe our ratings have a material effect on our relationships with existing customers currently. However, if financial strength ratings become a more prominent consideration for lenders, we may be competitively disadvantaged by customers choosing to do business with private mortgage insurers that have higher financial strength ratings.
Our mortgage insurance business depends on our relationships with our customers. Our customers place insurance with us directly on mortgage loans they originate and they also do business with us indirectly through purchases of mortgage loans that already have our mortgage insurance coverage.
Our customers place insurance with us directly on mortgage loans they originate, and they also do business with us indirectly through purchases of mortgage loans that already have our mortgage insurance coverage.
For more information about the GSEs’ guidelines and business practices and how they may change, see “— Changes in the charters, business practices or role of the GSEs in the U.S. housing finance market generally, could significantly impact our businesses . ” ■ the credit policies of certain lenders, which impact the ability of homeowners to refinance loans; and ■ economic conditions that can affect a borrower’s decision to pay off a mortgage earlier than required, including the strength of the housing market, which impacts a borrower’s prospects for selling their existing home and finding a suitable and affordable new home.
For more information about the GSEs’ guidelines and business practices and how they may change, see “ Changes in the charters, business practices or role of the GSEs in the U.S. housing finance market generally, could significantly impact our businesses .” ■ the credit policies of certain lenders, which impact the ability of homeowners to refinance loans; and ■ economic conditions that can affect a borrower’s decision to pay off a mortgage earlier than required, including the strength of the housing market, which impacts a borrower’s prospects for selling their existing home and finding a suitable and affordable new home. 49 Table of Contents Glossary Part I.
As a result, this business is particularly exposed to challenges associated with new and rapidly evolving technologies and business environments, customer acceptance of our digital product and service offerings, the costs associated with the development and launch of these technologies and products, our failure to successfully integrate new technologies into our existing systems and the risk that our digital product and services offerings fail to operate as expected or planned or that expose us to additional cybersecurity or third-party risks; ■ Our homegenius businesses depend on our relationships with our customers.
As a result, this business is particularly exposed to: challenges associated with new and rapidly evolving technologies and business environments; the long sales cycle associated with, and customer acceptance of, our digital product and service offerings; the costs associated with the development and launch of these technologies and products; our ability to successfully integrate new technologies into our existing systems; and the risk that our digital product and services offerings fail to operate as expected or planned or expose us to additional cybersecurity or third-party risks; ■ Our homegenius businesses depend on our relationships with our customers.
In recent years, mortgage insurers generally have migrated away from a predominantly standard rate-card-based pricing model and toward the use of proprietary, “black box” pricing frameworks that use a spectrum of filed rates to allow for formulaic, risk-based pricing based on multiple loan, borrower and property attributes that may be quickly adjusted within certain parameters.
In recent years, mortgage insurers generally have transitioned from a predominantly standard rate-card-based pricing model to the use of proprietary, “black box” pricing frameworks that use a spectrum of filed rates to allow for formulaic, risk-based pricing based on multiple loan, borrower and property attributes that may be quickly adjusted within certain parameters.
Depending on the amount of liquidity that is utilized from Radian Group, we may be required (or may decide) to seek additional capital by incurring additional debt, issuing additional equity or selling assets, which we may not be able to do on favorable terms, if at all. 46 Table of Contents Glossary Part I. Item 1A.
Depending on the amount of liquidity that is utilized from 44 Table of Contents Glossary Part I. Item 1A. Risk Factors Radian Group, we may be required (or may decide) to seek additional capital by incurring additional debt, issuing additional equity or selling assets, which we may not be able to do on favorable terms, if at all.
Loss of Radian Guaranty’s eligibility status with the GSEs would have an immediate and material adverse impact on the franchise value of our Mortgage business and our future prospects, as well as a material negative impact on our future results of operations and financial condition.
Loss or threat of loss of Radian Guaranty’s eligibility status with the GSEs would have an immediate and material adverse impact on the franchise value of our mortgage insurance business and our future prospects, as well as a material negative impact on our future results of operations and financial condition.
If these programs or any future credit risk transfer transactions and structures were to materially displace primary loan level or standard levels of mortgage insurance, the amount of mortgage insurance we write may be reduced, which could negatively impact our franchise value, results of operations and financial condition. See “Item 1.
If these products or credit risk transfer transactions and structures were to materially displace primary loan level or standard levels of mortgage insurance, the amount of mortgage insurance we write may be reduced, which could negatively impact our franchise value, results of operations and financial condition. See “Item 1.
To implement these plans or to otherwise support the FHFA’s mandate regarding increasing the accessibility and affordability of mortgage credit, the GSEs may pursue new products and activities, or alter existing policies and practices in ways that could require changes to the GSEs’ business practices, including in ways that could negatively impact Radian Guaranty’s IIF, results of operations or financial condition.
To implement these plans or to otherwise support the FHFA’s mandate regarding increasing the accessibility and affordability of mortgage credit, the GSEs may pursue new products and activities, or alter existing policies and practices, including in ways that could negatively impact Radian Guaranty’s IIF, results of operations or financial condition.
These conditions may be created or exacerbated by: acts of terrorism, war or other geopolitical conditions and conflicts; event-specific economic depressions; U.S. debt ceiling and budget deficit concerns; severe weather events and natural disasters, which may continue to increase in severity and frequency due to climate change; and other catastrophic events such as the COVID-19 pandemic or other future epidemics or pandemics.
These conditions may be created or exacerbated by: acts of terrorism, war or other geopolitical conditions and conflicts; event-specific economic depressions; U.S. debt ceiling and budget deficit concerns; severe weather events and natural disasters, which may continue to increase in severity and frequency due to climate change; and other catastrophic events such as pandemics or epidemics.
Because of this, claims paid may be substantially different than our loss reserves and these reserves may be insufficient to satisfy the full amount of claims that we ultimately have to pay. In the past, changes to our loss reserve estimates have, and could again in the future, adversely impact our results of operations and financial condition.
Because claims paid may be substantially different than our loss reserves, our loss reserves may be insufficient to satisfy the full amount of claims that we ultimately have to pay. In the past, changes to our loss reserve estimates have impacted, and could again in the future impact, our results of operations and financial condition.
The initial and ongoing credit that we receive under the PMIERs financial requirements for these risk distribution transactions is subject to the periodic review of the GSEs and could be influenced by the ERCF, which, in the form finalized in February 2022, significantly increases the capital requirements for the GSEs and provides the GSEs with a reduced amount of credit for their own credit risk transfer activities.
The initial and ongoing credit that we receive under the PMIERs financial requirements for these risk distribution transactions is subject to the periodic review of the GSEs and could be influenced by the ERCF, which, in its current form, significantly increases the capital requirements for the GSEs and provides the GSEs with a reduced amount of credit for their own credit risk transfer activities.
Business—Regulation—Federal Regulation—Housing Finance Reform and the GSEs’ Business Practices” for further discussion, including with respect to the recent release by the FHFA of a final rule regarding the process for how it will consider and approve new GSE activities and products.
Business—Regulation—Federal Regulation—Housing Finance Reform and the GSEs’ Business Practices” for further discussion, including with respect to a final rule released by the FHFA regarding the process for how it will consider and approve new GSE activities and products.
If we experience a disruption in the servicing of mortgage loans covered by our insurance policies or a failure by servicers to appropriately report the status of a loan, this could impact the amount of assets Radian Guaranty is required to hold under the PMIERs or ultimately contribute to a rise in claims among those loans, which could have a material adverse effect on our business, financial condition and operating results.
If we experience a disruption in the servicing of mortgage loans covered by our insurance policies or a failure by servicers to appropriately report the status of a loan, this could impact the amount of assets Radian Guaranty is required to hold under the PMIERs or ultimately contribute to a rise in claims among those loans, which could negatively impact our business, financial condition and operating results.
See “— Our sources of liquidity may be insufficient to fund our obligations .” Further, if Radian Guaranty becomes capital constrained, as was the case in the past, it may be more difficult for Radian Guaranty to return capital to Radian Group, which would compound the negative liquidity impact to Radian Group of the contributions it may be required to make to Radian Guaranty and leave less liquidity to satisfy Radian Group’s other obligations.
See “ Our sources of liquidity may be insufficient to fund our obligations .” Further, if Radian Guaranty becomes capital constrained, it may be more difficult for Radian Guaranty to return capital to Radian Group, which would compound the negative liquidity impact to Radian Group of the contributions it may be required to make to Radian Guaranty and leave less liquidity to satisfy Radian Group’s other obligations.
Changes in the business practices of the GSEs, which can be implemented by the GSEs acting independently or through their conservator, the FHFA, could negatively impact our businesses and financial performance.
Changes in the business practices of the GSEs, which can be implemented by the GSEs acting independently or through the FHFA, could negatively impact our business and financial performance.
Accordingly, we may be forced to incur additional expenses for reinsurance or may not be able to obtain sufficient reinsurance on acceptable terms, which could cause us to increase the amount of risk we retain, negatively affect the returns we are able to achieve on the business we write and adversely affect our ability to write future business.
Accordingly, we may be forced to incur additional expenses for reinsurance or may not be able to obtain sufficient reinsurance on acceptable terms, which could cause us to increase the amount of risk we retain, and negatively affect our ability to mitigate losses in our portfolio, the returns we are able to achieve on the business we write and our ability to write future business.
Any significant loss in our market share could negatively impact our mortgage insurance franchise, results of operations and financial condition. The current financial strength ratings assigned to our mortgage insurance subsidiaries could weaken our competitive position and potential downgrades by rating agencies to these ratings and the ratings assigned to Radian Group could adversely affect the Company.
Loss of a significant customer could result in a loss of market share and negatively impact our results of operations and financial condition. The current financial strength ratings assigned to our mortgage insurance subsidiaries could weaken our competitive position and potential downgrades by rating agencies to these ratings and the ratings assigned to Radian Group could adversely affect the Company.
Volatility or lack of liquidity in the markets in which we invest has at times reduced the market value of some of our investments, including as a result of the disruption in the financial markets following the onset of the COVID-19 pandemic and more recently, inflationary and interest rate trends.
Volatility or lack of liquidity in the markets in which we invest has at times reduced the market value of some of our investments, including as a result of the disruption in the financial markets following the onset of the COVID-19 pandemic and more recently, inflationary and interest rate trends and actual or perceived instability in the financial services industry.
Our ability to borrow under the credit facility is conditioned on the satisfaction of certain financial and other restrictive covenants, including covenants related to minimum net worth and statutory capital, a maximum debt-to-capitalization level, repayment or refinancing of a portion of our senior debt maturities prior to their maturity, and limitations on our ability to incur additional indebtedness, make investments, create liens, transfer or dispose of assets and merge with or acquire other companies.
