Earnings Call Transcript
RADIAN GROUP INC (RDN)
Earnings Call Transcript - RDN Q1 2023
Operator, Operator
Good day, and thank you for standing by. Welcome to the First Quarter 2023 Radian Group Earnings Conference Call. At this time all participants are in a listen-only mode. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, John Damian, Senior Vice President, Head of Corporate Development and Investor Relations. Please go ahead.
John Damian, Senior Vice President, Head of Corporate Development and Investor Relations
Thank you, and welcome to Radian's First Quarter 2023 Conference Call. Our press release, which contains Radian's financial results for the quarter, was issued yesterday evening and is posted to the Investors section of our website at www.radian.com. This press release includes certain non-GAAP measures that may be discussed during today's call, including adjusted pretax operating income, adjusted diluted net operating income per share and adjusted net operating return on equity. In addition, specifically for our Homegenius segment, other non-GAAP measures in our press release that may be discussed today include adjusted gross profit and adjusted pretax operating income or loss before allocated corporate operating expenses. A complete description of all of our non-GAAP measures may be found in press release Exhibit F, and reconciliations of these measures to the most comparable GAAP measures may be found in press release Exhibit G. These exhibits are on the Investors section of our website. Today, you will hear from Rick Thornberry, Radian's Chief Executive Officer; and Rob Quigley, Controller and Chief Accounting Officer. Also on hand for the Q&A portion of the call is Derek Brummer, President of Radian Mortgage. Before we begin, I would like to remind you that comments made during this call will include forward-looking statements. These statements are based on current expectations, estimates, projections and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially. For a discussion of these risks, please review the cautionary statements regarding forward-looking statements included in our earnings release and the risk factors included in our 2022 Form 10-K and subsequent reports filed with the SEC. These are also available on our website. Now, I'd like to turn the call over to Rick.
Rick Thornberry, CEO
Good afternoon, and thank you all for joining us today. Today, I'm pleased to report another solid quarter for Radian. GAAP revenues grew by 6% year-over-year to $311 million. Book value per share increased 10% year-over-year to $26.23. We generated net income of $158 million and our return on equity was 15.7% in the first quarter. Our overall liquidity and capital positions remained very strong, which I'll cover in a few minutes. Our primary Mortgage Insurance in force, which is the main driver of future earnings for our company, grew 5% year-over-year to $261.5 billion, including 8% year-over-year growth in our more profitable monthly premium insurance in force. Our persistency rate, which represents a percentage of Mortgage Insurance in force that remains on our books over a period of time, increased to 84% on a quarterly annualized basis compared to 77% a year ago. Given the current interest rate environment and the comparatively low mortgage rates across our portfolio, we expect our persistency rate to remain strong, which we believe is positive for the future insurance in-force growth. We continue to see positive credit performance in our Mortgage Insurance portfolio during the quarter, with our cure rate reaching the second highest level in 15 years. And although we generally expect new notices of defaults to increase in the future as the portfolio naturally seasons and the economic environment potentially becomes a bit more challenging for certain borrowers, in the first quarter curers outpaced new defaults by 10%, and our new default counts are in line with pre-pandemic levels. It is worth noting that the increase in interest rates has also resulted in higher yields across our $6 billion investment portfolio. The higher yields support higher returns on our Mortgage Insurance business and generate incremental income that flows directly to our bottom line. Despite continued headwinds in the mortgage and real estate markets and continuing macroeconomic uncertainty, our overall performance in the first quarter reflects the resilience of our business model, the strength of our insured portfolio, the depth of our customer relationships, and the commitment of our team. Let me share a few thoughts on the mortgage and housing markets and how we are executing on our strategic priorities. In terms of the mortgage market, for 2023, recent industry mortgage origination forecasts call for a bottoming out of the origination market with a decline of approximately 26% compared to last year, followed by a return to growth in 2024. Based on a total mortgage origination market of $1.7 trillion, we expect the private mortgage insurance market in 2023 to be approximately $300 million to $325 billion. Despite a smaller overall market, origination volume is projected to be driven primarily by purchase loans, which are estimated to reach $1.4 trillion. This would represent the largest purchase market in the past 16 years, excluding the pandemic years of 2020 through 2022. We view these collective factors as a positive sign of a strong and more stable mortgage market for the mortgage insurance industry and specifically for our business. In terms of the housing market, we saw home prices coming off their record highs last year, largely driven by higher mortgage rates. But more recently, we've seen home prices begin to stabilize and rebound according to industry data. This was largely driven by the imbalance of housing supply and demand. And while the inventory challenges and strong market demand continue to create difficulties for first-time homebuyers, these dynamics help to mitigate downside risk in terms of home values, which is positive for our insured portfolio. And we believe the resulting pent-up demand provides strong support for continuing purchase market growth in 2024 and beyond. As such, our overall outlook for the housing market remains generally positive over the near and long term. Our team remains focused across our three areas of strategic value creation - growing the economic value and the future earnings of our Mortgage Insurance portfolio, growing our Homegenius business, and