# Radian Group Inc: Form 10-Q for the period ended Sep 30, 2024 - Company: [Radian Group Inc](/companies/rdn.md) (CIK 890926) - Form: 10-Q - Filed: 2024-11-07 - Accepted by EDGAR: Nov 7, 2024, 07:44 ET - Period: 2024-09-30 - Accession: 0000950170-24-122809 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/890926/000095017024122809/rdn-20240930.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/890926/000095017024122809/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2024-09-30. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Revenue | 3 months, 2024-07-01 to 2024-09-30 | $333.9m | us-gaap:Revenues | | Revenue | 9 months, 2024-01-01 to 2024-09-30 | $974.4m | us-gaap:Revenues | | Cost of revenue | 3 months, 2024-07-01 to 2024-09-30 | $9.5m | us-gaap:CostOfGoodsAndServicesSold | | Cost of revenue | 9 months, 2024-01-01 to 2024-09-30 | $28.4m | us-gaap:CostOfGoodsAndServicesSold | | Interest expense | 3 months, 2024-07-01 to 2024-09-30 | $29.4m | us-gaap:InterestExpense | | Interest expense | 9 months, 2024-01-01 to 2024-09-30 | $85.5m | us-gaap:InterestExpense | | Income tax | 3 months, 2024-07-01 to 2024-09-30 | $43.5m | us-gaap:IncomeTaxExpenseBenefit | | Income tax | 9 months, 2024-01-01 to 2024-09-30 | $126.0m | us-gaap:IncomeTaxExpenseBenefit | | Net income | 3 months, 2024-07-01 to 2024-09-30 | $151.9m | us-gaap:NetIncomeLoss | | Net income | 9 months, 2024-01-01 to 2024-09-30 | $456.1m | us-gaap:NetIncomeLoss | | Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | $0.99 | us-gaap:EarningsPerShareDiluted | | Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | $2.95 | us-gaap:EarningsPerShareDiluted | | Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | $1.00 | us-gaap:EarningsPerShareBasic | | Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | $2.98 | us-gaap:EarningsPerShareBasic | | Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 153,073,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding | | Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 154,607,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding | | Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | −$394.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $2.8m | us-gaap:PaymentsToAcquireProductiveAssets | | Dividends paid | 9 months, 2024-01-01 to 2024-09-30 | $115.2m | us-gaap:PaymentsOfDividendsCommonStock | | Share repurchases | 9 months, 2024-01-01 to 2024-09-30 | $149.0m | us-gaap:PaymentsForRepurchaseOfCommonStock | | Cash and equivalents | at 2024-09-30 | $28.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue | | Total assets | at 2024-09-30 | $8.42bn | us-gaap:Assets | | Total liabilities | at 2024-09-30 | $3.72bn | us-gaap:Liabilities | | Shareholders' equity | at 2024-09-30 | $4.70bn | us-gaap:StockholdersEquity | ## Management's discussion and analysis As filed, 82,465 characters. The disclosures in this quarterly report are complementary to those made in our 2023 Form 10-K and should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in this report, as well as our audited financial statements, notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2023 Form 10-K. The following analysis of our financial condition and results of operations for the three and nine months ended September 30, 2024, provides information that evaluates our financial condition as of September 30, 2024, compared with December 31, 2023, and our results of operations for the three and nine months ended September 30, 2024, compared to the same periods last year. Certain terms and acronyms used throughout this report are defined in the Glossary of Abbreviations and Acronyms included as part of this report. In addition, investors should review the “Cautionary Note Regarding Forward-Looking Statements—Safe Harbor Provisions” herein, and “Item 1A. Risk Factors” in our 2023 Form 10-K for a discussion of those risks and uncertainties that have the potential to adversely affect our business, financial condition, results of operations, cash flows or prospects. Our results of operations for interim periods are not necessarily indicative of results to be expected for the full year or for any other period. See “Overview” below and Note 1 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information. | INDEX TO ITEM 2 | Page | | --- | ---: | | Overview | 47 | | Key Factors Affecting Our Results | 49 | | Mortgage Insurance Portfolio | 49 | | Results of Operations—Consolidated | 53 | | Results of Operations—Mortgage Insurance | 58 | | Results of Operations—All Other | 65 | | Liquidity and Capital Resources | 65 | | Critical Accounting Estimates | 70 | ### Overview We are a mortgage and real estate company with one reportable business segment—Mortgage Insurance. 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 other immaterial businesses are reported collectively as All Other and include our Mortgage Conduit, Title, Real Estate Services and Real Estate Technology businesses, which provide our existing and new customers with an array of products and services across the residential real estate and mortgage finance industries. ### Current Operating Environment As a mortgage and real estate company, our business results are subject to seasonal fluctuations impacting mortgage and real estate markets as well as macroeconomic conditions and specific events that impact the housing, housing finance and residential real estate markets and the credit performance of our mortgage insurance portfolio. Among others, these factors may include home prices and housing supply, inflationary pressures, interest rate changes, unemployment levels, the volume of mortgage originations and the availability of credit, national and regional economic conditions, legislative and regulatory developments and other events, including macroeconomic stresses and uncertainties resulting from global conflicts and other political and geopolitical events. ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Consistent with the trends observed in recent periods, the economic and market conditions impacting our results for the first nine months of 2024 remained generally favorable. The current interest rate environment has benefited our Persistency Rates and net investment income yields, however, it has also contributed to reduced refinance volumes and NIW in our Mortgage Insurance business and lower transaction volumes for certain of our other businesses. Private mortgage insurance industry volumes are impacted by total mortgage origination volumes and the mix between mortgage originations that are for home purchases versus refinancings of existing mortgages. Although it is difficult to project future volumes, recent industry forecasts project a total mortgage origination market for 2024 of approximately $1.7 trillion, which would represent an increase of approximately 17% compared to 2023, but a reduction compared to projections at the beginning of 2024. This decrease in projections for 2024 primarily relates to a change in the timing of interest rate decreases compared to expectations at the beginning of the year. The U.S. Federal Reserve reduced benchmark interest rates for the first time in approximately three years in September 2024, which was later than originally anticipated. The timing and magnitude of changes in the benchmark interest rate can affect mortgage interest rates and the overall size of the mortgage market. In light of updated projections, we now estimate that the private mortgage insurance market will be approximately $300 billion in 2024, which is the lower end of our expectations at the beginning of the year. In “Item 1A. Risk Factors” in our 2023 Form 10-K, 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”* for more information. While these macroeconomic conditions are expected to negatively impact the overall volume of mortgage transactions taking place, the higher interest rate environment is expected to continue to benefit our financial performance through elevated Persistency Rates, which is expected to benefit our level of IIF despite lower NIW, as well as through the recognition of higher net investment income. Further, the housing supply continues to be constrained, which we believe will continue to support home values and the high level of home price appreciation currently embedded in our insured portfolio of mortgages. We expect this will continue to benefit the credit performance of our mortgage insurance portfolio as a result of the increased level of embedded equity borrowers have in their homes, which has positively impacted our default and cure trends. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Current Operating Environment” in our 2023 Form 10-K for additional discussion of the primary factors affecting the current operating environment for our businesses. Despite risks and uncertainties, we believe that mortgage industry fundamentals remain strong, including as a result of the improvements to the mortgage and real estate ecosystem since the great financial crisis in 2008, such as more stringent underwriting and product standards, higher-quality borrowers with strong credit profiles and strengthened mortgage loan servicing and government support to help borrowers stay in their homes. ### Legislative and Regulatory Developments We are subject to comprehensive regulation by both federal and state regulatory authorities. For a description of significant state and federal regulations and other requirements of the GSEs that are applicable to our businesses, as well as legislative and regulatory developments affecting the housing finance industry, see “Item 1. Business—Regulation” in our 2023 Form 10-K. Except as discussed below, there were no significant regulatory developments impacting our businesses from those discussed in our 2023 Form 10-K. On August 21, 2024, the GSEs issued updates to the PMIERs (“PMIERs Updates”) that refine the standards for Available Assets under the PMIERs, which include the most liquid assets of a mortgage insurer available to pay claims. While the PMIERs do not prohibit a mortgage insurer from holding any type of assets, the PMIERs Updates further limit the Available Asset credit that mortgage insurers receive under the PMIERs for certain asset types based on several factors, including, among others, asset class and credit rating. Under the PMIERs Updates, the impact of reductions in Available Asset credit resulting from the changes is being phased-in over a two-year period, with 25% of the calculated adjustment to be implemented as of March 31, 2025, 50% as of September 30, 2025, 75% as of March 31, 2026, and 100% as of September 30, 2026. We do not expect the PMIERs Updates to have a material impact on Radian Guaranty’s capital position, its PMIERs cushion or its investment portfolio asset allocation strategy. As part of the PMIERs Updates, the GSEs also announced that because the COVID-19 national emergency has ended, it would be eliminating the allowance for a reduction of the Minimum Required Asset factor under the PMIERs for COVID-19 Defaulted Loans. Effective March 31, 2025, COVID-19 Defaulted Loans will no longer qualify for the Disaster Related Capital Charge and will instead revert to the standard non-performing loan requirements of PMIERs. Although the Disaster Related Capital Charge is being eliminated for COVID-19 Defaulted Loans, it will continue to be available and apply to non-performing ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations loans backed by a property located in a FEMA Designated Area, subject to certain conditions, including FEMA Designated Areas associated with the recent hurricanes Beryl, Helene and Milton. As of the effective date of March 31, 2025, we expect the elimination of the Disaster Related Capital Charge for COVID-19 Defaulted Loans to increase Radian Guaranty’s Minimum Required Assets by an immaterial amount. See “Management’s Discussion and Analysis—Liquidity and Capital Resources—Mortgage Insurance” for more information. ### Key Factors Affecting Our Results The key factors affecting our results are discussed in our 2023 Form 10-K. There have been no material changes to these key factors. ### Mortgage Insurance Portfolio ### New Insurance Written We wrote $13.5 billion and $38.9 billion of primary new mortgage insurance in the three and nine months ended September 30, 2024, respectively, compared to $13.9 billion and $42.1 billion of NIW in the three and nine months ended September 30, 2023, respectively. Our NIW decreased by 3% and 8% for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, due to a decline in private mortgage insurance penetration as a percentage of the overall mortgage origination market. According to industry estimates, total mortgage origination volume was higher for the three and nine months ended September 30, 2024, as compared to the comparable periods in 2023, due primarily to a small increase in mortgage refinance activity. The following table provides selected information for the periods indicated related to our mortgage insurance NIW. For direct Single Premium Policies, NIW includes policies written on an individual basis (as each loan is originated) and on an aggregated basis (in which each individual loan in a group of loans is insured in a single transaction, typically after the loans have been originated). ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations *($ in millions)* | NIW | Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 | | --- | ---: | ---: | ---: | ---: | | NIW | $13,493 | $13,922 | $38,872 | $42,076 | | Primary risk written | $3,389 | $3,542 | $9,889 | $10,819 | | Average coverage percentage | 25.1% | 25.4% | 25.4% | 25.7% | | NIW by loan purpose | | | | | | Purchases | 95.6% | 98.7% | 97.0% | 98.4% | | Refinances | 4.4% | 1.3% | 3.0% | 1.6% | | NIW by premium type | | | | | | Direct Monthly and Other Recurring Premiums | 95.9% | 96.0% | 96.3% | 95.9% | | Direct single premiums | 4.1% | 4.0% | 3.7% | 4.1% | | NIW by FICO score (1) | | | | | | \>=740 | 69.5% | 67.3% | 68.8% | 65.1% | | 680-739 | 24.8% | 27.4% | 25.7% | 29.2% | | 620-679 | 5.7% | 5.3% | 5.5% | 5.7% | | \<=619 | 0.0% | 0.0% | 0.0% | 0.0% | | NIW by LTV (2) | | | | | | 95.01% and above | 16.5% | 16.5% | 16.2% | 17.4% | | 90.01% to 95.00% | 37.1% | 38.6% | 38.2% | 39.2% | | 85.01% to 90.00% | 31.5% | 30.2% | 31.8% | 29.5% | | 85.00% and below | 14.9% | 14.7% | 13.8% | 13.9% | (1) For loans with multiple borrowers, the percentage of NIW by FICO score represents the lowest of the borrowers’ FICO scores at origination. (2) LTV at origination. ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ### Insurance and Risk in Force *($ in billions)* | Year of origination - IIF By vintage: | IIF as of: September 30, 2024 | | December 31, 2023 | | September 30, 2023 | | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | 2024 | $37.6 | 13.7% | $— | —% | $— | —% | | 2023 | 47.2 | 17.2% | 50.6 | 18.7% | 40.9 | 15.2% | | 2022 | 56.0 | 20.4% | 60.5 | 22.4% | 61.5 | 22.8% | | 2021 | 56.6 | 20.6% | 65.7 | 24.3% | 68.7 | 25.5% | | 2020 | 36.4 | 13.2% | 45.1 | 16.7% | 47.7 | 17.7% | | 2019 | 12.6 | 4.6% | 14.7 | 5.4% | 15.4 | 5.7% | | 2009 - 2018 | 21.5 | 7.8% | 25.7 | 9.6% | 27.3 | 10.2% | | 2008 & Prior | 6.8 | 2.5% | 7.7 | 2.9% | 8.0 | 2.9% | | Total | $274.7 | 100.0% | $270.0 | 100.0% | $269.5 | 100.0% | Our IIF is the primary driver of the future premiums that we expect to earn over time. IIF increased to $274.7 billion at September 30, 2024, from $270.0 billion at December 31, 2023, reflecting the impact of our NIW offset by policy cancellations and amortization for the first nine months of 2024. Our IIF at September 30, 2024, increased 2% as compared to the same period last year. Historically, there is a close correlation between interest rates and Persistency Rates. 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 September 30, 2024, increased as compared to September 30, 2023. The increase in our Persistency Rate at September 30, 2024, was primarily attributable to decreased refinance activity due to increases in mortgage interest rates, as compared to the same period in the prior year. As of September 30, 2024, 70% of our IIF had a mortgage note interest rate of 6.0% or less. Given the higher prevailing market mortgage interest rates, which, based on reported industry averages, now exceed these levels, we would expect a continued positive impact on our Persistency Rates. If refinance volume increases, we would expect the Persistency Rate for our portfolio to decrease, reducing the size of our IIF portfolio. See “*If the length of time that our mortgage insurance policies remain in force declines, it could result in a decrease in our future revenues”* under “Item 1A. Risk Factors” in our 2023 Form 10-K for more information. Throughout this report, unless otherwise noted, RIF is presented on a gross basis and includes the amount ceded under reinsurance. 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). ### Part I. Item 2. 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. *($ in millions)* | IIF and RIF | September 30, 2024 | December 31, 2023 | September 30, 2023 | | --- | ---: | ---: | ---: | | Primary IIF | $274,721 | $269,979 | $269,511 | | Primary RIF | $71,834 | $69,710 | $69,298 | | Average coverage percentage | 26.1% | 25.8% | 25.7% | | Persistency Rate (12 months ended) | 84.4% | 84.0% | 83.6% | | Persistency Rate (quarterly, annualized) (1) | 84.1% | 85.8% | 84.2% | | Primary RIF by premium type | | | | | Direct Monthly and Other Recurring Premiums | 89.8% | 88.9% | 88.6% | | Direct single premiums | 10.2% | 11.1% | 11.4% | | Primary RIF by FICO score (2) | | | | | \>=740 | 59.6% | 58.5% | 58.2% | | 680-739 | 33.0% | 33.9% | 34.0% | | 620-679 | 7.1% | 7.3% | 7.4% | | \<=619 | 0.3% | 0.3% | 0.4% | | Primary RIF by LTV (3) | | | | | 95.01% and above | 19.5% | 18.6% | 18.4% | | 90.01% to 95.00% | 48.0% | 48.2% | 48.2% | | 85.01% to 90.00% | 27.3% | 27.1% | 27.0% | | 85.00% and below | 5.2% | 6.1% | 6.4% | (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. It may be impacted by seasonality or other factors, including the level of refinance activity during the applicable periods, and may not be indicative of full-year trends. (2) For loans with multiple borrowers, the percentage of primary RIF by FICO score represents the lowest of the borrowers’ FICO scores at origination. (3) LTV at origination. ### Risk Distribution We use third-party reinsurance in our mortgage insurance business as part of our risk distribution strategy, including to manage our capital position and risk profile. When we enter into a reinsurance agreement, the reinsurer receives a premium and, in exchange, insures an agreed-upon portion of incurred losses. While these arrangements reduce our earned premiums, they also reduce our required capital and are expected to increase our return on required capital for the related policies. 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 “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our Results—Mortgage Insurance—Risk Distribution” in our 2023 Form 10-K and Note 8 of Notes to Unaudited Condensed Consolidated Financial Statements in this report for more information about our reinsurance transactions. ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The table below provides information about the amounts by which Radian Guaranty’s reinsurance programs reduced its Minimum Required Assets as of the dates indicated. *($ in thousands)* | PMIERs benefit from risk distribution PMIERs impact - reduction in Minimum Required Assets XOL Program | September 30, 2024 | December 31, 2023 | September 30, 2023 | | --- | ---: | ---: | ---: | | Mortgage insurance-linked notes | $606,204 | $770,335 | $465,794 | | Traditional reinsurance | 177,137 | 218,294 | — | | Total XOL Program | 783,341 | 988,629 | 465,794 | | Other QSR Agreements (1) | 533,721 | 420,989 | 379,568 | | Single Premium QSR Program | 180,178 | 193,807 | 198,448 | | Total PMIERs impact | $1,497,240 | $1,603,425 | $1,043,810 | | Percentage of gross Minimum Required Assets | 28.0% | 30.6% | 20.3% | (1) Consists primarily of the 2022, 2023 and 2024 QSR Agreements, which include both single and monthly premium policies. See “Results of Operations—Mortgage Insurance—Revenues—Net Premiums Earned” for information about the impact on premiums earned from each of Radian Guaranty’s reinsurance programs. ### Results of Operations—Consolidated Radian Group serves as the holding company for our operating subsidiaries and does not have any operations of its own. Our consolidated operating results for the three and nine months ended September 30, 2024 and 2023, primarily reflect the financial results and performance of our Mortgage Insurance business. See “Results of Operations—Mortgage Insurance” for the operating results of this business segment for the three and nine months ended September 30, 2024, compared to the same periods in 2023. In addition to the results of our operating segments, pretax income (loss) is also affected by those factors described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our Results” in our 2023 Form 10-K. ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following table summarizes our consolidated results of operations for the periods indicated. *($ in thousands, except per-share amounts)* | Summary results of operations - Consolidated Revenues | Three Months Ended September 30, 2024 | 2023 | Change Favorable (Unfavorable) 2024 vs. 2023 | Nine Months Ended September 30, 2024 | 2023 | Change Favorable (Unfavorable) 2024 vs. 2023 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | Net premiums earned | $239,133 | $240,262 | $(1,129) | $712,721 | $686,929 | $25,792 | | Services revenue | 12,167 | 10,892 | 1,275 | 38,020 | 33,673 | 4,347 | | Net investment income | 78,396 | 67,805 | 10,591 | 221,383 | 189,606 | 31,777 | | Net gains (losses) on investments and other financial instruments | 2,174 | (8,555) | 10,729 | (1,823) | (3,206) | 1,383 | | Income (loss) on consolidated VIEs | 465 | — | 465 | 465 | — | 465 | | Other income | 1,522 | 2,109 | (587) | 3,656 | 4,942 | (1,286) | | Total revenues | 333,857 | 312,513 | 21,344 | 974,422 | 911,944 | 62,478 | | **Expenses** | | | | | | | | Provision for losses | 6,889 | (8,135) | (15,024) | (1,890) | (46,696) | (44,806) | | Policy acquisition costs | 6,724 | 6,920 | 196 | 20,040 | 18,431 | (1,609) | | Cost of services | 9,542 | 8,886 | (656) | 28,404 | 29,541 | 1,137 | | Other operating expenses | 85,919 | 79,206 | (6,713) | 260,203 | 252,360 | (7,843) | | Interest expense | 29,391 | 23,282 | (6,109) | 85,501 | 66,526 | (18,975) | | Amortization of other acquired intangible assets | 0 | 1,371 | 1,371 | — | 4,112 | 4,112 | | Total expenses | 138,465 | 111,530 | (26,935) | 392,258 | 324,274 | (67,984) | | Pretax income | 195,392 | 200,983 | (5,591) | 582,164 | 587,670 | (5,506) | | Income tax provision | 43,500 | 44,401 | 901 | 126,015 | 127,244 | 1,229 | | Net income | $151,892 | $156,582 | $(4,690) | $456,149 | $460,426 | $(4,277) | | Diluted net income per share | $0.99 | $0.98 | $0.01 | $2.95 | $2.86 | $0.09 | | Return on equity | 13.2% | 15.0% | (1.8)% | 13.4% | 15.2% | (1.8)% | | **Non-GAAP Financial Measures (1)** | | | | | | | | Adjusted pretax operating income | $198,668 | $210,455 | $(11,787) | $594,168 | $594,693 | $(525) | | Adjusted diluted net operating income per share | $1.03 | $1.04 | $(0.01) | $3.04 | $2.92 | $0.12 | | Adjusted net operating return on equity | 13.7% | 16.0% | (2.3)% | 13.8% | 15.5% | (1.7)% | (1) See “Use of Non-GAAP Financial Measures” below. ### Revenues ***Net Premiums Earned.*** Net premiums earned increased for the nine months ended September 30, 2024, as compared to the same period in 2023 primarily due to: (i) an increase in direct premiums earned in 2024 and (ii) increased ceded premiums earned associated with the tender offers by Eagle Re 2019-1 Ltd. and Eagle Re 2020-1 Ltd. in the second quarter of 2023 to purchase the mortgage insurance-linked notes that supported their reinsurance agreements with Radian Guaranty. See “Results of Operations—Mortgage Insurance—Revenues—*Net Premiums Earned”* for more information. ***Net Investment Income.*** The increase in net investment income for the three and nine months ended September 30, 2024, as compared to the same periods in 2023, is primarily attributable to higher balances of residential mortgage loans held for sale and short-term investments. See Note 6 of Notes to Unaudited Condensed Consolidated Financial Statements for comparative detail about net investment income. See “Results of Operations—Mortgage Insurance—Revenues—*Net Investment Income”* and “Results of Operations—All Other” for more information. ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ***Net Gains (Losses) on Investments and Other Financial Instruments.*** See Note 6 of Notes to Unaudited Condensed Consolidated Financial Statements for comparative detail about net gains (losses) on investments and other financial instruments by investment category. ### Expenses ***Provision for Losses.*** The change in the provision for losses for the three and nine months ended September 30, 2024, as compared to the same periods in 2023, is primarily driven by a reduction in favorable development on prior period defaults, which impacted our mortgage insurance reserves. See “Results of Operations—Mortgage Insurance—Expenses—*Provision for Losses”* for more information. ***Other Operating Expenses.*** Other operating expenses increased for the three and nine months ended September 30, 2024, as compared to the same periods in 2023, primarily driven by a $10 million impairment of internal-use software, partially offset by decreases in other operating expense for the businesses that comprise All Other activities. For additional information, see “Expenses—*Other Operating Expenses”* under both “Results of Operations—Mortgage Insurance” and “Results of Operations—All Other.” ***Interest Expense.*** The increase in interest expense for the three and nine months ended September 30, 2024, as compared to the same periods in 2023, is primarily due to: (i) an increase in secured borrowings under our mortgage loan financing facilities and (ii) the net impact of the March 2024 issuance and redemption of the Senior Notes due 2029 and Senior Notes due 2025, respectively, including the impact of a $4 million loss on extinguishment of debt related to the redemption of the Senior Notes due 2025. See Note 12 of Notes to Unaudited Condensed Consolidated Financial Statements for additional detail about our interest expense. ### Income Tax Provision Our provision for income taxes for interim periods is established based on our estimated annual effective tax rate for a given year and reflects the impact of discrete tax effects in the period in which they occur. Our effective tax rate for the three and nine months ended September 30, 2024, was 22.3% and 21.6%, respectively, as compared to 22.1% and 21.7% for the three and nine months ended September 30, 2023, respectively. For the three and nine months ended September 30, 2024 and 2023, the effects of non-deductible executive compensation expense, state income taxes and the vesting of RSUs were the primary drivers of the difference in our effective tax rate compared to the federal statutory rate. ### Use of Non-GAAP Financial Measures In addition to traditional GAAP financial measures, we have presented “adjusted pretax operating income (loss),” “adjusted diluted net operating income (loss) per share” and “adjusted net operating return on equity,” which are non-GAAP financial measures for the consolidated company, among our key performance indicators to evaluate our fundamental financial performance. These non-GAAP financial measures align with the way our business performance is evaluated by both management and by our board of directors. These measures have been established in order to increase transparency for the purposes of evaluating our operating trends and enabling more meaningful comparisons with our peers. Although on a consolidated basis adjusted pretax operating income (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. 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. Our definitions of adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity, as discussed and reconciled below to the most comparable respective GAAP measures, may not be comparable to similarly named measures reported by other companies. Our senior management, including our Chief Executive Officer (Radian’s chief operating decision maker), uses adjusted pretax operating income (loss) as our primary measure to evaluate the fundamental financial performance of the Company’s business segments and to allocate resources to the segments. For detailed information regarding items excluded from adjusted pretax operating income (loss) and the reasons for their treatment, see Note 4 of Notes to Consolidated Financial ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Statements and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Consolidated—Use of Non-GAAP Financial Measures,” each in our 2023 Form 10-K. 