PHILADELPHIA--(BUSINESS WIRE)--Radian Group Inc. (NYSE: RDN) today reported net income for the quarter ended December 31, 2020, of $148.0 million, or $0.76 per diluted share. This compares with net income for the quarter ended December 31, 2019, of $161.2 million, or $0.79 per diluted share.

Net income for the full year 2020 was $393.6 million, or $2.00 per diluted share. This compares to net income for the full year 2019 of $672.3 million, or $3.20 per diluted share.

Key Financial Highlights (dollars in millions, except per-share amounts)

Adjusted pretax operating income for the quarter ended December 31, 2020, was $171.0 million, or $0.69 per diluted share. This compares with adjusted pretax operating income for the quarter ended December 31, 2019 of $224.0 million, or $0.86 per diluted share.

Adjusted pretax operating income for the full year 2020, was $432.1 million, or $1.74 per diluted share. This compares to adjusted pretax operating income for the full year 2019 of $854.6 million, or $3.21 per diluted share.

Book value as of December 31, 2020 was $4.3 billion, an increase of 6 percent compared to $4.0 billion as of December 31, 2019. Book value per share at December 31, 2020, was $22.36, an increase of 11 percent compared to $20.13 at December 31, 2019.

“While our quarterly and full-year results for 2020 were impacted by the pandemic environment, during the year we successfully increased book value per share by 11%, wrote record-breaking levels of new mortgage insurance business and grew revenues in our real estate segment,” said Radian’s Chief Executive Officer Rick Thornberry. “I’m proud to say that our business model weathered the storm as designed, demonstrating the strength and resilience we and the mortgage industry have been building since the last financial crisis in 2009. In 2020, we also took steps to fortify our capital position and increase our financial flexibility, with a focus on lowering the risk profile and through-the-cycle volatility of the business.”

Thornberry added, “Our solid results reflect the dedication of our outstanding team, who continue to support our customers and each other in a demanding, high-volume market. I’m pleased with our ability to operate well with strong momentum throughout a challenging year.”

FOURTH QUARTER AND FULL YEAR HIGHLIGHTS

• NIW was $29.8 billion for the fourth quarter of 2020, compared to $33.3 billion in the third quarter of 2020 and $20.0 billion in the prior-year quarter. NIW was $105.0 billion for the full year 2020, an increase of 47.2 percent compared to $71.3 billion for the prior year.
  • NIW for the full year 2020 represented record volume written on a flow basis for the company.
  • Of the $29.8 billion in NIW in the fourth quarter of 2020, 91 percent was written with monthly and other recurring premiums, compared to 90 percent in the third quarter of 2020, and 82 percent in the fourth quarter of 2019.
  • Refinances accounted for 35 percent of total NIW in the fourth quarter of 2020, compared to 30 percent in the third quarter of 2020, and 33 percent in the fourth quarter of 2019.

• Total primary mortgage insurance in force as of December 31, 2020, grew to $246.1 billion, an increase of 0.3 percent compared to $245.5 billion as of September 30, 2020, and an increase of 2.3 percent compared to $240.6 billion as of December 31, 2019. The year over year increase included a 11.4 percent increase in monthly premium insurance in force and a 20.9 percent decline in single premium insurance in force.
  • Persistency, which is the percentage of mortgage insurance that remains in force after a twelve- month period, was 61.2 percent for the twelve months ended December 31, 2020, compared to 65.6 percent for the twelve months ended September 30, 2020 and 78.2 percent for the twelve months ended December 31, 2019.
  • Annualized persistency for the three months ended December 31, 2020, was 60.4 percent, compared to 60.0 percent for the three months ended September 30, 2020, and 75.0 percent for the three months ended December 31, 2019.