Our ability to borrow under the credit facility is conditioned on the satisfaction of certain financial and other negative and affirmative covenants, including covenants related to minimum net worth and statutory capital, a maximum debt-to-capitalization level, repayment or refinancing of our senior notes at or prior to their maturity, and limitations on our ability to incur additional indebtedness, make investments, create liens, transfer or dispose of assets and merge with or acquire other companies.
Disruption and volatility in the financial markets, including sharp increases in market interest rates as we have recently experienced, could also have a material adverse effect on our liquidity, financial condition and results of operations.
Disruption and volatility in the financial markets, including the sharp increases in market interest rates we experienced in 2022 and 2023, could also have a material adverse effect on our liquidity, financial condition and results of operations.
Our reported earnings, stockholders’ equity and book value per share are subject to fluctuations based on changes in our investments that require us to adjust their fair market value. We have significant holdings of trading securities, equity securities and short-term investments that we carry at fair value.
Our reported earnings, stockholders’ equity and book value per share are subject to fluctuations based on changes in our investments that require us to adjust their fair market value. We have holdings of trading securities, equity securities, mortgage loans held for sale and short-term investments that we carry at fair value.
Management’s Discussion and Analysis of Financial Condition and Results of Operations,” see “—Overview—Current Operating Environment” and “—Key Factors Affecting Our Results—Mortgage.” Factors affecting the volume of low down payment mortgages include: ■ restrictions on mortgage credit due to changes in lender underwriting standards, capital requirements affecting lenders, regulatory requirements and the health of the private securitization market; ■ mortgage interest rates; ■ the health of the domestic economy generally, including in particular unemployment levels and the degree of consumer confidence, as well as specific conditions in regional and local economies; ■ housing supply and affordability; ■ tax laws and policies and their impact on, among other things, deductions for mortgage insurance premiums, mortgage interest payments and real estate taxes; ■ demographic trends, including the rate of household formation; ■ the rate of home price appreciation; ■ government housing policy encouraging affordability and accessibility of mortgage loans, in particular to first-time homebuyers; and ■ the practices of the GSEs, including the extent to which the guaranty fees, loan level price adjustments, credit underwriting guidelines and other business terms provided by the GSEs affect the cost of mortgages and lenders’ willingness to extend credit for low down payment mortgages.
Risk Factors ■ restrictions on mortgage credit due to changes in lender underwriting standards, capital requirements affecting lenders, regulatory requirements and the health of the private securitization market; ■ mortgage interest rates; ■ the health of the domestic economy generally, including in particular unemployment levels and the degree of consumer confidence, as well as specific conditions in regional and local economies; ■ housing supply and affordability; ■ tax laws and policies and their impact on, among other things, deductions for mortgage insurance premiums, mortgage interest payments and real estate taxes; ■ demographic trends, including the rate of household formation; ■ the rate of home price appreciation; ■ government housing policy encouraging affordability and accessibility of mortgage loans, in particular to first-time homebuyers; and ■ the practices of the GSEs, including the extent to which the guaranty fees, loan level price adjustments, credit underwriting guidelines and other business terms provided by the GSEs affect the cost of mortgages and lenders’ willingness to extend credit for low down payment mortgages.
Our relationships with our customers may influence both the amount of business they conduct with us directly and their willingness to continue to approve us as a mortgage insurance provider for loans that they purchase.
Our relationships with our customers may influence both the amount of business they conduct with us directly and their willingness to continue to consider us as an approved mortgage insurance provider for loans that they purchase.
While we have resolved all material disputes, a risk remains that our Loss Mitigation Activities or claims paying practices could in the future have a negative impact on our relationships with customers or potential customers. Further, disputes with our customers that are not resolved could result in additional arbitration or judicial proceedings, requiring significant legal expenses.
While these past disputes have been resolved, a risk remains that our Loss Mitigation Activities or claims paying practices could in the future have a negative impact on our relationships with customers or potential customers. Further, disputes with our customers that are not resolved could result in arbitration or judicial proceedings, requiring significant legal expenses.
Although our investment portfolio consists primarily of highly-rated fixed income investments, our investment strategy is affected by general economic conditions and tax policies, which may adversely affect the markets for credit and interest-rate-sensitive securities, including the extent and timing of investor participation in these markets, the level and volatility of interest rates and credit spreads and, consequently, the value of our fixed income securities and the level of our net investment income, and as such, we may not achieve our investment objectives.
Although our investment portfolio consists primarily of highly-rated fixed income investments, we may not achieve our investment objectives because our investment strategy is affected by factors beyond our control, such as general macroeconomic conditions, geopolitical events, domestic political conditions and tax policies, which may adversely affect the markets for credit and interest-rate-sensitive securities, including the extent and timing of investor participation in these markets, the level and volatility of interest rates and credit spreads and, consequently, the value of our fixed income securities and the level of our net investment income.
Although to date security incidents have not had a material impact on us, the risks of cyberattacks and information security incidents and breaches continue to increase in businesses such as ours due to, among other things, the proliferation of new technologies and the use of digital channels to conduct our business, including connectivity with customer devices that are beyond our security control systems and the use of portable computers or mobile devices which can be stolen, lost or damaged.
The risks of cyberattacks and information security incidents and breaches continue to increase in businesses such as ours due to, among other things, the proliferation of new technologies and the use of digital channels to conduct our business, including connectivity with customer devices that are beyond our security control systems and the use of portable computers or mobile devices which can be stolen, lost or damaged.
As a licensed real estate brokerage, homegenius Real Estate receives residential real estate information from various multiple listing services. homegenius Real Estate receives this information, which it uses in its business to broker real estate transactions and provide valuation products and services that comprise many of our homegenius product offerings, pursuant to the terms of agreements with the MLS providers.
As a licensed real estate brokerage, homegenius Real Estate receives residential real estate information from various multiple listing services. homegenius Real Estate receives this information, which it uses in its business to provide real estate services (e.g., home search and brokering real estate transactions) and provide valuation products and services that comprise many of our homegenius product offerings, pursuant to the terms of agreements with the multiple listing service (“MLS”) providers.
In addition, as required by the FHFA, each of the GSEs has prepared and filed three-year Equitable Housing Finance Plans that describe each GSE’s planned efforts to advance equity in housing finance, including proposals to reduce mortgage costs for historically underserved borrowers.
Business—Regulation—Federal Regulation—Housing Finance Reform and the GSEs’ Business Practices.” As required by the FHFA, each of the GSEs has prepared and filed three-year Equitable Housing Finance Plans that describe each GSE’s planned efforts to advance equity in housing finance, including proposals to reduce mortgage costs for historically underserved borrowers.
Among other benefits, our risk distribution transactions reduce our required capital, including by significantly reducing our Required Minimum Assets under the PMIERs.
Among other benefits, our risk distribution transactions have collectively reduced our required capital, including by significantly reducing our Required Minimum Assets under the PMIERs.
While we have information security policies, controls and systems in place in order to attempt to prevent, detect and respond to unauthorized use or disclosure of confidential information, including personally identifiable information, there can be no assurance that such unauthorized use or disclosure will not occur.
While we have information security policies, controls and systems in place in order to attempt to prevent, detect and respond to unauthorized use or disclosure of confidential information, including personally identifiable information, there can be no assurance that such unauthorized use or disclosure will not occur either through the actions of third parties or our employees.
Any potential downgrades by rating agencies in long-term sovereign credit ratings, as well as sovereign debt issues facing the governments of other countries, could have a material adverse impact on financial markets and economic conditions worldwide.
Any potential downgrades by rating agencies in long-term sovereign credit ratings, as well as sovereign debt issues facing the governments of other countries, could have a material adverse impact on financial markets and economic conditions worldwide. 56 Table of Contents Glossary Part I. Item 1A.
See “— Reinsurance may not be available, affordable or adequate to protect us against losses .” We also compete with governmental entities, such as the FHA and VA, primarily on the basis of loan limits, pricing, credit guidelines, terms of our insurance policies and loss mitigation practices.
See “ Reinsurance may not be available, affordable or adequate to protect us against losses .” We also compete with governmental entities, such as the FHA and VA, primarily on the basis of loan limits, pricing, credit guidelines, loss mitigation practices and terms of our insurance policies such as the ability to terminate private mortgage insurance, subject to conditions, as compared to the life-of-loan requirement under FHA policies.
As discussed above under “— Radian Guaranty may fail to maintain its eligibility status with the GSEs, and the additional capital required to support Radian Guaranty’s eligibility could reduce our available liquidity ,” compliance with the PMIERs financial requirements could impact our holding company liquidity if additional capital support for Radian Guaranty is required for it to maintain this compliance.
As discussed above under “ Radian Guaranty may fail to maintain its eligibility status with the GSEs, and the additional capital required to support Radian Guaranty’s eligibility could reduce our available liquidity ,” compliance with the PMIERs financial requirements could impact our holding company liquidity if additional capital support for Radian Guaranty is required 57 Table of Contents Glossary Part I.
Under this program, a lender could commit us to insure a material number of loans with unacceptable risk profiles before we discover the problem and are able to terminate that lender’s delegated underwriting authority or pursue other rights that may be available to us, such as our rights to rescind coverage or deny claims.
While we have systems and processes to monitor whether certain aspects of our guidelines are being followed, under this program, a lender could commit us to insure a material number of loans with unacceptable risk profiles before we discover the problem and are able to terminate that lender’s delegated underwriting authority or pursue other rights that may be available to us, such as our rights to rescind coverage or deny claims.
From time to time, we could experience large losses or an overall worsening of our loss payment experience in regard to the frequency or severity of claims that require us to record additional charges to our claims loss reserve.
Risk Factors large losses or an overall worsening of our loss payment experience in regard to the frequency or severity of claims that require us to record additional charges to our claims loss reserve.
The GSEs have in the past and may in the future offer new products and activities in pursuit of their business strategies, including credit risk transfer transactions and structures that compete with private mortgage insurance.
Business—Regulation—Federal Regulation—GSE Requirements for Mortgage Insurance Eligibility.” The GSEs have in the past and may in the future offer new products and activities in pursuit of their business strategies, including credit risk transfer transactions and structures that compete with private mortgage insurance.
As a result, our reinsurance arrangements do not fully eliminate our obligation to pay claims, and we have assumed counterparty credit risk with respect to our inability to recover amounts due from reinsurers. 50 Table of Contents Glossary Part I. Item 1A. Risk Factors We use reinsurance to manage Radian Guaranty’s capital position under the PMIERs financial requirements.
As a result, our reinsurance arrangements do not fully eliminate our obligation to pay claims, and we have assumed counterparty credit risk with respect to our inability to recover amounts due from reinsurers. We use reinsurance to manage Radian Guaranty’s capital position under the PMIERs financial requirements.
Risk Factors governmental entities, or to the terms and conditions of their mortgage insurance or other credit enhancement products, could negatively impact our ability to compete in that market effectively, which could have an adverse effect on our business, financial condition and operating results. See “Item 1.
