RADIAN GROUP INC
For the period ended Dec 31, 2024. Filed Feb 14, 2025.
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FY2024 · Filed Feb 14, 2025
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Mortgage Insurance Portfolio Metrics
New Insurance Written
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).
| NIW | |||
|---|---|---|---|
| Years Ended December 31, | |||
| ($ in millions) | 2024 | 2023 | 2022 |
| NIW | $51,984 | $52,670 | $67,954 |
| Primary risk written | $13,186 | $13,533 | $17,368 |
| Average coverage percentage | 25.4% | 25.7% | 25.6% |
| NIW by loan purpose | |||
| Purchases | 95.3% | 98.5% | 96.1% |
| Refinances | 4.7% | 1.5% | 3.9% |
| NIW by premium type | |||
| Direct Monthly and Other Recurring Premiums | 96.4% | 96.0% | 95.1% |
| Direct single premiums | 3.6% | 4.0% | 4.9% |
| NIW by FICO score (1) | |||
| >=740 | 69.6% | 65.4% | 59.8% |
| 680-739 | 25.1% | 28.9% | 32.4% |
| 620-679 | 5.3% | 5.7% | 7.8% |
| <=619 | 0.0% | 0.0% | 0.0% |
| NIW by LTV (2) | |||
| 95.01% and above | 16.1% | 16.9% | 16.6% |
| 90.01% to 95.00% | 38.0% | 39.4% | 39.9% |
| 85.01% to 90.00% | 31.8% | 29.9% | 28.4% |
| 85.00% and below | 14.1% | 13.8% | 15.1% |
(1)
For loans with multiple borrowers, the percentage of NIW by FICO score represents the lowest of the borrowers’ FICO scores at origination.
(2)
LTV at origination.
Insurance and Risk in Force
| Year of origination - IIF | ||||||
|---|---|---|---|---|---|---|
| ($ in billions) · IIF as of: | ||||||
| By vintage: · December 31, 2024 · December 31, 2023 · December 31, 2022 | ||||||
| 2024 | $49.3 | 17.9% | $— | —% | $— | —% |
| 2023 | 45.3 | 16.5% | 50.6 | 18.7% | — | —% |
| 2022 | 54.2 | 19.7% | 60.5 | 22.4% | 65.2 | 25.0% |
| 2021 | 53.5 | 19.4% | 65.7 | 24.3% | 77.3 | 29.6% |
| 2020 | 34.1 | 12.4% | 45.1 | 16.7% | 57.7 | 22.1% |
| 2019 | 12.1 | 4.4% | 14.7 | 5.4% | 17.9 | 6.8% |
| 2009 - 2018 | 20.1 | 7.3% | 25.7 | 9.6% | 33.9 | 13.0% |
| 2008 & Prior | 6.5 | 2.4% | 7.7 | 2.9% | 9.0 | 3.5% |
| Total | $275.1 | 100.0% | $270.0 | 100.0% | $261.0 | 100.0% |
The primary driver of the future premiums that we expect to earn over time is our IIF, which increases as a result of our NIW and decreases as a result of policy cancellations and amortization.
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 December 31, 2024, decreased slightly as compared to the same period in 2023, which we believe is primarily attributable to a slight increase in refinance activity in 2024 compared to 2023.
Following a three-year period of benchmark interest rate increases, the U.S. Federal Reserve reduced benchmark interest rates for the first time in September 2024 and then again in both November and December 2024. While decreases in benchmark interest rates generally reduce longer-term U.S. treasury rates and result in lower mortgage interest rates and a corresponding increase in mortgage refinance transactions, we do not expect these recent interest rate changes to have a significant impact on our Persistency Rate in the near term. As of December 31, 2024, 68% of our IIF had a mortgage note interest rate of 6.0% or less, which remains below the current mortgage interest rates based on reported industry averages. If mortgage rates were to decrease further, however, refinance volumes could increase, which could have a negative impact on our Persistency Rate and 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” for more information.
The following table provides selected information as of and for the periods indicated related to mortgage insurance IIF and RIF. 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).