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 those investments and other financial instruments attributable to our Mortgage Conduit business; (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 (expenses) and gains (losses) on extinguishment of debt. The following table provides a reconciliation of consolidated pretax income to our non-GAAP financial measure for the consolidated Company of adjusted pretax operating income. *Reconciliation of consolidated pretax income to adjusted pretax operating income* *(In thousands)* | | Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 | | --- | ---: | ---: | ---: | ---: | | Consolidated pretax income | $195,392 | $200,983 | $582,164 | $587,670 | | Less: income (expense) items | | | | | | Net gains (losses) on investments and other financial instruments (1) | 6,785 | (8,838) | 2,454 | (3,664) | | Amortization and impairment of goodwill and other acquired intangible assets | — | (1,371) | — | (4,112) | | Impairment of other long-lived assets and other non-operating items (2) | (10,061) | 737 | (14,458) | 753 | | Total adjusted pretax operating income (3) | $198,668 | $210,455 | $594,168 | $594,693 | (1) Excludes net gains (losses) on investments and other financial instruments that are attributable to our Mortgage Conduit business, which are included in adjusted pretax operating income (loss). (2) The non-operating loss for the three and nine months ended September 30, 2024, primarily relates to impairment of internal-use software. (3) Total adjusted pretax operating income on a consolidated basis consists of adjusted pretax operating income (loss) for our Mortgage Insurance segment and All Other activities, as further detailed in Note 4 of Notes to Unaudited Condensed Consolidated Financial Statements. Adjusted diluted net operating income (loss) per share is calculated by dividing adjusted pretax operating income (loss) attributable to common stockholders, net of taxes computed using the Company’s statutory tax rate, by the sum of the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. The following table provides a reconciliation of diluted net income (loss) per share to our non-GAAP financial measure for the consolidated Company of adjusted diluted net operating income (loss) per share. *Reconciliation of diluted net income per share to adjusted diluted net operating income per share* | | Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 | | --- | ---: | ---: | ---: | ---: | | Diluted net income per share | $0.99 | $0.98 | $2.95 | $2.86 | | Less: per-share impact of reconciling income (expense) items | | | | | | Net gains (losses) on investments and other financial instruments | 0.04 | (0.06) | 0.01 | (0.02) | | Amortization and impairment of goodwill and other acquired intangible assets | — | (0.01) | — | (0.03) | | Impairment of other long-lived assets and other non-operating items | (0.06) | 0.01 | (0.09) | — | | Income tax (provision) benefit on reconciling income (expense) items (1) | — | 0.01 | 0.02 | 0.01 | | Difference between statutory and effective tax rates | (0.02) | (0.01) | (0.03) | (0.02) | | Per-share impact of reconciling income (expense) items | (0.04) | (0.06) | (0.09) | (0.06) | | Adjusted diluted net operating income per share (1) | $1.03 | $1.04 | $3.04 | $2.92 | (1) Calculated using the Company’s federal statutory tax rate of 21%. ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Adjusted net operating return on equity is calculated by dividing annualized adjusted pretax operating income (loss), net of taxes computed using the Company’s statutory tax rate, by average stockholders’ equity, based on the average of the beginning and ending balances for each period presented. The following table provides a reconciliation of return on equity to our non-GAAP financial measure for the consolidated Company of adjusted net operating return on equity. *Reconciliation of return on equity to adjusted net operating return on equity* | | Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 | | --- | ---: | ---: | ---: | ---: | | Return on equity (1) | 13.2% | 15.0% | 13.4% | 15.2% | | Less: impact of reconciling income (expense) items (2) | | | | | | Net gains (losses) on investments and other financial instruments | 0.6% | (0.9)% | —% | (0.1)% | | Amortization and impairment of goodwill and other acquired intangible assets | —% | (0.2)% | —% | (0.2)% | | Impairment of other long-lived assets and other non-operating items | (0.9)% | 0.1% | (0.4)% | —% | | Income tax (provision) benefit on reconciling income (expense) items (3) | —% | 0.2% | 0.1% | 0.1% | | Difference between statutory and effective tax rates | (0.2)% | (0.2)% | (0.1)% | (0.1)% | | Impact of reconciling income (expense) items | (0.5)% | (1.0)% | (0.4)% | (0.3)% | | Adjusted net operating return on equity (3) | 13.7% | 16.0% | 13.8% | 15.5% | (1) Calculated by dividing annualized net income by average stockholders’ equity, based on the average of the beginning and ending balances for each period presented. (2) Annualized, as a percentage of average stockholders’ equity. (3) Calculated using the Company’s federal statutory tax rate of 21%. ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ### Results of Operations—Mortgage Insurance The following table summarizes our Mortgage Insurance segment’s results of operations for the periods indicated. *(In thousands)* | Summary results of operations - Mortgage Insurance Revenues | Three Months Ended September 30, 2024 | 2023 | Change Favorable (Unfavorable) 2024 vs. 2023 | Nine Months Ended September 30, 2024 | 2023 | Change Favorable (Unfavorable) 2024 vs. 2023 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | Net premiums written | $233,648 | $235,169 | $(1,521) | $698,170 | $679,128 | $19,042 | | (Increase) decrease in unearned premiums | 1,496 | 1,632 | (136) | 5,791 | (145) | 5,936 | | Net premiums earned | 235,144 | 236,801 | (1,657) | 703,961 | 678,983 | 24,978 | | Services revenue | 244 | 266 | (22) | 763 | 886 | (123) | | Net investment income | 50,236 | 49,953 | 283 | 149,912 | 144,016 | 5,896 | | Other income | 1,948 | 1,237 | 711 | 3,942 | 4,070 | (128) | | Total revenues | 287,572 | 288,257 | (685) | 858,578 | 827,955 | 30,623 | | **Expenses** | | | | | | | | Provision for losses | 6,346 | (8,257) | (14,603) | (2,309) | (46,744) | (44,435) | | Policy acquisition costs | 6,724 | 6,920 | 196 | 20,040 | 18,431 | (1,609) | | Cost of services | 126 | 172 | 46 | 435 | 556 | 121 | | Other operating expenses | 48,942 | 48,520 | (422) | 161,075 | 159,245 | (1,830) | | Interest expense | 21,891 | 21,673 | (218) | 67,181 | 64,440 | (2,741) | | Total expenses | 84,029 | 69,028 | (15,001) | 246,422 | 195,928 | (50,494) | | Adjusted pretax operating income (1) | $203,543 | $219,229 | $(15,686) | $612,156 | $632,027 | $(19,871) | (1) Our senior management uses adjusted pretax operating income as our primary measure to evaluate the fundamental financial performance of our business segments. See Note 4 of Notes to Unaudited Condensed Consolidated Financial Statements for more information. ### Revenues ***Net Premiums Earned.*** Net premiums earned increased for the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to: (i) an increase in direct premiums earned in 2024, due primarily to higher IIF, and (ii) increased ceded premiums earned associated with the tender offers by Eagle Re 2019-1 Ltd. and Eagle Re 2020-1 Ltd. in the second quarter of 2023 to purchase the mortgage insurance-linked notes that supported their reinsurance agreements with Radian Guaranty. ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The table below provides additional information about the components of mortgage insurance net premiums earned for the periods indicated, including the effects of our reinsurance programs. *(In thousands, except as otherwise indicated)* | Net premiums earned Direct | Three Months Ended September 30, 2024 | 2023 | Change Favorable (Unfavorable) 2024 vs. 2023 | Nine Months Ended September 30, 2024 | 2023 | Change Favorable (Unfavorable) 2024 vs. 2023 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | Premiums earned, excluding revenue from cancellations | $261,726 | $254,903 | $6,823 | $779,661 | $758,606 | $21,055 | | Single Premium Policy cancellations | 1,783 | 3,304 | (1,521) | 5,973 | 12,645 | (6,672) | | Direct | 263,509 | 258,207 | 5,302 | 785,634 | 771,251 | 14,383 | | Ceded | | | | | | | | Premiums earned, excluding revenue from cancellations (1) | (41,894) | (32,363) | (9,531) | (120,816) | (125,805) | 4,989 | | Single Premium Policy cancellations (2) | 818 | (873) | 1,691 | 1,438 | (3,459) | 4,897 | | Profit commission—other (3) | 12,711 | 11,830 | 881 | 37,705 | 36,996 | 709 | | Ceded premiums, net of profit commission | (28,365) | (21,406) | (6,959) | (81,673) | (92,268) | 10,595 | | Total net premiums earned | $235,144 | $236,801 | $(1,657) | $703,961 | $678,983 | $24,978 | | In force portfolio premium yield (in basis points) (4) | 38.2 | 38.0 | 0.2 | 38.2 | 38.1 | 0.1 | | Direct premium yield (in basis points) (5) | 38.5 | 38.5 | — | 38.5 | 38.8 | (0.3) | | Net premium yield (in basis points) (6) | 34.4 | 35.3 | (0.9) | 34.5 | 34.1 | 0.4 | | Average primary IIF (in billions) (7) | $273.8 | $268.2 | $5.6 | $272.4 | $265.3 | $7.1 | (1) The nine months ended September 30, 2023, include the impact of tender offers by Eagle Re 2019-1 Ltd. and Eagle Re 2020-1 Ltd. to purchase the mortgage insurance-linked notes that supported their reinsurance agreements with Radian Guaranty. As a result of these tender offers, Radian Guaranty incurred additional ceded premiums earned during the second quarter of 2023 of $21 million. (2) Includes the impact of related profit commissions. (3) Represents the profit commission from the Single Premium QSR Program, 2022 QSR Agreement, 2023 QSR Agreement and 2024 QSR Agreement, excluding the impact of Single Premium Policy cancellations. (4) Calculated by dividing annualized direct premiums earned, excluding revenue from cancellations, by average primary IIF. (5) Calculated by dividing annualized direct premiums earned, by average primary IIF. (6) Calculated by dividing annualized net premiums earned by average primary IIF. The calculation for all periods presented incorporates the impact of profit commission adjustments related to our reinsurance programs. (7) The average of beginning and ending balances of primary IIF, for each period presented. The level of mortgage prepayments affects the revenue ultimately produced by our mortgage insurance business and is influenced by the mix of business we write. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our Results—Mortgage Insurance—IIF and Related Drivers” in our 2023 Form 10-K for more information. ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following table provides information related to the impact of our reinsurance transactions on premiums earned. See Note 8 of Notes to Unaudited Condensed Consolidated Financial Statements for more information about our reinsurance programs. *($ in thousands)* | Ceded premiums earned XOL Program | Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 | | --- | ---: | ---: | ---: | ---: | | Mortgage insurance-linked notes (1) | $9,645 | $9,040 | $29,173 | $61,882 | | Traditional reinsurance | 2,113 | — | 6,646 | — | | Total XOL Program | 11,758 | 9,040 | 35,819 | 61,882 | | Other QSR Agreements (2) | 14,048 | 9,022 | 38,828 | 23,660 | | Single Premium QSR Program | 2,559 | 3,344 | 7,026 | 6,726 | | Total ceded premiums earned (3) | $28,365 | $21,406 | $81,673 | $92,268 | | Percentage of total direct and assumed premiums earned | 10.8% | 8.3% | 10.4% | 12.0% | (1) The nine months ended September 30, 2023, include the impact of tender offers by Eagle Re 2019-1 Ltd. and Eagle Re 2020-1 Ltd. to purchase the mortgage insurance-linked notes that supported their reinsurance agreements with Radian Guaranty. As a result of these tender offers, Radian Guaranty incurred additional ceded premiums earned during the second quarter of 2023 of $21 million, consisting of $16 million related to the cost of tender premiums and associated expenses and $5 million related to the acceleration of deferred costs from the original executions of these transactions. (2) Consists primarily of the 2022, 2023 and 2024 QSR Agreements. (3) Does not include the benefit from ceding commissions from the reinsurance agreements in our QSR Program, which is primarily included in other operating expenses in our condensed consolidated statements of operations. See Note 8 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information. ***Net Investment Income.*** Higher investment balances was the primary driver of the increases in net investment income for the three and nine months ended September 30, 2024, as compared to the same periods in 2023. The following table provides information related to our Mortgage Insurance subsidiaries’ investment balances and investment yields for the periods indicated. *($ in thousands)* | Investment balances and yields | Three Months Ended September 30, 2024 | 2023 | Change Favorable (Unfavorable) 2024 vs. 2023 | Nine Months Ended September 30, 2024 | 2023 | Change Favorable (Unfavorable) 2024 vs. 2023 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | Investment income | $52,929 | $51,578 | $1,351 | $157,267 | $149,258 | $8,009 | | Investment expenses | (2,693) | (1,625) | (1,068) | (7,355) | (5,242) | (2,113) | | Net investment income | $50,236 | $49,953 | $283 | $149,912 | $144,016 | $5,896 | | Average investments (1) | $5,382,155 | $5,333,104 | $49,051 | $5,397,016 | $5,329,118 | $67,898 | | Average investment yield (2) | 3.7% | 3.8% | (0.1)% | 3.7% | 3.6% | 0.1% | (1) The average of the beginning and ending amortized cost, for each period presented, of investments held by our Mortgage Insurance subsidiaries. (2) Calculated by dividing annualized net investment income by average investments balance. ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ### Expenses ***Provision for Losses.*** The following table details the financial impact of the significant components of our provision for losses for the periods indicated. *($ in thousands, except reserve per new default)* | Provision for losses | Three Months Ended September 30, 2024 | 2023 | Change Favorable (Unfavorable) 2024 vs. 2023 | Nine Months Ended September 30, 2024 | 2023 | Change Favorable (Unfavorable) 2024 vs. 2023 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | Current period defaults (1) | $57,032 | $46,630 | $(10,402) | $151,497 | $130,740 | $(20,757) | | Prior period defaults (2) | (50,686) | (54,887) | (4,201) | (153,806) | (177,484) | (23,678) | | Total provision for losses | $6,346 | $(8,257) | $(14,603) | $(2,309) | $(46,744) | $(44,435) | | Loss ratio (3) | 2.7% | (3.5)% | (6.2)% | (0.3)% | (6.9)% | (6.6)% | | Reserve per new default (4) | $4,160 | $4,180 | $20 | $4,143 | $4,143 | $0 | (1) Related to defaulted loans with the most recent default notice dated in the period indicated. For example, if a loan had defaulted in a prior period, but then subsequently cured and later re-defaulted in the current period, the default would be considered a current period default. (2) Related to defaulted loans with a default notice dated in a period earlier than the period indicated, which have been continuously in default since that time. (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 new primary defaults for each period. Current period new primary defaults increased by 23% and 16% for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, as shown below, which is consistent with the natural seasoning of the portfolio given the increase in our IIF in recent years. Our gross Default to Claim Rate assumption for new primary defaults was 8.0% at both September 30, 2024 and 2023, as we continue to closely monitor the trends in Cures and claims paid for our default inventory, while also weighing the risks and uncertainties associated with the current economic environment. Our provision for losses during the three and nine months ended September 30, 2024, and the same periods in 2023, was positively impacted by favorable reserve development on prior period defaults, primarily as a result of more favorable trends in Cures than originally estimated. These Cures have been due primarily to favorable outcomes resulting from positive trends in home price appreciation, which has also contributed to a higher rate of claims that result in no ultimate loss and that are withdrawn by servicers as a result. These favorable observed trends resulted in reductions in our Default to Claim Rate and other reserve adjustments for prior year default notices, including our Claim Severity assumptions in 2024. See Note 11 of Notes to Unaudited Condensed Consolidated Financial Statements herein for additional information, as well as Notes 1 and 11 of Notes to Consolidated Financial Statements and “Item 1A. Risk Factors” in our 2023 Form 10-K. Our primary default rate as a percentage of total insured loans at September 30, 2024, was 2.3% compared to 2.2% at December 31, 2023. The following table shows a rollforward of our primary loans in default. | Rollforward of primary loans in default | Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 | | --- | ---: | ---: | ---: | ---: | | Beginning default inventory | 20,276 | 19,880 | 22,021 | 21,913 | | New defaults | 13,708 | 11,156 | 36,568 | 31,555 | | Cures (1) | (11,484) | (10,467) | (35,764) | (32,671) | | Claims paid | (99) | (111) | (376) | (282) | | Rescissions and Claim Denials (2) | (51) | (52) | (99) | (109) | | Ending default inventory | 22,350 | 20,406 | 22,350 | 20,406 | (1) Includes submitted claims that resolved without a claim payment. (2) Net of any previous Rescissions and Claim Denials that were reinstated during the period. Such reinstated Rescissions and Claim Denials may ultimately result in a paid claim. ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following tables show additional information about our primary loans in default as of the dates indicated. *Primary loans in default - additional information* *($ in thousands)* | Missed payments | September 30, 2024 Total #% | | Foreclosure Stage Defaulted Loans #% | Cure % During the 3rd Quarter | Reserve for Losses $% | % of Reserve | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | Three payments or less | 11,714 | 52.4% | 23 | 36.3% | $102,689 | 30.4% | | Four to eleven payments | 7,067 | 31.6% | 301 | 27.0% | 125,264 | 37.2% | | Twelve payments or more | 3,214 | 14.4% | 695 | 17.5% | 91,368 | 27.1% | | Pending claims | 355 | 1.6% | N/A | 27.6% | 17,704 | 5.3% | | Total | 22,350 | 100.0% | 1,019 | | 337,025 | 100.0% | | LAE | | | | | 10,175 | | | IBNR | | | | | 1,669 | | | Total primary reserve (1) | | | | | $348,869 | | *($ in thousands)* | Missed payments | December 31, 2023 Total #% | | Foreclosure Stage Defaulted Loans #% | Cure % During the 4th Quarter | Reserve for Losses $% | % of Reserve | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | Three payments or less | 11,054 | 50.2% | 25 | 36.2% | $94,856 | 27.5% | | Four to eleven payments | 7,147 | 32.5% | 298 | 27.2% | 119,330 | 34.7% | | Twelve payments or more | 3,438 | 15.6% | 699 | 17.3% | 111,141 | 32.3% | | Pending claims | 382 | 1.7% | N/A | 30.6% | 18,908 | 5.5% | | Total | 22,021 | 100.0% | 1,022 | | 344,235 | 100.0% | | LAE | | | | | 10,397 | | | IBNR | | | | | 1,780 | | | Total primary reserve (1) | | | | | $356,412 | | N/A – Not applicable (1) Excludes pool and other reserves. See Note 11 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information. We develop our Default to Claim Rate estimates based primarily on models that use a variety of loan characteristics to determine the likelihood that a default will reach claim status. Our aggregate weighted average net Default to Claim Rate assumption for our primary loans used in estimating our reserve for losses, which is net of estimated Claim Denials and Rescissions, was 25% as of both September 30, 2024, and December 31, 2023, respectively. See Note 11 of Notes to Consolidated Financial Statements in our 2023 Form 10-K for additional details about our Default to Claim Rate assumptions. Although expected claims are included in our reserve for losses, the timing of claims paid is subject to fluctuation from quarter to quarter based on the rate that defaults cure and other factors, including the impact of foreclosure moratoriums (as described in “Item 1. Business—Mortgage Insurance—Defaults and Claims” in our 2023 Form 10-K) that make the timing of paid claims difficult to predict. ### Part I. Item 2. 