This pricing change and other potential future changes in pricing by these governmental entities, or to the terms and conditions of their mortgage insurance or other credit enhancement products, could negatively impact our ability to compete in that market effectively, which could have an adverse effect on our business, financial condition and operating results. See “Item 1.
The plans also include expected activity to address credit and alternative data in underwriting, valuations and appraisals, and title insurance, among others. The GSEs are expected to update these plans annually.
The plans also include expected activity to address alternative credit and data in underwriting, property appraisals, and title insurance, among others. The FHFA and GSEs expect to continue to update these plans annually.
We depend on third-party servicing of the loans that we insure. Dependable servicing is necessary for timely billing and premium payments to us and effective loss mitigation opportunities for delinquent or near-delinquent mortgage loans.
Risk Factors Our business depends, in part, on effective and reliable loan servicing. We depend on third-party servicing of the loans that we insure. Dependable servicing is necessary for timely billing and premium payments to us and effective loss mitigation opportunities for delinquent or near-delinquent mortgage loans.
The amount of the loss we could suffer depends in part on whether the home of a borrower who defaults on a mortgage can be sold for an amount that will cover the unpaid principal balance, interest and the expenses of the sale.
Declining housing values also may impact the effectiveness of our loss mitigation actions. The amount of the loss we could suffer depends in part on whether the home of a borrower who defaults on a mortgage can be sold for an amount that will cover the unpaid principal balance, interest and the expenses of the sale.
Risk Factors defaults by borrowers in certain areas. Further, climate change and natural disasters may impact the value of and cause volatility in our investment portfolio, and we might not achieve our investment objectives.
Further, climate change and natural disasters may impact the value of and cause volatility in our investment portfolio, and we might not achieve our investment objectives.
In addition, the GSEs’ business practices have changed in response to the COVID-19 pandemic and to support equitable access to, and affordability of, mortgage credit, in particular to low- and moderate-income borrowers and underserved communities. See “Item 1.
The GSEs have changed their business practices to support equitable access to, and affordability of, mortgage credit, in particular to low- and moderate-income borrowers and underserved communities. See “Item 1.
Further, a downgrade in our financial strength ratings could result in increased scrutiny of our financial condition by the GSEs and/or our customers, potentially resulting in a decrease in the amount of our NIW. 53 Table of Contents Glossary Part I. Item 1A.
Further, a downgrade in our financial strength ratings could result in increased scrutiny of our financial condition by the GSEs and/or our customers, potentially resulting in a decrease in the amount of our NIW.
Our success depends, in part, on the skills, working relationships and continued services of our management team and other key personnel, any of whom could terminate his or her relationship with us at any time.
Our success depends, in part, on the skills, working relationships and continued services of our management team and other key personnel, any of whom could terminate his or her relationship with us at any time. Competition for personnel is 60 Table of Contents Glossary Part I. Item 1A.
As this business grows, any of these margin calls could have a material adverse effect on Radian Mortgage Capital’s liquidity position and could require Radian Group to satisfy the margin requirements through capital contributions to Radian Mortgage Capital, which could impact Radian Group’s available liquidity.
As the conduit business grows, any of these margin calls could have a material adverse effect on Radian Mortgage Capital’s liquidity position and could require Radian Group to satisfy the margin requirements pursuant to its guarantee of Radian Mortgage Capital’s obligations under the Master Repurchase Agreements or through capital contributions to Radian Mortgage Capital, which could impact Radian Group’s available liquidity.
Risk Factors depend on access to data from a variety of other external sources to maintain our databases and grow our businesses.
In addition to MLS data, we depend on access to data from a variety of other external sources to maintain our databases and grow our businesses.
The length of time that this insurance remains in force, which we refer to as the Persistency Rate, is a significant driver of our future revenues, with a lower overall Persistency Rate generally reducing our future revenues.
The percentage of our insurance certificates that remain in force for a specified period of time, which we refer to as the Persistency Rate, is a significant driver of our future revenues, with a lower overall Persistency Rate generally reducing our future revenues.

… 183 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

2 edited+2 added−0 removed0 unchanged
Biggest changeWe believe our existing properties are suitable and adequate for their intended use. See Note 13 of Notes to Consolidated Financial Statements for additional information regarding our lease commitments.
Biggest changeSee Note 13 of Notes to Consolidated Financial Statements for additional information regarding our lease commitments.
Item 2. Properties In addition to leases of other properties and facilities to support our business operations, we currently lease approximately 65,000 square feet of office and storage space for our corporate headquarters, located at 550 East Swedesford Road, Suite 350, in Wayne, Pennsylvania. This property is used by both our reportable segments and our corporate functions.
Item 2. Properties In addition to leases of other properties and facilities to support our business operations, we currently lease approximately 30,000 square feet of office and storage space for our corporate headquarters, located at 550 East Swedesford Road, Suite 350, in Wayne, Pennsylvania. This property is used by both our reportable segments and our corporate functions.
Added
During 2021, in connection with our shift to a more flexible hybrid work environment following the onset of the COVID-19 pandemic, we made the decision to exit, and actively market for sublease, our former corporate headquarters comprised of 150,000 square feet of leased office and storage space at 1500 Market Street, West Tower, in Philadelphia, Pennsylvania.
Added
We have entered into agreements to sublease some of the vacated office space and continue to actively market the remaining space for sublease. In the future, we may choose to enter into additional sublease arrangements with regard to our other leased office locations. We believe our existing properties are suitable and adequate for their intended use.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+1 added−0 removed2 unchanged
Biggest changeLegal actions and proceedings could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief that could require significant expenditures or have other effects on our business. Management believes, based on current knowledge and after consultation with counsel, that the outcome of currently pending or threatened actions will not have a material adverse effect on our consolidated financial condition.
Biggest changeManagement believes, based on current knowledge and after consultation with counsel, that the outcome of currently pending or threatened actions will not have a material adverse effect on our consolidated financial condition or results of operations.
Added
Legal actions and proceedings could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief that could require significant expenditures or have other effects on our business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+2 added−2 removed0 unchanged
Biggest changeThe Company is subject to dividend limitations generally applicable to corporations that are incorporated in Delaware.
Biggest changeLimitations on Payment of Dividends Radian Group is not subject to any legal or contractual limitations on its ability to pay dividends except as described below. The Company is subject to dividend limitations generally applicable to corporations that are incorporated in Delaware.
For information on Radian Group’s ability to pay dividends, see “—Limitations on Payments of Dividends” below and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Liquidity Analysis—Holding Company—Dividends and Dividend Equivalents.” Information in Item 12 of this report under the caption “Equity Compensation Plans” is incorporated herein by reference.
For information on Radian Group’s ability to pay dividends, see “Limitations on Payments of Dividends” below and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Liquidity Analysis—Holding Company—Dividends and Dividend Equivalents.” Information in Item 12 of this report under the caption “Equity Compensation Plans” is incorporated herein by reference.
During 2022, we declared and paid a quarterly cash dividend of $0.20 per share. In February 2023, Radian Group’s board of directors authorized an increase to our quarterly cash dividend from $0.20 to $0.225 per share. We presently expect to continue to declare a regular quarterly dividend on our common stock.
During 2022 and 2023, we declared and paid a quarterly cash dividend of $0.20 and $0.225 per share, respectively. In February 2024, Radian Group’s board of directors authorized an increase in our quarterly cash dividend from $0.225 to $0.245 per share. We presently expect to continue to declare a regular quarterly dividend on our common stock.
Issuance of Unregistered Securities In the last three years, no equity securities of the Company were sold that were not registered under the Securities Act. Issuer Purchases of Equity Securities The following table provides information about purchases of Radian Group common stock by us (and our affiliated purchasers) during the three months ended December 31, 2022.
Unregistered Sales of Equity Securities In the last three years, no equity securities of the Company were sold that were not registered under the Securities Act. Issuer Purchases of Equity Securities The following table provides information about purchases of Radian Group common stock by us (and our affiliated purchasers) during the three months ended December 31, 2023.
In addition, pursuant to Radian Group’s revolving credit facility and the Parent Guarantees, Radian Group is permitted to pay dividends so long as no event of default exists and the Company is in pro forma compliance with the applicable financial covenants in the agreements on the date a dividend is declared. See Note 12 of Notes to Consolidated Financial Statements.
In addition, pursuant to Radian Group’s revolving credit facility and the Parent Guarantees, Radian Group is permitted to pay dividends so long as no event of default exists and the Company is in pro forma compliance with the applicable financial covenants in the agreements on the date a dividend is declared.
(2) In February 2022, Radian Group’s board of directors approved a share repurchase program authorizing the Company to spend up to $400 million, excluding commissions, to repurchase Radian Group common stock in the open market or in privately negotiated transactions, based on market and business conditions, stock price and other factors.
(2) In January 2023, Radian Group’s board of directors approved a share repurchase program authorizing the Company to spend up to $300 million, excluding commissions, to repurchase Radian Group common stock in the open market or in privately negotiated transactions, based on market and business conditions, stock price and other factors.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “RDN.” At February 22, 2023, there were 157,192,928 shares of our common stock outstanding and 61 holders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “RDN.” At February 21, 2024, there were 151,498,098 shares of our common stock outstanding and 61 holders of record.
Share repurchase program ($ in thousands, except per-share amounts) Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (2) Period 10/1/2022 to 10/31/2022 49,540 $ 19.81 49,228 $ — 11/1/2022 to 11/30/2022 1,927 20.67 — — 12/1/2022 to 12/31/2022 11,044 18.20 — — Total 62,511 49,228 (1) Includes 13,283 shares tendered by employees as payment of taxes withheld on the vesting of certain RSUs granted under the Company’s equity compensation plans.
Share repurchase program ($ in thousands, except per-share amounts) Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (2) Period 10/1/2023 to 10/31/2023 2,458,971 $ 25.86 2,447,222 $ 166,739 11/1/2023 to 11/30/2023 595 27.13 — 166,739 12/1/2023 to 12/31/2023 1,973 28.26 — 166,739 Total 2,461,539 2,447,222 (1) Includes 14,317 shares tendered by employees for payment of taxes withheld on the vesting of certain RSUs granted under the Company’s equity compensation plans.
Removed
During the three months ended December 31, 2022, the Company purchased 49 thousand shares at an average price of $19.81, including commissions. No purchase authority remains available under this program. In January 2023, Radian Group’s board of directors approved a share repurchase program authorizing the Company to spend up to $300 million, excluding commissions, to repurchase Radian Group common stock.
Added
During the three months ended December 31, 2023, the Company purchased 2.4 million shares at an average price of $25.86, including commissions. See Note 14 of Notes to Consolidated Financial Statements for additional details on our share repurchase plan.
Removed
This share repurchase program expires in January 2025. As of February 22, 2023, the full purchase authority remains available under this program. See Note 14 of Notes to Consolidated Financial Statements for additional information. Limitations on Payment of Dividends Radian Group is not subject to any legal or contractual limitations on its ability to pay dividends except as described below.
