RADIAN GROUP INC

New Insurance Written

We wrote $11.5 billion of primary new mortgage insurance in the three months ended March 31, 2024, compared to $11.3 billion of NIW in the three months ended March 31, 2023.

Our NIW increased by 2% for the three months ended March 31, 2024, compared to the same period in 2023, due to an increase in our market share, partially offset by 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 slightly higher for the three months ended March 31, 2024, as compared to the comparable period in 2023, due to a small increase in both mortgage refinance activity and home purchases.

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

(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.

Insurance and Risk in Force

(1)Policy years represent the original policy years and have not been adjusted to reflect subsequent refinancing activity under the Home Affordable Refinance Program (“HARP”).

(2)Includes loans that were subsequently refinanced under HARP.

Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our IIF is the primary driver of the future premiums that we expect to earn over time. IIF increased to $271.0 billion at March 31, 2024, from $270.0 billion at December 31, 2023, reflecting the impact of our NIW offset by policy cancellations and amortization for the first three months of 2024. Our IIF at March 31, 2024, increased 4% as compared to the same period last year, reflecting a 6% increase in Monthly Premium Policies in force partially offset by a 9% decline in Single Premium Policies in force.

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 March 31, 2024, increased as compared to March 31, 2023. The increase in our Persistency Rate at March 31, 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 March 31, 2024, 85% of our IIF had a mortgage note interest rate of 6.5% or less. Given the increase in 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).

The following table provides selected information as of and for the periods indicated related to mortgage insurance IIF and RIF.

(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.

Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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.

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.

(1)Consists primarily of 2022 and 2023 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.