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. *(In thousands)* | Claims paid Net claims paid (1) | Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 | | --- | ---: | ---: | ---: | ---: | | Primary | $2,408 | $4,325 | $7,558 | $7,478 | | Pool and other | (47) | 413 | (41) | (59) | | Subtotal | 2,361 | 4,738 | 7,517 | 7,419 | | LAE | 1,031 | — | 3,227 | 3,497 | | Commutations and settlements (2) | — | — | 1,552 | — | | Total net claims paid | $3,392 | $4,738 | $12,296 | $10,916 | | Average net primary claim paid (1) (3) | $22.9 | $37.6 | $27.0 | $36.0 | | Average direct primary claim paid (3) (4) | $27.2 | $38.7 | $29.0 | $37.2 | (1) Net of reinsurance recoveries. (2) Includes payments to commute mortgage insurance coverage on certain performing and non-performing loans. (3) Calculated excluding the impact of: (i) LAE; (ii) commutations and settlements; and (iii) claims resolved without payment, including claims subsequently withdrawn by the servicer. (4) Before reinsurance recoveries. Hurricanes Helene and Milton made landfall in September and October 2024, respectively, causing extensive property damage in Florida and certain other states, as well as other general disruptions including power outages and flooding. Although the Primary Mortgage Insurance we write protects lenders from a portion of losses resulting from mortgage defaults, it generally does not provide protection against property loss or physical damage, including damage caused by hurricanes or other severe weather events or natural disasters. As a result, while we expect new defaults from the affected areas to increase in the fourth quarter of 2024, absent a prolonged negative impact on the local economies in these areas, as of September 30, 2024, we do not expect to incur any material losses due to current or future defaults in FEMA Designated Areas related to these hurricanes. For additional information about our reserve for losses, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our 2023 Form 10-K. ***Other Operating Expenses.*** The increase in other operating expenses for the three and nine months ended September 30, 2024, as compared to the same periods in 2023, is primarily due to an increase in variable and share-based compensation expense and severance related expense, partially offset by a reduction in general operating expenses related to expense savings actions implemented during the past year, as well as an increase in the benefit from ceding commissions under Radian Guaranty’s QSR Program. Share-based compensation expense for the nine months ended September 30, 2024, includes $8 million of costs recognized on RSUs granted to retirement eligible grantees during the second quarter of 2024, as compared to $3 million for the same periods in 2023. Because no further service is required from retirement eligible grantees to satisfy vesting conditions for their awards, we recognize the full compensation costs as of the grant date for retirement eligible grantees. See Note 17 of Notes to Consolidated Financial Statements in our 2023 Form 10-K for additional information about our share-based compensation programs. ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following table shows additional information about other operating expenses for our Mortgage Insurance segment, for the periods indicated. *($ in thousands)* | Other operating expenses Direct | Three Months Ended September 30, 2024 | 2023 | Change Favorable (Unfavorable) 2024 vs. 2023 | Nine Months Ended September 30, 2024 | 2023 | Change Favorable (Unfavorable) 2024 vs. 2023 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | Salaries and other base employee expenses | $10,180 | $9,877 | $(303) | $32,373 | $31,946 | $(427) | | Variable and share-based incentive compensation | 5,299 | 4,465 | (834) | 15,109 | 13,018 | (2,091) | | Other general operating expenses | 7,205 | 7,587 | 382 | 21,230 | 25,232 | 4,002 | | Ceding commissions | (6,276) | (5,153) | 1,123 | (17,877) | (14,605) | 3,272 | | Total direct | 16,408 | 16,776 | 368 | 50,835 | 55,591 | 4,756 | | Allocated (1) | | | | | | | | Salaries and other base employee expenses | 11,356 | 10,425 | (931) | 39,897 | 33,703 | (6,194) | | Variable and share-based incentive compensation | 7,005 | 9,184 | 2,179 | 27,650 | 27,405 | (245) | | Other general operating expenses | 14,173 | 12,135 | (2,038) | 42,693 | 42,546 | (147) | | Total allocated | 32,534 | 31,744 | (790) | 110,240 | 103,654 | (6,586) | | Total other operating expenses | $48,942 | $48,520 | $(422) | $161,075 | $159,245 | $(1,830) | | Expense ratio (2) | 23.7% | 23.4% | (0.3)% | 25.7% | 26.2% | 0.5% | (1) See Note 4 of Notes to Unaudited Condensed Consolidated Financial Statements for more information about our allocation of corporate operating expenses. (2) Operating expenses (which consist of policy acquisition costs and other operating expenses, as well as allocated corporate operating expenses), expressed as a percentage of net premiums earned. See “Revenues—*Net Premiums Earned”* above for additional information on the changes in net premiums earned. ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ### Results of Operations—All Other The following table summarizes our All Other results of operations for the periods indicated. *Summary results of operations - All Other* *(In thousands)* | Revenues | Three Months Ended September 30, 2024 | 2023 | Change Favorable (Unfavorable) 2024 vs. 2023 | Nine Months Ended September 30, 2024 | 2023 | Change Favorable (Unfavorable) 2024 vs. 2023 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | Net premiums earned | $3,989 | $3,461 | $528 | $8,760 | $7,946 | $814 | | Services revenue | 12,001 | 10,723 | 1,278 | 37,558 | 33,083 | 4,475 | | Net investment income | 28,160 | 17,852 | 10,308 | 71,471 | 45,590 | 25,881 | | Net gains (losses) on investments and other financial instruments | (4,611) | 283 | (4,894) | (4,277) | 458 | (4,735) | | Income (loss) on consolidated VIEs | 465 | — | 465 | 465 | — | 465 | | Other income | (399) | 9 | (408) | (244) | 13 | (257) | | Total revenues | 39,605 | 32,328 | 7,277 | 113,733 | 87,090 | 26,643 | | **Expenses** | | | | | | | | Provision for losses | 543 | 122 | (421) | 419 | 48 | (371) | | Cost of services | 9,416 | 8,714 | (702) | 27,969 | 28,985 | 1,016 | | Other operating expenses | 27,021 | 30,657 | 3,636 | 89,288 | 93,305 | 4,017 | | Interest expense | 7,500 | 1,609 | (5,891) | 14,045 | 2,086 | (11,959) | | Total expenses | 44,480 | 41,102 | (3,378) | 131,721 | 124,424 | (7,297) | | Adjusted pretax operating income (loss) (1) | $(4,875) | $(8,774) | $3,899 | $(17,988) | $(37,334) | $19,346 | (1) Our senior management uses adjusted pretax operating income (loss) as our primary measure to evaluate the fundamental financial performance of each of our business segments. See Note 4 of Notes to Unaudited Condensed Consolidated Financial Statements. Our All Other results include income from investments held at Radian Group, which have benefited from rising interest rates over the past year as well as from rising balances resulting from distributions by Radian Guaranty. All Other also includes the financial results of our other immaterial operating segments, comprising our Mortgage Conduit, Title, Real Estate Services and Real Estate Technology businesses. In particular, Radian Mortgage Capital contributed to the increase in net investment income, net losses on investments and interest expense during the three and nine months ended September 30, 2024. ### Liquidity and Capital Resources ### Consolidated Cash Flows The following table summarizes our consolidated cash flows from operating, investing and financing activities. *(In thousands)* | Summary cash flows - Consolidated Net cash provided by (used in): | Nine Months Ended September 30, 2024 | 2023 | | --- | ---: | ---: | | Operating activities | $(394,157) | $264,476 | | Investing activities | 292,429 | (189,445) | | Financing activities | 111,738 | (74,797) | | Increase (decrease) in cash and restricted cash | $10,010 | $234 | 65 ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ***Operating Activities.*** Our most significant source of operating cash flows is from premiums received from our mortgage insurance policies, while our most significant uses of operating cash flows are typically for our operating expenses and claims paid on our mortgage insurance policies and taxes. In addition, our operating activities also include Radian Mortgage Capital’s purchases, sales and principal payments from residential mortgage loans held for sale, which can fluctuate from period to period. The increase in cash used in operating activities in the nine months ended September 30, 2024, as compared to cash provided by operating activities in the same period in 2023, is primarily due to increases in net purchases of mortgage loans held for sale, which increased from $137 million in the first nine months of 2023 to $849 million for the same period in 2024. ***Investing Activities.