Added
See Note 12 of Notes to Consolidated Financial Statements for additional details.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

229 edited+54 added−46 removed92 unchanged
Biggest changeMortgage origination market (1) Origination Market ($ in billions) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 ¢ Refinance $412 $699 $773 $876 $896 $650 $606 $539 $330 $186 $95 $66 ¢ Purchase $284 $353 $466 $444 $377 $532 $527 $489 $388 $492 $411 $330 Total $696 $1,052 $1,239 $1,320 $1,273 $1,182 $1,133 $1,028 $718 $678 $506 $396 Private mortgage insurance penetration of mortgage origination market (1) Market Penetration (%) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 ò Purchase (2) 22.7% 24.3% 26.9% 27.0% 25.5% 24.3% 25.5% 24.4% 25.1% 24.0% 24.9% 22.7% ò Overall (2) 13.5% 14.0% 14.6% 13.4% 11.7% 13.4% 13.1% 12.6% 14.5% 17.9% 20.6% 19.2% ò Refinance (2) 7.2% 8.9% 7.1% 6.5% 5.8% 4.5% 2.4% 1.9% 2.0% 1.6% 1.8% 2.0% (1) Based on actual dollars generated in the credit enhanced market as reported by HUD and publicly reported industry information.
Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations Mortgage origination market (1) Origination Market (In billions) Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 ¢ Refinance $ 896 $ 650 $ 606 $ 539 $ 347 $ 195 $ 100 $ 67 $ 63 $ 82 $ 73 $ 63 ¢ Purchase 377 531 526 489 384 487 419 341 273 364 350 301 Total $ 1,273 $ 1,181 $ 1,132 $ 1,028 $ 731 $ 682 $ 519 $ 408 $ 336 $ 446 $ 423 $ 364 Private mortgage insurance penetration of mortgage origination market (1) Market Penetration (%) Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 ò Purchase (2) 25.5% 24.3% 25.5% 24.4% 25.3% 24.2% 24.4% 21.9% 23.1% 22.0% 22.0% 19.3% ò Overall (2) 11.7% 13.4% 13.1% 12.6% 14.2% 17.7% 20.1% 18.6% 19.2% 18.3% 18.5% 16.2% ò Refinance (2) 5.8% 4.5% 2.4% 1.9% 1.9% 1.5% 1.7% 2.1% 2.3% 1.8% 1.5% 1.8% (1) Based on actual dollars generated in the credit enhanced market as reported by HUD and publicly reported industry information.
NIW and Related Drivers NIW increases our IIF and our premiums written and earned. NIW is affected by the overall size of the mortgage origination market, the penetration percentage of private mortgage insurance into the overall mortgage origination market and our market share of the private mortgage insurance market.
Mortgage Insurance NIW and Related Drivers NIW increases our IIF and our premiums written and earned. NIW is affected by the overall size of the mortgage origination market, the penetration percentage of private mortgage insurance into the overall mortgage origination market and our market share of the private mortgage insurance market.
In the past we have repurchased and exchanged, prior to maturity, some of our outstanding debt, and in the future, we may from time to time seek to redeem, repurchase or exchange for other securities, or otherwise restructure or refinance some or all of our outstanding debt prior to maturity in the open market through other public or private transactions, including pursuant to one or more tender offers or through any combination of the foregoing, as circumstances may allow.
In the past we have repurchased or exchanged, prior to maturity, some of our outstanding debt, and in the future, we may from time to time seek to redeem, repurchase or exchange for other securities, or otherwise restructure or refinance some or all of our outstanding debt prior to maturity in the open market through other public or private transactions, including pursuant to one or more tender offers or through any combination of the foregoing, as circumstances may allow.
The principal sources of liquidity in our Mortgage business currently include insurance premiums, net investment income and cash flows from: (i) investment sales and maturities; (ii) FHLB advances; and (iii) if necessary, capital contributions from Radian Group.
The principal sources of liquidity in our Mortgage Insurance business currently include insurance premiums, net investment income and cash flows from: (i) investment sales and maturities; (ii) FHLB advances; and (iii) if necessary, capital contributions from Radian Group.
Other principal demands for liquidity in our Mortgage business include: (i) expenses (including those allocated from Radian Group); (ii) repayments of FHLB advances; and (iii) taxes, including potential additional purchases of U.S. Mortgage Guaranty Tax and Loss Bonds. See Notes 10 and 16 of Notes to Consolidated Financial Statements for additional information related to these non-interest-bearing instruments.
Other principal demands for liquidity in our Mortgage Insurance business include: (i) expenses (including those allocated from Radian Group); (ii) repayments of FHLB advances; and (iii) taxes, including potential additional purchases of U.S. Mortgage Guaranty Tax and Loss Bonds. See Notes 10 and 16 of Notes to Consolidated Financial Statements for information related to these non-interest-bearing instruments.
Our cost of services primarily consists of employee compensation and related payroll benefits, and to a lesser extent, other costs of providing services such as travel and related expenses incurred in providing client services, costs paid to outside vendors, data acquisition costs and other compensation-related expenses to maintain software application platforms that directly support our businesses.
Our cost of services primarily consists of employee compensation and related payroll benefits, and to a lesser extent, other costs of providing services such as travel and related expenses incurred in providing client services, costs paid to outside vendors, data acquisition costs and other costs to maintain software platforms that directly support our businesses.
Credit Losses and Other Impairments Investments We perform an evaluation of fixed-maturity securities available for sale each quarter to assess whether any decline in their fair value below cost is deemed to be a credit impairment recognized in earnings.
Credit Losses and Other Impairments We perform an evaluation of fixed-maturity securities available for sale each quarter to assess whether any decline in their fair value below cost is deemed to be a credit impairment recognized in earnings.
We believe that the operating cash flows generated by each of our mortgage subsidiaries will provide these subsidiaries with the funds necessary to satisfy their needs for the foreseeable future.
We believe that the operating cash flows generated by each of our mortgage insurance subsidiaries will provide these subsidiaries with the funds necessary to satisfy their needs for the foreseeable future.
This balance includes a $596 million benefit from U.S. Mortgage Guaranty Tax and Loss Bonds issued by the U.S. Department of the Treasury, which mortgage guaranty insurers such as Radian Guaranty may purchase in order to be eligible for a tax deduction, subject to certain limitations, related to amounts required to be set aside in statutory contingency reserves.
This balance includes a $750 million benefit from U.S. Mortgage Guaranty Tax and Loss Bonds issued by the U.S. Department of the Treasury, which mortgage guaranty insurers such as Radian Guaranty may purchase in order to be eligible for a tax deduction, subject to certain limitations, related to amounts required to be set aside in statutory contingency reserves.
The impact of these programs on our financial results will vary depending on the level of ceded RIF, as well as the levels of prepayments and incurred losses on the reinsured portfolios, among other factors. See “Key Factors Affecting Our Results—Mortgage—Risk Distribution” above and Note 8 of Notes to Consolidated Financial Statements for more information about our reinsurance transactions.
The impact of these programs on our financial results will vary depending on the level of ceded RIF, as well as the levels of prepayments and incurred losses on the reinsured portfolios, among other factors. See “Key Factors Affecting Our Results—Mortgage Insurance—Risk Distribution” and Note 8 of Notes to Consolidated Financial Statements for more information about our reinsurance transactions.
Mortgage Historically, one of the primary demands for liquidity in our Mortgage business is the payment of claims, net of reinsurance, including from commutations and settlements.
Mortgage Insurance Historically, one of the primary demands for liquidity in our Mortgage Insurance business is the payment of claims, net of reinsurance, including from commutations and settlements.
Therefore, Claim Severity generally increases the longer that a loan is in default. We considered the sensitivity of first-lien loss reserve estimates at December 31, 2022, by assessing the potential changes resulting from a parallel shift in Claim Severity and Default to Claim Rate estimates for primary loans, excluding any potential benefits from reinsurance.
Therefore, Claim Severity generally increases the longer that a loan is in default. We considered the sensitivity of first-lien loss reserve estimates at December 31, 2023, by assessing the potential changes resulting from a parallel shift in Claim Severity and Default to Claim Rate estimates for primary loans, excluding any potential benefits from reinsurance.
(2) As a percentage of average stockholders’ equity. (3) Calculated using the Company’s federal statutory tax rates of 21%. Any permanent tax adjustments and state income taxes on these items have been deemed immaterial and are not included. 82 Table of Contents Glossary Part II. Item 7.
(2) As a percentage of average stockholders’ equity. (3) Calculated using the Company’s federal statutory tax rates of 21%. Any permanent tax adjustments and state income taxes on these items have been deemed immaterial and are not included. 80 Table of Contents Glossary Part II. Item 7.
RIF and IIF for direct Single Premium Policies include policies written on an individual basis (as each loan is originated) and on an aggregated basis (in which each individual loan in a group of loans is insured in a single transaction, typically after the loans have been originated). 75 Table of Contents Glossary Part II. Item 7.
RIF and IIF for direct Single Premium Policies include policies written on an individual basis (as each loan is originated) and on an aggregated basis (in which each individual loan in a group of loans is insured in a single transaction, typically after the loans have been originated). 73 Table of Contents Glossary Part II. Item 7.
For example, assuming all other factors remain constant, for every one percentage point change in primary Claim Severity (which we estimate to be 98% of defaulted risk exposure at December 31, 2022), we estimated that our loss reserves would change by approximately $4 million at December 31, 2022.
For example, assuming all other factors remain constant, for every one percentage point change in primary Claim Severity (which we estimate to be 98% of defaulted risk exposure at December 31, 2023), we estimated that our loss reserves would change by approximately $4 million at December 31, 2023.
Critical Accounting Estimates SEC guidance defines Critical Accounting Estimates as those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operation of the registrant.
Critical Accounting Estimates SEC guidance defines Critical Accounting Estimates as those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the registrant.
Detailed discussions of our consolidated results of operations for the year ended December 31, 2021, including the year-over-year comparisons between 2021 and 2020, that are not included in this Annual Report on Form 10-K can be found in “Item 7.
Detailed discussions of our consolidated results of operations for the year ended December 31, 2022, including the year-over-year comparisons between 2022 and 2021, that are not included in this Annual Report on Form 10-K can be found in “Item 7.
In contrast to Monthly Premium Policies, when Single Premium Policies are cancelled by the insured because the loan has been paid off or otherwise, we accelerate the recognition of any remaining unearned premiums, net of any refunds that may be owed to the borrower.
In contrast to Monthly Premium Policies, when Single Premium Policies are canceled by the insured because the loan has been paid off or otherwise, we accelerate the recognition of any remaining unearned premiums, net of any refunds that may be owed to the borrower.
Higher interest rate environments generally decrease refinancings, which decrease the cancellation rate of our insurance and positively affect our Persistency Rates. As shown in the table below, our 12-month Persistency Rate at December 31, 2022, increased as compared to the same period in 2021.