managing our capital resources. In terms of growing the economic value of our Mortgage Insurance portfolio, we wrote $11.3 billion of high-quality Mortgage Insurance business in the first quarter of 2023, which, combined with the strong portfolio persistency, contributed to the growth of our large and valuable insurance in force portfolio. We continue to leverage our proprietary analytics in the RADAR Rates platform, focused on driving economic value while calibrating our dynamic risk-based pricing to address the risk and opportunities that we see in the current market. We increased our prices in 2022 and continue to increase pricing in 2023, and we've seen evidence of the same among our mortgage insurance peers while maintaining an attractive share of the market. We expect to see continued opportunity to put our capital to work at attractive risk-adjusted returns. From a Mortgage Insurance portfolio perspective, as I mentioned earlier, we expect the persistency rate to remain strong, based on the higher interest rate environment and greater concentration of purchase versus refinance loans. From a quality perspective, our Mortgage Insurance portfolio has been well-underwritten and has a strong overall credit profile. Furthermore, the quality of the mortgage industry's loan manufacturing and servicing processes remains strong, including exhaustive efforts to support borrowers experiencing hardship. One recent example is the GSE's new enhancement to their payment deferral policies that was announced in March. The policy is similar to the solution offered during the pandemic to borrowers with COVID-19 hardships. And based on its success, the GSEs are now making this a part of their standard loss mitigation efforts. This heightened focus on home retention, on top of already-strong underwriting and servicing, is another example of how the mortgage industry has been transformed to the benefit of all participants, including private mortgage insurers. With regard to our Homegenius business, during 2022 and continuing into 2023, we experienced a decline in Homegenius revenues due to the rapid decrease in industry-wide mortgage and real estate transaction volume. We are managing the Homegenius business through this challenging environment by continuing to focus on disciplined cost management. In addition, our team is focused on our strategic investments in data and analytics and technology, including the application of artificial intelligence and computer vision across our innovative real estate platforms. The team is also focused on growing revenue by building awareness of our suite of digital real estate products and services, including several new and recently-launched offerings, including our highly innovative Homegenius IQ technology, which combines artificial intelligence and computer vision to power many of our products; our Homegenius digital toolkit, a customizable Platform-as-a-Service for lenders and other companies to provide their customers with a unique home buying, selling, and ownership experience; and a refreshed Homegenius.com website that delivers a highly personalized search-to-close experience for home buyers. Although I'm proud of how our Homegenius team continues to serve our customers and navigate the challenging market environment, we know that we still have work to do as the current business results are not where we want to be. Our issue today is primarily revenue growth, which is largely driven by two challenges: first, the decline in real estate and mortgage volumes across the market, and second, adoption curves and customer sales cycles, given the macroeconomic backdrop. We are sharply focused on managing our cost structure, investing strategically, and growing our customer base in order to place Homegenius on a path to profitability. In terms of our available liquidity and managing our capital resources, total holding company liquidity increased to $1.2 billion, including the benefit from a $100 million ordinary dividend paid by Radian Guaranty. This was the first ordinary dividend paid by Radian Guaranty, the Radian Group, since the beginning of the great financial crisis 15 years ago. We expect Radian Guaranty to pay between approximately $200 million to $300 million of additional ordinary dividends during the remainder of 2023, based on current performance expectations and consistent with our prior guidance. Beyond 2023, future dividends from Radian Guaranty are expected to approximate Radian Guaranty's guaranteed statutory income. Radian Guaranty maintains a strong PMIERs position with excess available assets of $1.7 billion or 44% over its minimum required assets. We continue to execute on our aggregate managed and distributed Mortgage Insurance business model, focused on lowering the risk profile, tail risk, and the psycho volatility of the business by utilizing risk distribution structures, optimized between the capital and reinsurance markets, based on availability and strength of execution. I also want to highlight the strength of our liquidity position, given recent depository-related market events. It is important to recognize that beyond our ongoing operating expense, dividends, and debt service requirements, our primary liquidity needs relate to mortgage insurance claims management. Given the normal course of mortgage defaults and the structure of our Mortgage Insurance policies, our default-to-claim cycle typically ranges between two to four years. Over the course of this claims-paying cycle, in addition to our current $6 billion investment portfolio, we also continue to generate significant cash flows from premiums and investment portfolio earnings, which provides significant liquidity and a strong source of claims-paying resources through the claims cycle. As a result, as compared to deposit-based financial substitutions, our business is not subject to similar accelerated liquidity demands in the ordinary course. We have good visibility into the potential future cash outflows to allow for effective liquidity management. We believe the strength of our liquidity and capital position significantly enhances our financial flexibility now and going forward. As you've heard me say before, our company is built to withstand economic cycles, significantly strengthened by the PMIERs capital framework, dynamic risk-based pricing, and the distribution of risk into the capital and reinsurance markets. Now I'd like to turn the call over to Rob for details of our financial position.