*** Net cash provided by investing activities increased for the nine months ended September 30, 2024, as compared to cash used in investing activities in the same period in 2023. The increase was primarily from: (i) sales and redemptions, net of purchases, of short-term investments and fixed-maturities available for sale and (ii) cash provided by operating activities other than net cash used for purchases of mortgage loans held for sale, which were primarily funded by financing activities as described below. ***Financing Activities.*** For the nine months ended September 30, 2024, our primary financing activities impacting cash included an increase in secured borrowings, primarily related to funding from mortgage loan financing facilities, which increased from $120 million in the first nine months of 2023 to $473 million for the same period in 2024, as well as proceeds from the issuance of securitized nonrecourse debt in 2024. This increase was partially offset by: (i) net changes in our senior notes; (ii) repurchases of our common stock; and (iii) payment of dividends. See Notes 12 and 14 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information regarding our borrowings and share repurchases, respectively. See “Item 1. Financial Statements (Unaudited)—Condensed Consolidated Statements of Cash Flows (Unaudited)” for additional information. ### 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 September 30, 2024, Radian Group had available, either directly or through unregulated subsidiaries, unrestricted cash and liquid investments of $844 million. Available liquidity at September 30, 2024, 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 $1.1 billion as of September 30, 2024. During the nine months ended September 30, 2024, Radian Group’s available liquidity decreased by $149 million, due to the net impact of the redemption of the Senior Notes due 2025 and 2024 and the issuance of the Senior Notes due 2029 and the payments for dividends and share repurchases, as described, partially offset by the $485 million in ordinary dividends received from Radian Guaranty. In addition to available cash and marketable securities, including net investment income earned on such investments, 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 and (ii) to the extent available, dividends or other distributions from its subsidiaries. Radian Group has in place a $275 million unsecured revolving credit facility with a syndicate of bank lenders. 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 September 30, 2024, the full $275 million remains undrawn and available under the facility. See Note 12 of Notes to Consolidated Financial Statements in our 2023 Form 10-K for additional information on the unsecured revolving credit facility. In connection with our Mortgage Conduit business, Radian Mortgage Capital has entered into the Master Repurchase Agreements. As of September 30, 2024, Radian Group has entered into three separate Parent Guarantees to guaranty the obligations under the Master Repurchase Agreements. See Note 12 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information. In addition to financing the acquisition of mortgage loan assets under the Master Repurchase Agreements, Radian Mortgage Capital may fund such purchases directly using capital contributed from Radian Group. We expect Radian Group’s principal liquidity demands for the next 12 months to be: (i) the payment of corporate expenses, including taxes; (ii) interest payments on our outstanding debt obligations; (iii) the payment of quarterly dividends on ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations our common stock, which are currently $0.245 per share, and which remain subject to approval by our board of directors and our ongoing assessment of our financial condition and potential needs related to the execution and implementation of our business plans and strategies; (iv) the potential continued repurchases of shares of our common stock pursuant to share repurchase authorizations, as described below; and (v) investments to support our business strategy, including capital contributions to our subsidiaries. In addition to our ongoing short-term liquidity needs discussed above, our most significant need for liquidity beyond the next 12 months is the repayment of $1.1 billion aggregate principal amount of our senior debt due in future years. See “Capitalization—Holding Company” below for details of our debt maturity profile. Radian Group’s liquidity demands for the next 12 months or in future periods could also include: (i) early repurchases or redemptions of portions of our debt obligations and (ii) potential payments pursuant to the Parent Guarantees. For additional information about related risks and uncertainties, see “*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”* under “Item 1A. Risk Factors” in our 2023 Form 10-K. In addition to Radian Group’s existing sources of liquidity to fund its obligations, we may decide to seek additional capital, including by incurring additional debt, issuing additional equity, or selling assets, which we may not be able to do on favorable terms, if at all. ***Share Repurchases.*** During the nine months ended September 30, 2024, the Company repurchased 4.8 million shares of Radian Group common stock under a program authorized by Radian Group’s board of directors, at a total cost of $149 million, including commissions. See Note 14 of Notes to Unaudited Condensed Consolidated Financial Statements for additional details on our share repurchase programs. ***Dividends and Dividend Equivalents.*** In February 2024, Radian Group’s board of directors authorized an increase to the Company’s quarterly dividend from $0.225 to $0.245 per share. Based on our outstanding shares of common stock and our current dividend level, which our board of directors may change as discussed above, we would require approximately $147 million in the aggregate to pay dividends for the next 12 months, plus an incremental amount for dividend equivalents that will fluctuate based on final shares vested under our performance-based RSU programs. So long as no default or event of default exists under our revolving credit facility or the Parent Guarantees, Radian Group is not subject to any legal or contractual limitations on its ability to pay dividends except those generally applicable to corporations that are incorporated in Delaware. See Note 12 of Notes to Unaudited Condensed Consolidated Financial Statements for additional details. The declaration and payment of future quarterly dividends remains subject to the board of directors’ discretion and determination. ***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 expense on Radian Group’s debt obligations allocated under these arrangements during the nine months ended September 30, 2024, of $131 million and $65 million, respectively, were substantially all reimbursed by its subsidiaries. We expect substantially all of our holding company expenses to continue to be reimbursed by our subsidiaries under our expense-sharing arrangements. The expense-sharing arrangements between Radian Group and its mortgage insurance subsidiaries, as amended, have been approved by the Pennsylvania Insurance Department, but such approval may be modified or revoked at any time. ***Taxes.*** Pursuant to our tax-sharing agreements, our operating subsidiaries pay Radian Group an amount equal to any federal income tax the subsidiary would have paid on a standalone basis if they were not part of our consolidated tax return. As a result, from time to time, under the provisions of our tax-sharing agreements, Radian Group may pay to or receive from its operating subsidiaries amounts that differ from Radian Group’s consolidated federal tax payment obligation. Radian Group received $15 million of tax-sharing agreement payments from its subsidiaries during the nine months ended September 30, 2024. ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ### Capitalization—Holding Company The following table presents our holding company capital structure. *(In thousands, except per-share amounts and ratios)* | Capital structure Debt | September 30, 2024 | December 31, 2023 | | --- | ---: | ---: | | Senior Notes due 2024 | $— | $450,000 | | Senior Notes due 2025 | — | 525,000 | | Senior Notes due 2027 | 450,000 | 450,000 | | Senior Notes due 2029 | 625,000 | — | | Unamortized discount and debt issuance costs | (10,282) | (7,219) | | Revolving credit facility | — | — | | Total | 1,064,718 | 1,417,781 | | Stockholders’ equity | 4,698,853 | 4,397,805 | | Total capitalization | $5,763,571 | $5,815,586 | | Holding company debt-to-capital ratio (1) | 18.5% | 24.4% | | Shares outstanding | 149,776 | 153,179 | | Book value per share | $31.37 | $28.71 | (1) Calculated as carrying value of senior notes, which were issued and are owed by our holding company, divided by carrying value of senior notes and stockholders’ equity. This holding company ratio does not include the effects of amounts owed by our subsidiaries related to secured borrowings. Stockholders’ equity increased by $301 million from December 31, 2023, to September 30, 2024. The net increase in stockholders’ equity for the nine months ended September 30, 2024, resulted primarily from our net income of: (i) $456 million, and (ii) a net decrease in unrealized losses on investment securities of $98 million as a result of decreases in market interest rates during the period. These items were partially offset by: (i) share repurchases of $149 million, excluding related excise taxes due and (ii) dividend and dividend equivalents of $115 million. As of September 30, 2024, we did not expect to realize a loss for our investments in an unrealized loss position given our intent and ability to hold these investment securities until recovery of their amortized cost basis. The increase in book value per share from $28.71 at December 31, 2023, to $31.37 at September 30, 2024, is primarily due to: (i) an increase of $2.98 per share attributable to our net income for the nine months ended September 30, 2024, and (ii) an increase of $0.64 per share due to a net decrease in unrealized losses in our available for sale securities, recorded in accumulated other comprehensive income. These increases were partially offset primarily by a decrease of $0.75 per share attributable to dividends and dividend equivalents. We regularly evaluate opportunities, based on market conditions, to finance our operations by accessing the capital markets or entering into other types of financing arrangements with institutional and other lenders. We also regularly consider various measures to improve our capital and liquidity positions, as well as to strengthen our balance sheet, improve Radian Group’s debt maturity profile and maintain adequate liquidity for our operations. Among other things, these measures may include borrowing agreements or arrangements, such as securities or other master repurchase agreements and revolving credit facilities. 