Higher interest rate environments generally decrease refinancings, which decrease the cancellation rate of our insurance and positively affect our Persistency Rates. As shown in the table below, our 12-month Persistency Rate at December 31, 2023, increased as compared to the same period in 2022.
(2) Calculated by dividing net investment income by average investments balance. Expenses Provision for Losses. The following table details the financial impact of the significant components of our provision for losses for the periods indicated. 85 Table of Contents Glossary Part II. Item 7.
(2) Calculated by dividing net investment income by average investments balance. Expenses Provision for Losses. The following table details the financial impact of the significant components of our provision for losses for the periods indicated. 83 Table of Contents Glossary Part II. Item 7.
(3) Provision for losses as a percentage of net premiums earned. See “—Revenues— Net Premiums Earned ” above for additional information on the changes in net premiums earned. (4) Calculated by dividing provision for losses for new defaults, net of reinsurance, by the number of new primary defaults for each period.
(3) Provision for losses as a percentage of net premiums earned. See “Revenues— Net Premiums Earned ” above for additional information on the changes in net premiums earned. (4) Calculated by dividing provision for losses for new defaults, net of reinsurance, by the number of new primary defaults for each period.
Cumulative incurred loss ratio by vintage (1) Vintage Dec 2013 Dec 2014 Dec 2015 Dec 2016 Dec 2017 Dec 2018 Dec 2019 Dec 2020 (2) Dec 2021 (2) Dec 2022 2013 2.5% 4.0% 3.4% 3.7% 3.5% 3.4% 3.3% 4.2% 4.1% 2.9% 2014 2.7% 4.1% 4.9% 5.0% 5.1% 5.2% 6.9% 6.8% 4.5% 2015 2.1% 4.8% 5.2% 5.0% 4.7% 7.4% 6.8% 3.8% 2016 2.9% 5.0% 4.8% 4.7% 9.7% 8.0% 3.7% 2017 4.7% 5.1% 6.1% 14.3% 11.9% 5.1% 2018 3.0% 6.4% 22.8% 19.0% 7.2% 2019 2.8% 35.6% 23.5% 6.8% 2020 25.6% 14.9% 6.0% 2021 7.9% 10.9% 2022 9.4% (1) Represents inception-to-date losses incurred as a percentage of net premiums earned.
Cumulative incurred loss ratio by vintage (1) Vintage Dec 2014 Dec 2015 Dec 2016 Dec 2017 Dec 2018 Dec 2019 Dec 2020 (2) Dec 2021 (2) Dec 2022 Dec 2023 2014 2.7% 4.1% 4.9% 5.0% 5.1% 5.2% 6.9% 6.8% 4.5% 3.9% 2015 2.1% 4.8% 5.2% 5.0% 4.7% 7.4% 6.8% 3.8% 2.9% 2016 2.9% 5.0% 4.8% 4.7% 9.7% 8.0% 3.7% 2.7% 2017 4.7% 5.1% 6.1% 14.3% 11.9% 5.1% 3.7% 2018 3.0% 6.4% 22.8% 19.0% 7.2% 4.9% 2019 2.8% 35.6% 23.5% 6.8% 4.6% 2020 25.6% 14.9% 6.0% 3.8% 2021 7.9% 10.9% 9.1% 2022 9.4% 15.2% 2023 7.1% (1) Represents inception-to-date losses incurred as a percentage of net premiums earned.
Reconciliation of return on equity to adjusted net operating return on equity Years Ended December 31, 2022 2021 2020 Return on equity (1) 18.2 % 14.1 % 9.4 % Less impact of reconciling income (expense) items: (2) Net gains (losses) on investments and other financial instruments (2.0) 0.4 1.4 Amortization of other acquired intangible assets (0.1) (0.1) (0.1) Impairment of other long-lived assets and other non-operating items (0.4) (0.1) (0.2) Income tax (provision) benefit on reconciling income (expense) items (3) 0.5 — (0.2) Difference between statutory and effective tax rate (0.1) (0.1) 0.3 Impact of reconciling income (expense) items (2.1) 0.1 1.2 Adjusted net operating return on equity (3) 20.3 % 14.0 % 8.2 % (1) Calculated by dividing net income by average stockholders’ equity.
Reconciliation of return on equity to adjusted net operating return on equity Years Ended December 31, 2023 2022 2021 Return on equity (1) 14.5 % 18.2 % 14.1 % Less: impact of reconciling income (expense) items (2) Net gains (losses) on investments and other financial instruments 0.2 (2.0) 0.4 Impairment of goodwill (0.2) — — Amortization of other acquired intangible assets (0.1) (0.1) (0.1) Impairment of other long-lived assets and other non-operating items (0.3) (0.4) (0.1) Income tax (provision) benefit on reconciling income (expense) items (3) 0.1 0.5 — Difference between statutory and effective tax rate (0.1) (0.1) (0.1) Impact of reconciling income (expense) items (0.4) (2.1) 0.1 Adjusted net operating return on equity (3) 14.9 % 20.3 % 14.0 % (1) Calculated by dividing net income by average stockholders’ equity.
Our PMIERs Cushion at December 31, 2022, also includes a benefit from the current broad-based application of the Disaster Related Capital Charge that has reduced the total amount of Minimum Required Assets that Radian Guaranty otherwise would have been required to hold against pandemic-related defaults by approximately $200 million and $300 million as of December 31, 2022 and 2021, respectively, taking into consideration our risk distribution structures in effect as of those dates.
Our PMIERs Cushion at December 31, 2023, also includes a benefit from the current broad-based application of the Disaster Related Capital Charge that has reduced the total amount of Minimum Required Assets that Radian Guaranty otherwise would have been required to hold against pandemic-related defaults by approximately $85 million and $200 million as of December 31, 2023 and 2022, respectively, taking into consideration our risk distribution structures in effect as of those dates.
This section of our Annual Report on Form 10-K generally discusses our consolidated results of operations for the years ended December 31, 2022 and 2021, and a year-over-year comparison between 2022 and 2021.
This section of our Annual Report on Form 10-K generally discusses our consolidated results of operations for the years ended December 31, 2023 and 2022, and a year-over-year comparison between 2023 and 2022.
Radian Group has in place a $275 million unsecured revolving credit facility with a syndicate of bank lenders. The revolving credit facility matures in December 2026, although under certain conditions Radian Group may need to offer to repay any outstanding amounts and terminate lender commitments earlier than the maturity date.
Radian Group has in place a $275 million unsecured revolving credit facility with a syndicate of bank lenders. The revolving credit facility matures in December 2026, although under certain conditions Radian Group may be required to offer to repay any outstanding amounts and terminate lender commitments earlier than the maturity date.
Business—Mortgage—Defaults and Claims”), which make the timing of paid claims difficult to predict. 87 Table of Contents Glossary Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following table shows net claims paid by product and the average claim paid by product for the periods indicated.
Business—Mortgage Insurance—Defaults and Claims”), which make the timing of paid claims difficult to predict. 85 Table of Contents Glossary Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following table shows net claims paid by product and the average claim paid by product for the periods indicated.
Subject to certain limitations, borrowings under the credit facility may be used for working capital and general corporate purposes, including, without limitation, capital contributions to our insurance subsidiaries as well as growth initiatives. At December 31, 2022, the full $275 million remains undrawn and available under the facility.
Subject to certain limitations, borrowings under the credit facility may be used for working capital and general corporate purposes, including, without limitation, capital contributions to our insurance and other subsidiaries as well as growth initiatives. At December 31, 2023, the full $275 million remains undrawn and available under the facility.
According to industry estimates, total mortgage origination volume was significantly lower in 2022 as compared to 2021 due to a significant decline in refinance activity and a smaller decline in home purchases.
According to industry estimates, total mortgage origination volume was significantly lower in 2023 as compared to 2022 due to a significant decline in mortgage refinance activity and a smaller decline in home purchases.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Top 10 Core Based Statistical Areas - RIF December 31, 2022 2021 Top 10 CBSAs (1) RIF Reserve for Losses RIF Reserve for Losses New York-Newark-Jersey City, NY-NJ-PA 5.5 % 12.2 % 5.4 % 10.0 % Chicago-Naperville-Elgin, IL-IN-WI 4.3 5.7 4.2 5.2 Washington-Arlington-Alexandria, DC-VA-MD-WV 4.0 3.4 4.0 4.1 Dallas-Fort Worth-Arlington, TX 3.1 2.7 2.9 3.4 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 2.7 2.5 2.6 2.3 Houston-The Woodlands-Sugar Land, TX 2.7 3.0 2.5 3.3 Los Angeles-Long Beach-Anaheim, CA 2.4 2.6 2.6 3.3 Minneapolis-St.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Top 10 Core Based Statistical Areas - RIF December 31, 2023 2022 Top 10 CBSAs (1) RIF Reserve for Losses RIF Reserve for Losses New York-Newark-Jersey City, NY-NJ-PA 5.3 % 10.7 % 5.5 % 12.2 % Chicago-Naperville-Elgin, IL-IN-WI 4.6 5.6 4.3 5.7 Washington-Arlington-Alexandria, DC-VA-MD-WV 4.3 3.1 4.0 3.4 Dallas-Fort Worth-Arlington, TX 3.4 3.0 3.1 2.7 Houston-The Woodlands-Sugar Land, TX 2.9 3.2 2.7 3.0 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 2.7 2.6 2.7 2.5 Los Angeles-Long Beach-Anaheim, CA 2.3 2.5 2.4 2.6 Denver-Aurora-Lakewood, CO 2.2 1.0 1.9 0.9 Minneapolis-St.
Cost of services for 2022 decreased compared to 2021, primarily due to the decrease in services revenue, as discussed above. Our cost of services is primarily affected by our level of services revenue. Other Operating Expenses.
Cost of services for 2023 decreased compared to 2022, primarily due to the decrease in services revenue, as discussed above. Our cost of services is primarily affected by our level of services revenue. Other Operating Expenses.
The level of mortgage prepayments affects the revenue ultimately produced by our mortgage insurance business and is influenced by the mix of business we write. See “Key Factors Affecting Our Results — Mortgage—IIF and Related Drivers” above for more information. 84 Table of Contents Glossary Part II. Item 7.
The level of mortgage prepayments affects the revenue ultimately produced by our mortgage insurance business and is influenced by the mix of business we write. See “Key Factors Affecting Our Results — Mortgage Insurance—IIF and Related Drivers” for more information. 82 Table of Contents Glossary Part II. Item 7.
In “Item 1A. Risk Factors,” see “— Our Loss Mitigation Activity could negatively impact our customer relationships. ” 70 Table of Contents Glossary Part II. Item 7.
In “Item 1A. Risk Factors,” see “ Our Loss Mitigation Activity could negatively impact our customer relationships. ” 68 Table of Contents Glossary Part II. Item 7.