• Net mortgage insurance premiums earned were $286.8 million for the quarter ended December 31, 2020, compared to $283.4 million for the quarter ended September 30, 2020, and $298.5 million for the quarter ended December 31, 2019. Net mortgage insurance premiums earned were $1.1 billion for the year ended December 31, 2020, compared to $1.1 billion for the year ended December 31, 2019.
  • The fourth quarters of 2020 and 2019, include increases to premiums earned of $11.3 million and $17.4 million, respectively, related to changes in present value estimates for initial premiums on monthly policies that are deferred and not collected until cancellation.
  • Mortgage insurance in force portfolio premium yield was 44.6 basis points in the fourth quarter of 2020, or 42.8 basis points excluding the impact of the fourth quarter 2020 premium adjustment described above. This compares to 43.2 basis points in the third quarter of 2020 and 50.0 basis points in the fourth quarter of 2019, or 47.1 basis points excluding the impact of the fourth quarter 2019 premium adjustment described above.
  • The impact of single premium cancellations before consideration of reinsurance represented 8.7 basis points of direct premium yield in the fourth quarter of 2020, 10.7 basis points in the third quarter of 2020, and 4.4 basis points in the fourth quarter of 2019.
  • Total net mortgage insurance premium yield, which includes the impact of ceded premiums and accrued profit commission, was 46.7 basis points in the fourth quarter of 2020, or 44.8 basis points excluding the impact of the fourth quarter 2020 premium adjustment described above. This compares to 46.6 basis points in the third quarter of 2020, and 50.0 basis points in the fourth quarter of 2019 or 47.1 basis points excluding the impact of the fourth quarter 2019 premium adjustment described above.
  • Additional details regarding premiums earned may be found in Exhibit D.

• The mortgage insurance provision for losses was $56.3 million in the fourth quarter of 2020, compared to $87.8 million in the third quarter of 2020, and $34.4 million in the fourth quarter of 2019. The mortgage insurance provision for losses was $483.3 million for the year ended December 31, 2020, compared to $131.5 million for the year ended December 31, 2019. The increase for the full year 2020 primarily relates to a significant increase in the number of new default notices as a result of the effects of the COVID-19 pandemic, substantially all due to borrowers in forbearance programs. The number of new defaults increased significantly during the second quarter of 2020, and while new defaults during the fourth quarter remained elevated compared to levels before the pandemic, they decreased 76.9 percent from the second quarter of 2020 and 29.0 percent from the third quarter of 2020.
  • The number of primary delinquent loans was 55,537 as of December 31, 2020, compared to 62,737 as of September 30, 2020 and 21,266 as of December 31, 2019.
  • The primary mortgage insurance delinquency rate was 5.2 percent in the fourth quarter of 2020, compared to 5.9 percent in the third quarter of 2020, and 2.0 percent in the fourth quarter of 2019.
  • The loss ratio in the fourth quarter of 2020 was 19.6 percent, compared to 31.0 percent in the third quarter of 2020 and 11.5 percent in the fourth quarter of 2019.
  • Mortgage insurance loss reserves were $844.1 million as of December 31, 2020, compared to $821.7 million as of September 30, 2020, and $401.3 million as of December 31, 2019.
  • Total mortgage insurance claims paid were $40.6 million in the fourth quarter of 2020, compared to $10.8 million in the third quarter of 2020, and $28.5 million in the fourth quarter of 2019. Excluding the impact of commutations and settlements, claims paid were $8.4 million in the fourth quarter of 2020, compared to $11.1 million in the third quarter of 2020 and $24.8 million in the fourth quarter of 2019. For the full year 2020, total net claims paid were $97.6 million, compared to $132.2 million for the full year 2019.

• Radian's Real Estate segment offers a broad array of title, valuation, asset management and other real estate services to market participants across the real estate value chain.
  • Total Real Estate segment revenues for the fourth quarter of 2020 were $23.6 million, compared to $29.8 million for the third quarter of 2020, and $22.0 million for the fourth quarter of 2019. Total revenues for the full year 2020 were $102.4 million, compared to $89.6 million for the same period of 2019.
  • Adjusted earnings before interest, income taxes, depreciation and amortization (Real Estate adjusted EBITDA) for the quarter ended December 31, 2020 was a loss of $7.0 million, compared to a loss of $1.1 million for the quarter ended September 30, 2020, and a loss of $2.4 million for the quarter ended December 31, 2019. Real Estate adjusted EBITDA for the full year 2020 was a loss of $7.6 million, compared to a loss of $5.5 million for the prior year period. Additional details regarding the non-GAAP measure Real Estate adjusted EBITDA may be found in Exhibits F and G.
  • The decrease in Real Estate adjusted EBITDA in the fourth quarter and full year 2020, compared to the fourth quarter and full year 2019, was primarily related to the negative impact of the COVID-19 pandemic on the operating environment for certain business lines and the continued strategic investment focused on our title and digital real estate businesses.
  • Due to certain changes in the composition of our reportable segments made in the fourth quarter of 2020, our results for Real Estate and All Other have been restated for all prior periods to reflect these changes. See Exhibit E for more details on these reclassifications.