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 timing or amount of any potential transactions will depend on a number of factors, including market opportunities and our views regarding our capital and liquidity positions and potential future needs. There can be no assurance that any such transactions will be completed on favorable terms, or at all. ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ### 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. See Note 11 of Notes to Unaudited Condensed Consolidated Financial Statements for information on our mortgage insurance reserve for losses and LAE, which represents our best estimate for the costs of settling future claims on currently defaulted mortgage loans. Other principal demands for liquidity in our Mortgage Insurance business are expected to include: (i) expenses (including those allocated from Radian Group); (ii) repayments of FHLB advances; (iii) distributions from Radian Guaranty to Radian Group, including returns of capital or recurring ordinary dividends, as discussed below; and (iv) 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 in our 2023 Form 10-K for additional information related to these non-interest-bearing instruments. 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. 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. As of September 30, 2024, Radian Guaranty maintained claims paying resources of $6 billion on a statutory basis, which consist of contingency reserves, statutory policyholders’ surplus, premiums received but not yet earned and loss reserves. In addition, our reinsurance programs are designed to provide additional claims-paying resources during times of economic stress and elevated losses. See Note 8 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information. Radian Guaranty’s Risk-to-capital as of September 30, 2024, was 10.3 to 1. Radian Guaranty is not expected to need additional capital to satisfy state insurance regulatory requirements. At September 30, 2024, Radian Guaranty had statutory policyholders’ surplus of $691 million. This balance includes an $870 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. See Note 16 of Notes to Consolidated Financial Statements 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 liquidit*y” under “Item 1A. Risk Factors” in our 2023 Form 10-K for more information. Radian Guaranty currently is an approved mortgage insurer under the PMIERs. Private mortgage insurers, including Radian Guaranty, are required to comply with the PMIERs to remain approved insurers of loans purchased by the GSEs. At September 30, 2024, Radian Guaranty’s Available Assets under the PMIERs financial requirements totaled $6.0 billion, resulting in a PMIERs Cushion of $2.1 billion, or 55%, over its Minimum Required Assets. Those amounts compare to Available Assets of $5.9 billion and a PMIERs cushion of $2.3 billion, or 62%, at December 31, 2023. See “Overview—Legislative and Regulatory Developments” for more information on the PMIERs. Despite holding assets above the minimum statutory capital thresholds and PMIERs financial requirements, the ability of Radian’s mortgage insurance subsidiaries to pay dividends on their common stock is restricted by certain provisions of the insurance laws of Pennsylvania, their state of domicile. Under Pennsylvania’s insurance laws, ordinary dividends and other distributions may only be paid out of an insurer’s positive unassigned surplus unless the Pennsylvania Insurance Department approves the payment of dividends or other distributions from another source. Radian Guaranty paid ordinary dividends to Radian Group of $485 million during the first nine months of 2024 and expects to maintain the ability to pay additional ordinary dividends during the remainder of 2024. See Note 16 of Notes to Consolidated Financial Statements in our 2023 Form 10-K for additional information on our statutory dividend restrictions and contingency reserve requirements. Radian Guaranty is a member of the FHLB. As a member, it may borrow from the FHLB, subject to certain conditions, which include requirements to post collateral and to maintain a minimum investment in FHLB stock. Advances from the FHLB may be used to provide low-cost, supplemental liquidity for various purposes, including to fund incremental investments. Radian’s current strategy includes using FHLB advances as financing for general cash management and liquidity purposes. As of September 30, 2024, there were $54 million of FHLB advances outstanding. See Note 12 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information. ### Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ### All Other Additional capital support may also be required for potential investments in our other business initiatives to support our strategy of growing our businesses. During the nine months ended September 30, 2024, Radian Group made $60 million of additional equity contributions to support our Title, Real Estate Services and Real Estate Technology businesses. During that same period, Radian Group also made $70 million of additional equity contributions to facilitate the growth of our Mortgage Conduit business. In the event the cash flows from operations of our All Other businesses continue to be insufficient to fund all of their needs, Radian Group may continue to provide additional funds in the form of additional capital contributions or other support. 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”* under “Item 1A. Risk Factors” in our 2023 Form 10-K for additional information. ### Ratings Ratings independently assigned by third-party statistical rating organizations often are considered in assessing our credit strength and the financial strength of our primary insurance subsidiaries. Radian Group, Radian Guaranty and Radian Title Insurance are currently assigned the financial strength ratings set forth in the chart below, which are provided for informational purposes only and are subject to change. See “*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”* under “Item 1A. Risk Factors” in our 2023 Form 10-K. | Ratings | | | | | | --- | --- | --- | --- | --- | | **Subsidiary** | **Demotech, Inc.** | **Fitch (1)** | **Moody’s (1)** | **S&P (1)** | | Radian Group | N/A | BBB- | Baa3 | BBB- | | Radian Guaranty | N/A | A- | A3 | A- | | Radian Title Insurance | A | N/A | N/A | N/A | (1) On April 12, 2024, Fitch Ratings (“Fitch”) revised the outlook to Positive from Stable for both Radian Group and Radian Guaranty. Moody’s Investors Service (“Moody’s”) and S&P Global Ratings (“S&P”) each currently rate the outlook for both Radian Group and Radian Guaranty as Stable. ### Critical Accounting Estimates As of the filing date of this report, there were no significant changes in our critical accounting estimates from those discussed in our 2023 Form 10-K. See Note 2 of Notes to Unaudited Condensed Consolidated Financial Statements for accounting pronouncements issued but not yet adopted that may impact the Company’s consolidated financial position, earnings, cash flows or disclosures. ## Market risk As filed, 1,228 characters. Market risk represents the potential for loss due to adverse changes in the value of financial instruments as a result of changes in market conditions. Examples of market risk include changes in interest rates, credit spreads, foreign currency exchange rates and equity prices. 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. See “*Our success depends, in part, on our ability to manage risks in our investment portfolio”* under “Item 1A. Risk Factors” in our 2023 Form 10-K. Residential mortgage loans held for sale increased from $33 million at December 31, 2023, to $530 million at September 30, 2024. See Note 7 of Notes to Unaudited Condensed Consolidated Financial Statements for more information on our residential mortgage loans held for sale and related hedging activities. Other than the higher balances of residential mortgage loans held for sale and related derivatives, our market risk exposures at September 30, 2024, which primarily relate to interest rate and credit risk, have not materially changed from those identified in our 2023 Form 10-K. ## Controls and procedures As filed, 1,672 characters. ### Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of September 30, 2024, pursuant to Rule 15d-15(b) under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2024, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. ### Changes in Internal Control Over Financial Reporting During the three-month period ended September 30, 2024, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Filed Nov 7, 2024. Source: SEC EDGAR, the filing index for accession 0000950170-24-122809. Last ingested by Listed: Oct 24, 2026, 14:59 ET. No prices; not investment advice.