Therefore, with respect to deferred tax assets relating to these state and local NOLs and other state timing adjustments, we retained a valuation allowance of $70 million and $83 million at December 31, 2022 and 2021, respectively. Estimated factors in this assessment include, but are not limited to, forecasts of future income and actual and planned business and operational changes.
Therefore, with respect to deferred tax assets relating to these state and local NOLs and other state timing adjustments, we retained a valuation allowance of $63 million and $70 million at December 31, 2023 and 2022, respectively. Estimated factors in this assessment include, but are not limited to, forecasts of future income and actual and planned business and operational changes.
Our Mortgage segment aggregates, manages and distributes U.S. mortgage credit risk for the benefit of mortgage lending institutions and mortgage credit investors, principally through private mortgage insurance on residential first-lien mortgage loans, and also provides contract underwriting and other credit risk management solutions to our customers.
Our Mortgage Insurance segment aggregates, manages and distributes U.S. mortgage credit risk for the benefit of mortgage lending institutions and mortgage credit investors, principally through private mortgage insurance on residential first-lien mortgage loans, and also offers other credit risk management solutions, including contract underwriting, to our customers.
Available liquidity at December 31, 2022, excludes certain additional cash and liquid investments that have been advanced to Radian Group from our subsidiaries to pay for corporate expenses and interest payments. Total liquidity, which includes our undrawn $275 million unsecured revolving credit facility, as described below, was $1.2 billion as of December 31, 2022.
Available liquidity at December 31, 2023, excludes certain additional cash and liquid investments that have been advanced to Radian Group from our subsidiaries to pay for corporate expenses and interest payments. Total liquidity, which includes our undrawn $275 million unsecured revolving credit facility, as described below, was $1.3 billion as of December 31, 2023.
Delaware corporation law provides that dividends are only payable out of a corporation’s capital surplus or (subject to certain limitations) recent net profits. As of December 31, 2022, our capital surplus was $3.8 billion, representing our dividend limitation under Delaware law. The declaration and payment of future quarterly dividends remains subject to the board of directors’ discretion and determination.
Delaware corporation law provides that dividends are only payable out of a corporation’s capital surplus or (subject to certain limitations) recent net profits. As of December 31, 2023, our capital surplus was $4.3 billion, representing our dividend limitation under Delaware law. The declaration and payment of future quarterly dividends remains subject to the board of directors’ discretion and determination.
Factors considered in our assessment for impairment include the extent to which the amortized cost basis is greater than fair value and the reasons for the decline in value. As of December 31, 2022, our gross unrealized losses on available for sale securities were $581 million, which can fluctuate materially over time based on changes in market conditions.
Factors considered in our assessment for impairment include the extent to which the amortized cost basis is greater than fair value and the reasons for the decline in value. As of December 31, 2023, our gross unrealized losses on available for sale securities were $444 million, which can fluctuate materially over time based on changes in market conditions.
See Note 4 of Notes to Consolidated Financial Statements for more information. Year Ended December 31, 2022, Compared to Year Ended December 31, 2021 Revenues Net Premiums Earned.
See Note 4 of Notes to Consolidated Financial Statements for more information. Year Ended December 31, 2023, Compared to Year Ended December 31, 2022 Revenues Net Premiums Earned.
An amount up to the total valuation allowance currently recorded could be recognized if our assessment of realizability changes. Our assumptions around these items and the weight assigned to them have remained consistent in recent periods. See Note 10 of Notes to Consolidated Financial Statements for additional information. 99 Table of Contents Glossary
An amount up to the total valuation allowance currently recorded could be recognized if our assessment of realizability changes. Our assumptions around these items and the weight assigned to them have remained consistent in recent periods. See Note 10 of Notes to Consolidated Financial Statements for additional information.
(3) Represents the profit commission on the Single Premium QSR Program and 2022 QSR Agreement, excluding the impact of Single Premium Policy cancellations. (4) Calculated by dividing direct premiums earned, including assumed revenue and excluding revenue from cancellations, by average primary IIF. (5) Calculated by dividing direct premiums earned, including assumed revenue, by average primary IIF.
(3) Represents the profit commission on the Single Premium QSR Program and 2022 and 2023 QSR Agreements, excluding the impact of Single Premium Policy cancellations. (4) Calculated by dividing direct premiums earned, including assumed revenue and excluding revenue from cancellations, by average primary IIF. (5) Calculated by dividing direct premiums earned, including assumed revenue, by average primary IIF.
As a result, we experienced a material increase in new defaults in 2020, substantially all of which related to defaults of loans subject to mortgage forbearance programs implemented in response to the COVID-19 pandemic.
As a result, we experienced a material increase in new defaults beginning in the second quarter of 2020, substantially all of which related to loans subject to mortgage forbearance programs implemented in response to the COVID-19 pandemic.
Adjusted pretax operating income (loss) is defined as GAAP consolidated pretax income (loss) excluding the effects of: (i) net gains (losses) on investments and other financial instruments, except for certain investments attributable to our reportable segments and All Other activities; (ii) gains (losses) on extinguishment of debt; (iii) amortization and impairment of goodwill and other acquired intangible assets; and (iv) impairment of other long-lived assets and other non-operating items, such as impairment of internal-use software, gains (losses) from the sale of lines of business and acquisition-related income and expenses.
Adjusted pretax operating income (loss) is defined as GAAP consolidated pretax income (loss) excluding the effects of: (i) net gains (losses) on investments and other financial instruments, except for certain investments and other financial instruments attributable to our reportable segments and All Other activities; (ii) amortization and impairment of goodwill and other acquired intangible assets; and (iii) impairment of other long-lived assets and other non-operating items, if any, such as gains (losses) from the sale of lines of business, acquisition-related income and expenses and gains (losses) on extinguishment of debt.
Liquidity Analysis—Holding Company Radian Group serves as the holding company for our operating subsidiaries and does not have any operations of its own. At December 31, 2022, Radian Group had available, either directly or through unregulated subsidiaries, unrestricted cash and liquid investments of $903 million.
Liquidity Analysis—Holding Company Radian Group serves as the holding company for our operating subsidiaries and does not have any operations of its own. At December 31, 2023, Radian Group had available, either directly or through unregulated subsidiaries, unrestricted cash and liquid investments of $992 million.
Services revenue for 2022 decreased as compared to 2021, primarily driven by the termination of a large mortgage fulfillment services contract with a customer as well as a decrease in demand for our contract underwriting services as a result of the general market decline in mortgage origination volume. Net Investment Income.
Services revenue for 2023 decreased as compared to 2022, primarily driven by the termination of a large mortgage fulfillment services contract with a customer in the second quarter of 2022, as well as a decrease in demand for our contract underwriting services as a result of the general market decline in mortgage origination volume. Net Investment Income.
Based on current NIW pricing and the impact of higher Persistency Rates we have been experiencing, we currently expect our in force portfolio premium yield in 2023 to be relatively stable; however, due to the potential impacts of Single Premium Policy cancellations and reinsurance, among other things, the net premium yield may continue to fluctuate from period to period.
Based on current NIW pricing and the impact of higher Persistency Rates we have been experiencing, we currently expect our in force portfolio premium yield in 2024 to remain stable; however, due to the potential impacts of Single Premium Policy cancellations and reinsurance, among other things, the net premium yield may continue to fluctuate from period to period.
As discussed in “Overview—Current Operating Environment,” the macroeconomic stresses beginning in the second quarter of 2022 impacted our homegenius businesses, including in particular a decrease in our title revenues due to the rapid decline in industrywide refinance volumes.
As discussed in “Overview—Current Operating Environment,” the macroeconomic stresses beginning in the second quarter of 2022 have continued to impact our homegenius businesses, including in particular a decrease in our title revenues due to the rapid decline in industrywide refinance volumes.
Our pricing actions gradually affect our results over time, as existing IIF cancels and is replaced with NIW at current pricing. See “Mortgage Insurance Portfolio—New Insurance Written” and “Liquidity and Capital Resources—Mortgage” below for additional information.
Our pricing actions gradually affect our results over time, as existing IIF cancels and is replaced with NIW at current pricing. See “Mortgage Insurance Portfolio—New Insurance Written” and “Liquidity and Capital Resources—Mortgage Insurance” for additional information.
Top 10 U.S. states - RIF December 31, 2022 2021 Top 10 States RIF Reserve for Losses RIF Reserve for Losses Texas 9.4 % 8.4 % 8.5 % 9.7 % California 8.7 9.3 9.3 11.0 Florida 6.3 9.1 6.9 10.8 Illinois 4.7 6.0 4.6 5.3 New York 4.5 10.0 4.4 7.7 Virginia 3.9 2.3 3.8 2.7 New Jersey 3.8 5.3 3.8 5.1 Pennsylvania 3.8 3.3 3.6 2.6 Washington 3.6 1.7 3.5 2.0 Maryland 3.5 3.6 3.3 3.9 Total 52.2 % 59.0 % 51.7 % 60.8 % The following table shows, as of December 31, 2022 and 2021, the percentage of our direct Primary Mortgage Insurance RIF and the associated percentage of our mortgage insurance reserve for losses (by location of property) for the top 10 Core Based Statistical Areas, referred to as “CBSAs,” in the U.S.
Top 10 U.S. states - RIF December 31, 2023 2022 Top 10 States RIF Reserve for Losses RIF Reserve for Losses Texas 10.0 % 9.5 % 9.4 % 8.4 % California 8.5 9.3 8.7 9.3 Florida 5.8 8.5 6.3 9.1 Illinois 5.0 6.0 4.7 6.0 New York 4.2 9.4 4.5 10.0 Virginia 4.2 2.2 3.9 2.3 Pennsylvania 3.8 3.5 3.8 3.3 New Jersey 3.7 4.7 3.8 5.3 Maryland 3.7 3.5 3.5 3.6 Washington 3.6 2.2 3.6 1.7 Total 52.5 % 58.8 % 52.2 % 59.0 % The following table shows, as of the dates indicated, the percentage of our direct Primary Mortgage Insurance RIF and the associated percentage of our mortgage insurance reserve for losses (by location of property) for the top 10 Core Based Statistical Areas, referred to as “CBSAs,” in the U.S.
However, with significant home price appreciation in recent years, penetration on purchase transactions has increased while penetration on refinancings has decreased, and the penetration rate for private mortgage insurance has shifted to 12 to 16 times higher for purchase transactions than for refinancings.
However, with significant home price appreciation in recent years, penetration on purchase transactions has increased while penetration on refinancings has decreased, and the penetration rate for private mortgage insurance has shifted to 10 to 14 times higher for purchase transactions than for refinancings.
Our estimate for the single premium earnings pattern is updated periodically and subject to change given uncertainty as to the underlying loss development and duration of risk. There were no changes to our single premium earnings pattern estimate in 2022 or 2021.
