RADIAN GROUP INC

Our Specialty segment writes insurance and reinsurance coverage through multiple lines of business including property, casualty, financial lines and other specialty lines focusing on core classes of insurance and reinsurance where we believe we possess technical expertise.

During the three months ended September 30, 2026, our Specialty segment contributed $86 million of adjusted pretax operating income, with net premiums earned of $311 million, and had a Combined Ratio of 80.4%. The Combined Ratio benefited from a relatively benign level of catastrophe losses during the quarter and favorable prior accident year reserve development. Although net premiums earned continued to be negatively affected by competitive market conditions and premium rate softening in certain classes, the segment’s underwriting performance reflected continued discipline in risk selection and portfolio management.

The property, casualty and other specialty insurance markets in which the Specialty segment operates are influenced by market cycles, competitive pressures and evolving risk landscapes. This market demands a disciplined approach to underwriting, effective risk selection and robust data and analytics to navigate increasing competition, particularly in short-tail property lines. Factors such as claims inflation, geopolitical risks and climate change further shape the specialty insurance environment.

The following table summarizes our Specialty 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 Specialty segment’s net premiums earned for the periods indicated.

For the three months ended September 30, 2026, and for the period from the Closing Date to September 30, 2026, net premiums earned for the Specialty segment were $311 million and $743 million, respectively. For the three months ended September 30, 2026, gross premiums earned before the impact of ceded reinsurance were $413 million, consisting of $154 million of direct premiums earned and $259 million of assumed premiums earned. For the period from the Closing Date to September 30, 2026, gross premiums earned before the impact of ceded reinsurance were $953 million, consisting of $409 million of direct premiums earned and $544 million of assumed premiums earned. Direct premiums earned relate to insurance policies written by the Specialty segment and assumed premiums earned relate to reinsurance business where the Specialty segment assumes risk from other insurers or reinsurers.

Net premiums earned for the three months ended September 30, 2026, and for the period from the Closing Date to September 30, 2026, were reduced by ceded premiums earned of $102 million and $209 million, respectively, reflecting reinsurance purchased by the Specialty segment to manage underwriting exposures and catastrophe risk and to reduce the potential variability of underwriting results. As Inigo’s results are included only from the Closing Date, the period from the Closing Date to September 30, 2026, that is presented herein does not reflect a full three quarters of Specialty segment activity.

Net Investment Income. The following table provides information related to our Specialty 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, including cash, short-term deposits and overseas deposits, for each month of the period.

(2)

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

Net investment income for the quarter was $28 million, generated from average invested assets of $2.7 billion and an average investment yield of 4.2%. Net investment income for the period from the Closing Date to September 30, 2026, was $70 million, generated from average invested assets of $2.6 billion and an average investment yield of 3.9%. Net investment income for both periods reflects returns from a conservatively positioned fixed income portfolio and cash holdings maintained to support insurance liabilities and liquidity requirements.

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

(1)

Related to provision for losses and LAE for insured events occurring during the current period, including estimates for both reported claims and IBNR claims.

(2)

Related to changes in estimates of losses and LAE related to prior accident periods.

For the three months ended September 30, 2026, and for the period from the Closing Date to September 30, 2026, the total provision for losses for the Specialty segment was $148 million and $404 million, respectively, representing a Loss Ratio of 47.6% and 54.3%, respectively. Current period losses for the three months ended September 30, 2026, and for the period from the Closing Date to September 30, 2026, were $191 million and $483 million, respectively, and reflect losses and LAE related to insured events occurring during the current accident year. These losses were partially offset by $43 million and $80 million of favorable prior period development, for the three months ended September 30, 2026, and for the period from the Closing Date to September 30, 2026, respectively, reflecting updated estimates of losses and LAE related to prior accident periods.

The lower Loss Ratio for the three months ended September 30, 2026, as compared to the period from the Closing Date to September 30, 2026, was primarily driven by higher favorable prior year reserve development across most lines of business, as well as relatively benign catastrophe activity during the current accident year.

Geopolitical developments influenced market conditions during the first nine months of 2026. The escalation of hostilities in the Middle East introduced heightened uncertainty across political violence, aviation war, cyber, energy and related specialty insurance markets. While reported loss activity to date has been limited, the ongoing and evolving situation presents a heightened risk of loss with respect to insured risks in the region, reinforcing the importance of disciplined risk selection, exposure management and reinsurance protection. The Company continues to monitor geopolitical developments and evolving market conditions, including potential increased volatility in financial markets.

Amortization of Deferred Policy Acquisition Costs. Amortization of deferred policy acquisition costs reflects gross policy acquisition costs of $69 million and $162 million for the three months ended September 30, 2026, and for the period from the Closing Date to September 30, 2026, respectively, partially offset by ceded policy acquisition costs of $10 million and $21 million for the three months ended September 30, 2026, and for the period from the Closing Date to September 30, 2026, respectively, on ceded reinsurance arrangements.

Other Operating Expenses. The following table shows additional information about other operating expenses for the periods indicated.

For the three months ended September 30, 2026, and for the period from the Closing Date to September 30, 2026, other operating expenses reflect the personnel and incentive costs required to support underwriting and claims operations, together with technology, professional fees and other infrastructure expenses, including marketing spend in the first quarter to support key strategic initiatives.