RADIAN GROUP INC

Our Mortgage segment continued to serve as a solid foundation for our financial results, generating strong earnings and cash flow in the second quarter of 2026. Our Mortgage segment contributed $208 million of adjusted pretax operating income, with net premiums earned of $236 million. Our mortgage insurance in force portfolio was $284.0 billion as of June 30, 2026, and we wrote $16.3 billion of NIW during the quarter. We continued to observe low default and claim rates and steady cure activity, supporting favorable loss performance.

Consistent with the trends observed in recent periods, the economic and market conditions impacting our Mortgage results for the second quarter of 2026 remained generally favorable. These trends include: (i) positive economic growth and generally low unemployment in the U.S., resulting in a strong credit environment; (ii) continued elevated mortgage rates, contributing to a strong Persistency Rate due to the interest rates of mortgages in our insured portfolio generally remaining below prevailing interest rates; and (iii) strong mortgage insurance fundamentals, including stringent underwriting and product standards, higher-quality borrowers with strong credit profiles and strengthened servicing standards and government support to help borrowers stay in their homes.

The following table summarizes our Mortgage segment’s results of operations for the periods indicated.

(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 5 of Notes to Unaudited Condensed Consolidated Financial Statements for more information.

Net Premiums Earned. The following table provides additional information about the components of our Mortgage segment’s net premiums earned for the periods indicated, including the effects of reinsurance programs.

(1)

Calculated by dividing annualized direct premiums earned, excluding revenue from cancellations, by average primary IIF. Revenue from cancellations was $1.9 million and $3.4 million for the three and six months ended June 30, 2026, respectively, and $1.7 million and $2.9 million for the three and six months ended June 30, 2025, respectively.

(2)

Calculated by dividing annualized direct premiums earned, by average primary IIF.

(3)

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.

(4)

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 2025 Form 10-K for more information.

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.

(1)

Includes the impact of changes in the profit commission retained by Radian Guaranty due to changes in loss reserves.

(2)

Does not include the benefit from ceding commissions from the reinsurance agreements in our Mortgage QSR Program, which is primarily included in other operating expenses on the condensed consolidated statements of operations. See Note 8 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information.

Net Investment Income. The following table provides information related to our Mortgage segment’s investments for the periods indicated.

(1)

For each period presented, reflects the average of the beginning and ending amortized cost of our total investments for each month of the quarter. Beginning December 31, 2025, average investments include the $600 million Intercompany Note with Radian Group, which is eliminated in consolidation.

(2)

Calculated by dividing annualized net investment income by average investments balance.

Net investment income increased for the three and six months ended June 30, 2026, as compared to the same periods in 2025, primarily driven by $10 million of interest earned in each of the first and second quarters of 2026 on the Intercompany

Note issued by Radian Guaranty to Radian Group in connection with the Inigo acquisition. A corresponding amount is reported as interest expense for the Corporate category and both amounts are eliminated in consolidation. This benefit was partially offset by a decline in the average balance for the remainder of the investment portfolio.

Provision for Losses. The following table details the financial impact of the significant components of our Mortgage segment’s provision for losses for the periods indicated.

(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)

Calculated by dividing provision for losses for new defaults, net of reinsurance, by the number of new primary defaults for each period.

The increase in the provision for losses for the three and six months ended June 30, 2026, as compared to the same periods in 2025, is primarily driven by an increase in current period new defaults and a reduction in favorable development on prior period defaults, which impacted our mortgage insurance loss reserves.

As shown in the table below, current period new primary defaults increased for the three and six months ended June 30, 2026, compared to the same periods in 2025. Our gross Default to Claim Rate assumption for new primary defaults was 7.5% at both June 30, 2026 and 2025. When establishing this assumed rate, 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 six months ended June 30, 2026, and the same periods in 2025, was positively impacted by favorable reserve development on prior period defaults, primarily as a result of Cure trends that were more favorable than originally estimated, and which resulted in reductions in certain of our prior year Default to Claim Rate assumptions.

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 2025 Form 10-K.

Our primary default rate as a percentage of total insured loans was 2.5% and 2.6% at June 30, 2026, and December 31, 2025, respectively. The following table shows a rollforward of our primary loans in default.

(1)

Prior periods have been recast to conform to current presentation for Cures, claims paid and Rescissions and Claim Denials.

(2)

Net of any cancelled defaulted policies that were reinstated back into an active default status during the period.

(3)

Includes any previously rescinded or denied policies that ultimately resulted in a paid claim during the period, and net of any previously paid claims that were reinstated into an active default status. Claims resolved without payment were moved from Cures into claims paid for all periods presented.

(4)

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.

The following table shows additional information about our primary loans in default as of the dates indicated.

(1)

Loans in the stage of default in which a foreclosure sale has been scheduled or held.

We develop our Default to Claim Rate estimates based primarily on observed trends and 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% and 23% as of June 30, 2026, and December 31, 2025, respectively. See Note 11 of Notes to Consolidated Financial Statements in our 2025 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 (as described in “Item 1. Business—Mortgage Insurance—Rescissions, Defaults and Claims” in our 2025 Form 10-K) that make the timing of paid claims difficult to predict.

The following table shows net claims paid by product and the average claim paid by product for the periods indicated.

(1)

Net of reinsurance recoveries.

(2)

Calculated excluding the impact of: (i) LAE; (ii) commutations and settlements; and (iii) claims resolved without payment, including claims subsequently withdrawn by the servicer.

(3)

Before reinsurance recoveries.

Total claims paid increased for the three and six months ended June 30, 2026, compared to the same periods in 2025, consistent with both the growth and seasoning of our IIF and our reserving expectations.

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 2025 Form 10-K.

Other Operating Expenses. The following table provides information about our Mortgage segment’s other operating expenses for the periods indicated.

The decrease in other operating expenses for the three and six months ended June 30, 2026, compared to the same periods in 2025, was primarily due to lower variable incentive compensation expense, driven by increases to estimated performance-based compensation payouts recognized in 2025.