Our estimate for the single premium earnings pattern is updated periodically and subject to change given uncertainty as to the underlying loss development and duration of risk. There were no significant changes to our single premium earnings pattern estimate in 2023 and 2022.
Risk Factors,” including “— Our sources of liquidity may be insufficient to fund our obligations .” and “— Radian Guaranty may fail to maintain its eligibility status with the GSEs, and the additional capital required to support Radian Guaranty’s eligibility could reduce our available liquidity .” See also “Overview” above and Note 1 of Notes to Consolidated Financial Statements for further information.
Risk Factors,” including “ Our sources of liquidity may be insufficient to fund our obligations .” and “ Radian Guaranty may fail to maintain its eligibility status with the GSEs, and the additional capital required to support Radian Guaranty’s eligibility could reduce our available liquidity .” See also “Overview—Current Operating Environment” and Note 1 of Notes to Consolidated Financial Statements for further information.
See Note 8 of Notes to Consolidated Financial Statements for additional information. Radian Guaranty’s Risk-to-capital as of December 31, 2022, was 10.7 to 1. Radian Guaranty is not expected to need additional capital to satisfy state insurance regulatory requirements in their current form. At December 31, 2022, Radian Guaranty had statutory policyholders’ surplus of $758 million.
See Note 8 of Notes to Consolidated Financial Statements for additional information. Radian Guaranty’s Risk-to-capital as of December 31, 2023, was 10.4 to 1. Radian Guaranty is not expected to need additional capital to satisfy state insurance regulatory requirements in their current form. At December 31, 2023, Radian Guaranty had statutory policyholders’ surplus of $620 million.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 25, 2022. 79 Table of Contents Glossary Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Revenues Net Premiums Earned.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 24, 2023. 77 Table of Contents Glossary Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Revenues Net Premiums Earned.
We believe, for example, that given current pricing levels, which are subject to change, the generally better execution available through the GSEs for borrowers with higher FICO scores, lender preferences and the inability to cancel FHA insurance for certain loans are factors that currently provide a competitive advantage for private mortgage insurers.
We believe, for example, that given current pricing levels, which are subject to change, the generally better execution available through the GSEs for borrowers with higher FICO scores and lender preferences are factors that currently provide a competitive advantage for private mortgage insurers.
Assuming all other factors remain constant, for every one percentage point change in our overall primary net Default to Claim Rate (which we estimate to be 30% at December 31, 2022, including our assumptions related to Loss Mitigation Activities), we estimated a $13 million change in our loss reserves at December 31, 2022.
Assuming all other factors remain constant, for every one percentage point change in our overall primary net Default to Claim Rate (which we estimate to be 25% at December 31, 2023, including our assumptions related to Loss Mitigation Activities), we estimated a $14 million change in our loss reserves at December 31, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations In addition to available cash and marketable securities, Radian Group’s principal sources of cash to fund future liquidity needs include: (i) payments made to Radian Group by its subsidiaries under expense- and tax-sharing arrangements; (ii) net investment income earned on its cash and marketable securities; and (iii) to the extent available, dividends or other distributions from its subsidiaries.
In addition to available cash and marketable securities, Radian Group’s principal sources of cash to fund future liquidity needs include: (i) payments made to Radian Group by its subsidiaries under expense- and tax-sharing arrangements; (ii) net investment income earned on its cash and marketable securities; and (iii) to the extent available, dividends or other distributions from its subsidiaries.
(2) Amounts primarily relate to impairment of other long-lived assets and are included in other operating expenses on the consolidated statements of operations. See Note 9 of Notes to Consolidated Financial Statements.
(2) Amounts primarily relate to impairments of other long-lived assets that are included in other operating expenses on the consolidated statements of operations. See Note 9 of Notes to Consolidated Financial Statements.
(as measured by our direct Primary Mortgage Insurance RIF as of December 31, 2022).
(as measured by our direct Primary Mortgage Insurance RIF as of December 31, 2023).
Increasing yields from higher interest rates were the primary driver of the increases in net investment income for 2022 compared to 2021. The following table provides information related to our Mortgage subsidiaries’ investment balances and investment yields.
Increasing yields from higher interest rates were the primary driver of the increases in net investment income for 2023 compared to 2022. The following table provides information related to our Mortgage Insurance subsidiaries’ investment balances and investment yields for the periods indicated.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Single premiums written are initially recorded as unearned premiums and earned over time based on the anticipated loss pattern and the estimated period of risk exposure, which is primarily derived from historical experience and other factors such as projected losses, premium type and projected contractual periods of risk based on original LTV.
Single premiums written are initially recorded as unearned premiums and earned over time based on the anticipated loss pattern and the estimated period of risk exposure, which is primarily derived from historical experience and other factors such as projected losses, premium type and projected contractual periods of risk based on original LTV.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following tables provide selected information as of and for the periods indicated related to mortgage insurance IIF and RIF.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following table provides selected information as of and for the periods indicated related to mortgage insurance IIF and RIF.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Risk Distribution We use third-party reinsurance in our mortgage insurance business to manage capital and risk in an effort to optimize the amounts and types of capital and risk distribution deployed against insured risk. See “—IIF and Related Drivers” above.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Risk Distribution We use third-party reinsurance in our mortgage insurance business to manage capital and risk in an effort to optimize the amounts and types of capital and risk distribution deployed against insured risk.
The decrease in net premiums earned for 2022 compared to 2021 is primarily driven by a decrease in net premiums earned in both our mortgage insurance and title insurance businesses in 2022.
The decrease in net premiums earned for 2023 compared to 2022 is primarily driven by decreases in net premiums earned in both our mortgage insurance and title insurance businesses in 2023.
Our consolidated operating results for 2022 primarily reflect the financial results and performance of our two business segments—Mortgage and homegenius. See “Results of Operations—Mortgage,” and “Results of Operations—homegenius” for the operating results of these business segments. 78 Table of Contents Glossary Part II. Item 7.
Our consolidated operating results for 2023 primarily reflect the financial results and performance of our two reportable segments—Mortgage Insurance and homegenius. See “Results of Operations—Mortgage Insurance,” and “Results of Operations—homegenius” for the operating results of these business segments. 76 Table of Contents Glossary Part II. Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following table shows our direct Primary Mortgage Insurance RIF by year of origination and selected information related to that risk as of December 31, 2022 and 2021.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following table shows our direct Primary Mortgage Insurance RIF by year of origination and selected information related to that risk as of the dates indicated.
Nearly all of our financial instruments recorded at fair value relate to our investment portfolio which, including securities loaned to third-party borrowers under securities lending agreements, totaled $5.8 billion as of December 31, 2022.
Nearly all of our financial instruments recorded at fair value relate to our investment portfolio which, including securities loaned to third-party borrowers under securities lending agreements, totaled $6.3 billion as of December 31, 2023.
(as measured by our direct Primary Mortgage Insurance RIF as of December 31, 2022). 77 Table of Contents Glossary Part II. Item 7.
(as measured by our direct Primary Mortgage Insurance RIF as of December 31, 2023). 75 Table of Contents Glossary Part II. Item 7.
Although on a consolidated basis, adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity are non-GAAP financial measures, for the reasons discussed above we believe these measures aid in understanding the underlying performance of our operations. 80 Table of Contents Glossary Part II. Item 7.
Although on a consolidated basis, adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity are non-GAAP financial measures, for the reasons discussed above we believe these measures aid in understanding the underlying performance of our operations.
Corporate Expenses and Interest Expense. Radian Group has expense-sharing arrangements in place with its principal operating subsidiaries that require those subsidiaries to pay their allocated share of certain holding-company-level expenses, including interest payments on Radian Group’s outstanding debt obligations. Corporate expenses and interest 94 Table of Contents Glossary Part II. Item 7.
Corporate Expenses and Interest Expense. Radian Group has expense-sharing arrangements in place with its principal operating subsidiaries that require those subsidiaries to pay their allocated share of certain holding-company-level expenses, including interest payments on Radian Group’s outstanding debt obligations.
Unrealized gains and losses arise primarily from changes in the market value of our investments that are classified as trading or equity securities. These valuation adjustments may not necessarily result in realized economic gains or losses.
Unrealized gains and losses arise primarily from changes in the market value of our investments that are classified as trading or equity securities, as well as changes in the value of mortgage loans held by Radian Mortgage Capital. These valuation adjustments may not necessarily result in realized economic gains or losses.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Total adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity are not measures of overall profitability, and therefore should not be considered in isolation or viewed as substitutes for GAAP pretax income (loss), diluted net income (loss) per share or return on equity.
Total adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity are not measures of overall profitability, and therefore should not be considered in isolation or viewed as substitutes for GAAP pretax income (loss), diluted net income (loss) per share or return on equity.
At December 31, 2022, Radian Guaranty’s Available Assets under the PMIERs financial requirements totaled approximately $5.6 billion, resulting in a PMIERs Cushion of $1.7 billion, or 45%, over its Minimum Required Assets. Those amounts compare to Available Assets and a PMIERs cushion of $5.4 billion and $2.1 billion, respectively, at December 31, 2021.
At December 31, 2023, Radian Guaranty’s Available Assets under the PMIERs financial requirements totaled $5.9 billion, resulting in a PMIERs Cushion of $2.3 billion, or 62%, over its Minimum Required Assets. Those amounts compare to Available Assets and a PMIERs cushion of $5.6 billion and $1.7 billion, respectively, at December 31, 2022.
Services revenue for 2022 decreased compared to 2021, primarily driven by the general market decline in mortgage origination volume as well as other market and macroeconomic conditions, as further described above in “Overview—Current Operating Environment.” See “Results of Operations—Mortgage—Year Ended December 31, 2022, Compared to Year Ended December 31, 2021— Services Revenue ” and “Results of Operations—homegenius—Year Ended December 31, 2022, Compared to Year Ended December 31, 2021—Revenues— Services Revenue ” for more information.
Services revenue for 2023 decreased compared to 2022, primarily driven by the general market decline in mortgage origination volume as well as other market and macroeconomic conditions, as further described above in “Overview—Current Operating Environment.” For more information, see “Year Ended December 31, 2023, Compared to Year Ended December 31, 2022—Revenues— Services Revenue ” under both ““Results of Operations—Mortgage Insurance” and “Results of Operations—homegenius.” Net Investment Income.
See Note 4 of Notes to Consolidated Financial Statements. Year Ended December 31, 2022, Compared to Year Ended December 31, 2021 Revenues Net Premiums Earned. Net premiums earned for 2022 decreased compared to 2021, primarily due to a decrease in new title policies written in our title insurance business. Services Revenue.
See Note 4 of Notes to Consolidated Financial Statements. Year Ended December 31, 2023, Compared to Year Ended December 31, 2022 Revenues Net Premiums Earned. Net premiums earned for 2023 decreased compared to 2022, primarily due to a decrease in new title policies written in our title insurance business given the decline in industrywide refinance volumes. Services Revenue.