• Other operating expenses were $81.6 million in the fourth quarter of 2020, compared to $69.4 million in the third quarter of 2020, and $80.9 million in the fourth quarter of 2019. Other operating expenses were $280.7 million for the year ended December 31, 2020, compared to $306.1 million for the year ended December 31, 2019.
  • The increase in the fourth quarter of 2020 compared to the third quarter of 2020 was primarily related to a $6.5 million increase in non-operating items and adjustments to share-based incentive compensation. The increase in the fourth quarter of 2020 compared to the fourth quarter of 2019 was driven primarily by an increase in non-operating items, which was partially offset by lower incentive compensation expense.
  • The decrease for the full year 2020, compared to the full year 2019, was driven primarily by an increase in ceding commissions, lower professional services costs, and lower incentive compensation expense.

CAPITAL AND LIQUIDITY UPDATE

• At December 31, 2020, Excess Available Resources to Support Private Mortgage Insurer Eligibility Requirements (PMIERs)were $2.7 billion or 80 percent above Radian Guaranty's Minimum Required Assets of $3.4 billion.

Radian Group

• As of December 31, 2020, Radian Group maintained $1.1 billion of available liquidity. Total liquidity, which includes the company’s $267.5 million unsecured revolving credit facility, was $1.4 billion as of December 31, 2020.
• For the full year 2020, the company repurchased 11.0 million shares of Radian Group common stock at a total cost of $226.3 million, including commissions. In March 2020, the company temporarily suspended purchases under its share repurchase program by canceling its then current 10b5-1 plan. The company may initiate a new 10b5-1 plan at its discretion in the future, during an open trading window and in accordance with SEC rules. As of December 31, 2020, purchase authority of up to $198.9 million remained available under this program. The current share repurchase authorization expires on August 31, 2021.
• On November 11, 2020, Radian Group's board of directors authorized a regular quarterly dividend on its common stock in the amount of $0.125 per share and the dividend was paid on December 4, 2020. On February 10, 2021 Radian Group's board of directors authorized a regular quarterly dividend on its common stock in the amount of $0.125 per share and the dividend will be paid on March 4, 2021.
• For the full year 2020, Radian paid $97.5 million in dividends on its common stock.

Radian Guaranty

• As previously announced, in October 2020, Radian Guaranty entered into its fourth fully collateralized mortgage insurance-linked-note (ILN) reinsurance transaction, in which the company obtained $390.3 million of credit risk protection from Eagle Re 2020-2 Ltd. (Eagle Re) through the issuance by Eagle Re of ILNs to eligible third-party capital markets investors in an unregistered private offering. Eagle Re is a special purpose insurer domiciled in Bermuda and is not a subsidiary or affiliate of Radian Guaranty. Radian Guaranty's related PMIERs credit under this ILN transaction remains subject to GSE approval.
• At December 31, 2020, Radian Guaranty’s Available Assets under PMIERs totaled approximately $4.7 billion, resulting in excess available resources or a “cushion” of $1.3 billion, or 40 percent, over its Minimum Required Assets of $3.4 billion.
• As of December 31, 2020, 66 percent of Radian Guaranty's primary mortgage insurance risk in force is subject to some form of risk distribution, providing a $1.4 billion reduction of Minimum Required Assets under PMIERs.

ABOUT RADIAN

Radian Group Inc. (NYSE: RDN) is ensuring the American dream of homeownership responsibly and sustainably through products and services that include industry-leading mortgage insurance and a comprehensive suite of mortgage, risk, title, valuation, asset management and other real estate services. We are powered by technology, informed by data and driven to deliver new and better ways to transact and manage risk. Visit www.radian.com to learn more about how Radian is shaping the future of mortgage and real estate services.