| IIF and RIF | |||
|---|---|---|---|
| As of December 31, | |||
| ($ in millions) | 2024 | 2023 | 2022 |
| Primary IIF | $275,126 | $269,979 | $260,994 |
| Primary RIF | $72,074 | $69,710 | $66,094 |
| Average coverage percentage | 26.2% | 25.8% | 25.3% |
| Persistency Rate (12 months ended) | 83.6% | 84.0% | 79.6% |
| Persistency Rate (quarterly, annualized) (1) | 82.7% | 85.8% | 84.1% |
| Primary RIF by premium type | |||
| Direct Monthly and Other Recurring Premiums | 90.0% | 88.9% | 87.1% |
| Direct single premiums | 10.0% | 11.1% | 12.9% |
| Primary RIF by FICO score (2) | |||
| >=740 | 60.1% | 58.5% | 57.4% |
| 680-739 | 32.6% | 33.9% | 34.6% |
| 620-679 | 7.0% | 7.3% | 7.6% |
| <=619 | 0.3% | 0.3% | 0.4% |
| Primary RIF by LTV (3) | |||
| 95.01% and above | 19.8% | 18.6% | 17.1% |
| 90.01% to 95.00% | 47.9% | 48.2% | 48.4% |
| 85.01% to 90.00% | 27.3% | 27.1% | 27.2% |
| 85.00% and below | 5.0% | 6.1% | 7.3% |
(1)
The Persistency Rate on a quarterly, annualized basis is calculated based on loan-level detail for the quarter ending as of the date shown. 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.
At December 31, 2024, 90% of our total Primary Mortgage RIF are Monthly and Other Recurring Premium Policies. Based on the current composition of our mortgage insurance portfolio, with Monthly Premium Policies comprising a larger proportion of our total portfolio than Single Premium Policies, an increase in IIF generally has a corresponding positive impact on premiums earned, while a decrease in IIF generally has a corresponding negative impact on premiums earned. Reductions in IIF through cancellations of our insurance policies as a result of prepayments, as well as other insurance policy terminations such as Rescissions of coverage and claims paid, generally have a negative effect on premiums earned over time.
The following table shows our direct Primary Mortgage Insurance RIF by year of origination and selected information related to that risk as of the dates indicated.
| Year of origination - RIF | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| December 31, | |||||||||
| 2024 · 2023 | |||||||||
| ($ in millions) · RIF · Number of Defaults · Delinquency Rate · Percentage of Reserve for Losses · RIF · Number of Defaults · Delinquency Rate · Percentage of Reserve for Losses | |||||||||
| 2024 | $12,516 | 585 | 0.4% | 1.7% | $— | — | — | — | |
| 2023 | 11,677 | 2,117 | 1.6% | 9.4% | 13,008 | 584 | 0.4% | 1.6% | |
| 2022 | 14,121 | 4,181 | 2.5% | 23.2% | 15,589 | 2,899 | 1.6% | 13.9% | |
| 2021 | 14,413 | 4,124 | 2.2% | 19.9% | 17,065 | 3,630 | 1.6% | 17.0% | |
| 2020 | 9,302 | 2,215 | 1.6% | 8.9% | 11,596 | 2,111 | 1.2% | 9.2% | |
| 2019 | 3,151 | 1,780 | 3.0% | 6.4% | 3,740 | 1,904 | 2.7% | 7.9% | |
| 2009 - 2018 | 5,244 | 5,228 | 4.6% | 17.3% | 6,775 | 6,158 | 4.2% | 26.5% | |
| 2008 and prior | 1,650 | 3,825 | 8.1% | 13.2% | 1,937 | 4,735 | 8.7% | 23.9% | |
| Total | $72,074 | 24,055 | 100.0% | $69,710 | 22,021 | 100.0% | |||
Historical loan performance data indicates that credit scores and underwriting quality are key drivers of credit performance, and loan originations after 2008 have consisted primarily of high credit quality loans with significantly better credit performance than loans originated during 2008 and prior periods.
The following table illustrates the trends of our cumulative incurred loss ratios by year of origination and development year.
| Cumulative incurred loss ratio by vintage (1) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Vintage | Dec2015 | Dec2016 | Dec2017 | Dec2018 | Dec2019 | Dec 2020 (2) | Dec 2021 (2) | Dec2022 | Dec2023 | Dec2024 |
| 2015 | 2.1% | 4.8% | 5.2% | 5.0% | 4.7% | 7.4% | 6.8% | 3.8% | 2.9% | 2.4% |
| 2016 | 2.9% | 5.0% | 4.8% | 4.7% | 9.7% | 8.0% | 3.7% | 2.7% | 2.1% | |
| 2017 | 4.7% | 5.1% | 6.1% | 14.3% | 11.9% | 5.1% | 3.7% | 2.9% | ||
| 2018 | 3.0% | 6.4% | 22.8% | 19.0% | 7.2% | 4.9% | 3.9% | |||
| 2019 | 2.8% | 35.6% | 23.5% | 6.8% | 4.6% | 3.5% | ||||
| 2020 | 25.6% | 14.9% | 6.0% | 3.8% | 3.1% | |||||
| 2021 | 7.9% | 10.9% | 9.1% | 8.0% | ||||||
| 2022 | 9.4% | 15.2% | 17.0% | |||||||
| 2023 | 7.1% | 12.6% | ||||||||
| 2024 | 6.9% | |||||||||
(1)
Represents inception-to-date losses incurred as a percentage of net premiums earned.