Based on the current composition of our mortgage insurance portfolio, with Monthly Premium Policies comprising a larger proportion of our total portfolio than Single Premium Policies, an increase or decrease in IIF generally has a corresponding positive (increase in IIF) or negative (decrease in IIF) impact on premiums earned.
Based on the current composition of our mortgage insurance portfolio, with Monthly Premium Policies comprising a larger proportion of our total portfolio than Single Premium Policies, an increase in IIF generally has a corresponding positive impact on premiums earned, while a decrease in IIF generally has a corresponding negative impact on premiums earned. 67 Table of Contents Glossary Part II.
Our homegenius segment offers an array of title, real estate and technology products and services to consumers, mortgage lenders, mortgage and real estate investors, GSEs, real estate brokers and agents. See Note 4 of Notes to Consolidated Financial Statements for additional information about our reportable segments.
Our homegenius segment offers an array of title, real estate and real estate technology products and services primarily to consumers, mortgage lenders, mortgage and real estate investors, the GSEs, real estate brokers and agents, and corporations for their employees. See Note 4 of Notes to Consolidated Financial Statements for additional information about our businesses.
See “—Expenses— Provision for Losses ” below for additional information on the favorable reserve development. (2) Does not include the benefit from ceding commissions from the reinsurance agreements in our QSR Program, which is primarily included in other operating expenses on the consolidated statements of operations. See Note 8 of Notes to Consolidated Financial Statements for additional information. Services Revenue.
(3) Does not include the benefit from ceding commissions from the reinsurance agreements in our QSR Program, which is primarily included in other operating expenses on the consolidated statements of operations. See Note 8 of Notes to Consolidated Financial Statements for additional information. Services Revenue.
IIF and RIF Years Ended December 31, ($ in millions) 2022 2021 2020 Primary IIF $ 260,994 $ 245,972 $ 246,144 Primary RIF $ 66,094 $ 60,913 $ 60,656 Average coverage percentage 25.3 % 24.8 % 24.6 % Persistency Rate (12 months ended) 79.6 % 64.3 % 61.2 % Persistency Rate (quarterly, annualized) (1) 84.1 % 71.7 % 60.4 % Total borrower-paid RIF 93.3 % 90.6 % 86.3 % Primary RIF by Premium Type Direct Monthly and Other Recurring Premiums 87.1 % 83.9 % 79.1 % Direct single premiums (2) 12.9 % 16.1 % 20.9 % Primary RIF by FICO score (3) >=740 57.4 % 56.9 % 57.5 % 680-739 34.6 % 35.0 % 34.6 % 620-679 7.6 % 7.6 % 7.3 % 0.4 % 0.5 % 0.6 % Primary RIF by LTV 95.01% and above 17.1 % 15.1 % 14.4 % 90.01% to 95.00% 48.4 % 48.9 % 49.3 % 85.01% to 90.00% 27.2 % 27.7 % 28.0 % 85.00% and below 7.3 % 8.3 % 8.3 % (1) The Persistency Rate on a quarterly, annualized basis is calculated based on loan-level detail for the quarter ending as of the date shown.
IIF and RIF Years Ended December 31, ($ in millions) 2023 2022 2021 Primary IIF $ 269,979 $ 260,994 $ 245,972 Primary RIF $ 69,710 $ 66,094 $ 60,913 Average coverage percentage 25.8 % 25.3 % 24.8 % Persistency Rate (12 months ended) 84.0 % 79.6 % 64.3 % Persistency Rate (quarterly, annualized) (1) 85.8 % 84.1 % 71.7 % Primary RIF by premium type Direct Monthly and Other Recurring Premiums 88.9 % 87.1 % 83.9 % Direct single premiums 11.1 % 12.9 % 16.1 % Primary RIF by FICO score (2) >=740 58.5 % 57.4 % 56.9 % 680-739 33.9 % 34.6 % 35.0 % 620-679 7.3 % 7.6 % 7.6 % 0.3 % 0.4 % 0.5 % Primary RIF by LTV 95.01% and above 18.6 % 17.1 % 15.1 % 90.01% to 95.00% 48.2 % 48.4 % 48.9 % 85.01% to 90.00% 27.1 % 27.2 % 27.7 % 85.00% and below 6.1 % 7.3 % 8.3 % (1) The Persistency Rate on a quarterly, annualized basis is calculated based on loan-level detail for the quarter ending as of the date shown.
For direct Single Premium Policies, NIW includes policies written on an individual basis (as each loan is originated) and on an aggregated basis (in which each individual loan in a group of loans is insured in a single transaction, typically after the loans have been originated). 73 Table of Contents Glossary Part II. Item 7.
For direct Single Premium Policies, NIW includes policies written on an individual basis (as each loan is originated) and on an aggregated basis (in which each individual loan in a group of loans is insured in a single transaction, typically after the loans have been originated).

… 249 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

12 edited+1 added−0 removed5 unchanged
Biggest changeBusiness—Investment Policy and Portfolio” for a discussion of portfolio strategy and risk exposure. Securities Lending Agreements. Radian Group and Radian Guaranty from time to time enter into short-term securities lending agreements with third-party borrowers for the purpose of increasing the income on our investment securities portfolio with limited incremental risk.
Biggest changeRadian Group and Radian Guaranty from time to time enter into short-term securities lending agreements with third-party borrowers for the purpose of increasing the income on our investment securities portfolio with limited incremental risk.
Actual shifts in credit spreads generally vary by issuer and security, based on issuer-specific and security-specific factors such as credit quality, maturity, sector and asset class. Within a given asset class, investment grade securities generally exhibit less credit-spread volatility than securities with lower credit ratings. At December 31, 2022, 95% of our investment portfolio was rated investment grade.
Actual shifts in credit spreads generally vary by issuer and security, based on issuer-specific and security-specific factors such as credit quality, maturity, sector and asset class. Within a given asset class, investment grade securities generally exhibit less credit-spread volatility than securities with lower credit ratings. At December 31, 2023, 95% of our investment portfolio was rated investment grade.
We also have the right to request the return of the loaned securities at any time. For additional information on our securities lending agreements, see Note 6 of Notes to Consolidated Financial Statements. 100 Table of Contents Glossary
We also have the right to request the return of the loaned securities at any time. For additional information on our securities lending agreements, see Note 6 of Notes to Consolidated Financial Statements. 98 Table of Contents Glossary
Our sensitivity analyses for interest-rate risk and credit-spread risk provide an indication of our investment portfolio’s sensitivity to shifts in interest rates and credit spreads. However, the timing and magnitude of actual market changes may differ from the hypothetical assumptions used in our sensitivity calculations. See “Item 1.
Our sensitivity analyses for interest-rate risk and credit-spread risk provide an indication of our investment portfolio’s sensitivity to shifts in interest rates and credit spreads. However, the timing and magnitude of actual market changes may differ from the hypothetical assumptions used in our sensitivity calculations.
Accordingly, in presenting this discussion, we have not distinguished between trading and non-trading instruments. We calculate the duration of our fixed income securities, expressed in years, in order to estimate the interest-rate sensitivity of these securities. The average duration of our total fixed income portfolio was 4.4 years and 4.5 years at December 31, 2022 and 2021, respectively.
Accordingly, in presenting this discussion, we have not distinguished between trading and non-trading instruments. We calculate the duration of our fixed income securities, expressed in years, in order to estimate the interest-rate sensitivity of these securities. The average duration of our total fixed income portfolio was 4.1 years and 4.4 years at December 31, 2023 and 2022, respectively.
Market factors, including changes in interest rates, credit spreads and equity prices, may impact the timing or magnitude of cash outflows for the return of cash collateral. As of December 31, 2022 and 2021, the carrying value of these securities included in the sensitivity analyses above was $85 million and $86 million, respectively.
Market factors, including changes in interest rates, credit spreads and equity prices, may impact the timing or magnitude of cash outflows for the return of cash collateral. As of December 31, 2023 and 2022, the carrying value of these securities included in the sensitivity analyses above was $195 million and $85 million, respectively.
We regularly analyze our exposure to interest-rate risk and credit-spread risk and have determined that the fair value of our investments is materially exposed to changes in both interest rates and credit spreads. As of December 31, 2022, we held $116 million of investment securities for trading purposes, representing less than 3% of our total investment portfolio.
We regularly analyze our exposure to interest-rate risk and credit-spread risk and have determined that the fair value of our investments is materially exposed to changes in both interest rates and credit spreads. As of December 31, 2023, we held $106 million of investment securities for trading purposes, representing less than 2% of our total investment portfolio.
Interest-Rate Risk and Credit-Spread Risk The primary market risks in our investment portfolio are interest-rate risk and credit-spread risk, namely the fair value sensitivity of our fixed income securities to changes in interest rates and credit spreads, respectively.
Quantitative and Qualitative Disclosures About Market Risk Interest-Rate Risk and Credit-Spread Risk The primary market risks in our investment portfolio are interest-rate risk and credit-spread risk, namely the fair value sensitivity of our fixed income securities to changes in interest rates and credit spreads, respectively.
If interest rates experienced an increase of 100 basis points, our fixed income portfolio would decrease by $236 million and $282 million of the market value of the related fixed income portfolio for 2022 and 2021, respectively.
If interest rates experienced an increase of 100 basis points, our fixed income portfolio would decrease by $244 million and $236 million of the market value of the related fixed income portfolio for 2023 and 2022, respectively.
If credit spreads experienced an increase of 100 basis points, our fixed income portfolio would decrease by $201 million and $263 million of the market value of the related fixed income portfolio for 2022 and 2021, respectively.
If credit spreads experienced an increase of 100 basis points, our fixed income portfolio would decrease by $205 million and $201 million of the market value of the related fixed income portfolio for 2023 and 2022, respectively.
The carrying value of our fixed income securities has a balance of $5.6 billion and $6.5 billion as of December 31, 2022 and 2021, respectively.
The carrying value of our fixed income securities has a balance of $6.1 billion and $5.6 billion as of December 31, 2023 and 2022, respectively.
We perform sensitivity analyses to determine the effects of market risk exposures on our investment securities by determining the potential loss in future earnings, fair values or cash flows of market-risk-sensitive instruments resulting from one or more selected hypothetical changes in the above-mentioned market risks.
We perform sensitivity analyses to determine the effects of market risk exposures on our investment securities by determining the potential loss in future earnings, fair values or cash flows of market-risk-sensitive instruments resulting from one or more selected hypothetical changes in the above-mentioned market risks. 97 Table of Contents Glossary Part II. Item 7A.
Added
Through our mortgage conduit, we also have exposure to market risks associated with our mortgage loan activities. For additional information on our mortgage loans held for sale, see Note 7 of Notes to Consolidated Financial Statements. See “Item 1. Business—Investment Policy and Portfolio” for a discussion of portfolio strategy and risk exposure. Securities Lending Agreements.

Other RDN 10-K year-over-year comparisons