(2)
Losses incurred in 2021 and 2020 across all vintages were elevated due to the impact of the COVID-19 pandemic.
Geographic Dispersion
The following table shows, as of the dates indicated, the percentage of our direct Primary Mortgage Insurance RIF and the associated percentage of our mortgage insurance reserve for losses (by location of property) for the top 10 states in the U.S. (as measured by our direct Primary Mortgage Insurance RIF as of December 31, 2024).
| Top 10 U.S. states - RIF | ||||
|---|---|---|---|---|
| December 31, | ||||
| 2024 | 2023 | |||
| Top 10 States | RIF | Reserve for Losses | RIF | Reserve for Losses |
| Texas | 10.3% | 11.8% | 10.0% | 9.5% |
| California | 8.3% | 8.9% | 8.5% | 9.3% |
| Florida | 5.5% | 8.4% | 5.8% | 8.5% |
| Illinois | 5.1% | 5.8% | 5.0% | 6.0% |
| Virginia | 4.4% | 2.5% | 4.2% | 2.2% |
| Maryland | 3.9% | 3.4% | 3.7% | 3.5% |
| New York | 3.9% | 7.1% | 4.2% | 9.4% |
| Pennsylvania | 3.7% | 3.2% | 3.8% | 3.5% |
| Colorado | 3.7% | 2.2% | 3.4% | 1.6% |
| Washington | 3.7% | 1.8% | 3.6% | 2.2% |
| Total | 52.5% | 55.1% | 52.2% | 55.7% |
The following table shows, as of the dates indicated, the percentage of our direct Primary Mortgage Insurance RIF and the associated percentage of our mortgage insurance reserve for losses (by location of property) for the top 10 Core Based Statistical Areas, referred to as “CBSAs,” in the U.S. (as measured by our direct Primary Mortgage Insurance RIF as of December 31, 2024).
| Top 10 Core Based Statistical Areas - RIF | ||||
|---|---|---|---|---|
| December 31, | ||||
| 2024 | 2023 | |||
| Top 10 CBSAs (1) | RIF | Reserve for Losses | RIF | Reserve for Losses |
| New York-Newark-Jersey City, NY-NJ-PA | 5.0% | 8.9% | 5.3% | 10.7% |
| Chicago-Naperville-Elgin, IL-IN-WI | 4.7% | 5.5% | 4.6% | 5.6% |
| Washington-Arlington-Alexandria, DC-VA-MD-WV | 4.4% | 3.5% | 4.3% | 3.1% |
| Dallas-Fort Worth-Arlington, TX | 3.4% | 3.9% | 3.4% | 3.0% |
| Houston-The Woodlands-Sugar Land, TX | 3.0% | 4.3% | 2.9% | 3.2% |
| Philadelphia-Camden-Wilmington, PA-NJ-DE-MD | 2.7% | 2.4% | 2.7% | 2.6% |
| Denver-Aurora-Lakewood, CO | 2.4% | 1.5% | 2.2% | 1.0% |
| Los Angeles-Long Beach-Anaheim, CA | 2.3% | 2.2% | 2.3% | 2.5% |
| Minneapolis-St. Paul-Bloomington, MN-WI | 2.2% | 1.8% | 2.2% | 1.5% |
| Seattle-Tacoma-Bellevue, WA | 2.2% | 1.0% | 2.1% | 1.1% |
| Total | 32.3% | 35.0% | 32.0% | 34.3% |
(1)
CBSAs are metropolitan areas and may include a portion of adjoining states as noted above.
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.
The impact of these programs on our financial results will vary depending on the level of ceded RIF, as well as the levels of prepayments and incurred losses on the reinsured portfolios, among other factors. See “Key Factors Affecting Our Results—Mortgage Insurance—Risk Distribution” and Note 8 of Notes to Consolidated Financial Statements for more information about our reinsurance transactions.
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.
| PMIERs benefit from risk distribution | |||
|---|---|---|---|
| December 31, | |||
| ($ in thousands) | 2024 | 2023 | 2022 |
| PMIERs impact - reduction in Minimum Required Assets | |||
| XOL Program | |||
| Mortgage insurance-linked notes | $558,939 | $770,335 | $665,617 |
| Traditional reinsurance | 160,742 | 218,294 | — |
| Total XOL Program | 719,681 | 988,629 | 665,617 |
| Other QSR Agreements (1) | 572,229 | 420,989 | 241,889 |
| Single Premium QSR Program | 172,968 | 193,807 | 231,339 |
| Total PMIERs impact | $1,464,878 | $1,603,425 | $1,138,845 |
| Percentage of gross Minimum Required Assets | 27.4% | 30.6% | 22.9% |
(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.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.