Rob Quigley, Controller and Chief Accounting Officer
Thank you, Rick. Good afternoon, everyone. I appreciate the opportunity to share additional details about our first-quarter results, which reflect another strong quarter of operating performance, highlighted by the quality and resiliency of our Mortgage Insurance in force portfolio as well as by the strength and flexibility of our investment, capital, and liquidity positions. As reported last night, in the first quarter of 2023, we earned GAAP net income of $158 million or $0.98 per diluted share compared to $1.01 per diluted share in the first quarter a year ago. Adjusted diluted net operating income per share for the first quarter of 2023 was also $0.98 compared to $1.17 per diluted share in the first quarter of 2022, as reflected in the detailed reconciliations provided in our press release. Those earnings helped produce a 15.7% return on equity for the first quarter of 2023 and grow our book value per share 10% year-over-year to $26.23 as of March 31, 2023. Turning to more detail behind these results, I will first address our revenue and related drivers. Despite the challenging macroeconomic environment, we generated $311 million in total GAAP revenues during the first quarter of 2023 compared to $293 million in the first quarter of 2022. Our net premiums earned continued to be the most significant contributor to those totals. As detailed on Exhibit D in our press release, we reported net premiums earned of $233 million in the first quarter of 2023, in line with the fourth quarter of 2022 and down from $254 million earned in the first quarter of 2022. The change from the prior year primarily reflects an increase in ceded premiums under our reinsurance programs, including as a result of the quota share reinsurance agreement that went into effect mid last year as part of our continued strategic use of risk distribution programs to mitigate risk and optimize our capital position. Additionally, our premiums earned in the first quarter of 2023 were impacted by fewer single-premium policy cancellations in our Mortgage Insurance portfolio as well as lower title insurance volume, both due primarily to the significant reduction in mortgage refinance activity during the past year. The two most significant and consistent drivers of our net premiums earned remain the size and average premium yield of our large in-force mortgage insurance portfolio. Our primary insurance in force grew 5% year-over-year to $261.5 billion as of March 31, 2023, including 8% year-over-year growth in monthly premium in force, which currently represents 86% of our total primary insured portfolio and is expected to be the most significant driver of our future revenues. Contributing to this growth was $11.3 billion of new insurance written for the first quarter of 2023 compared to $18.7 billion in the first quarter of 2022. The year-over-year decline in new insurance written reflects the reduction in the overall mortgage origination market. While the industry-wide decrease in purchase and refinance originations has had a negative impact on our new insurance written, it has significantly benefited our persistency rate, which increased to 84% on a quarterly annualized basis in the first quarter compared to 77% a year ago. Given the sharp rise in mortgage rates last year, following an extended period of very low rates, we expect our persistency rate to remain strong. In particular, since 82% of our insurance in force had a mortgage rate of 5% or less as of the end of the first quarter and is therefore less likely to cancel in the near term due to refinancing. Given the shift in the mix of our insured portfolio in recent years toward our monthly premium products, we believe this increase in persistency is an especially positive indicator for our future insurance in force growth, premiums earned, and recurring cash flows. As shown on webcast Slide 13 and consistent with our guidance provided last quarter, the in-force portfolio premium yield for our Mortgage Insurance portfolio stabilized in the first quarter of 2023 at approximately 38.5 basis points, a modest increase from the level reported for the fourth quarter of 2022. Given strong persistency rates and the current industry pricing environment, we continue to expect the in-force portfolio premium yield to remain relatively flat over the course of 2023, while the total net yield of our insured portfolio can fluctuate from period to period due to other factors such as changes in our risk distribution programs, profit commissions earned, and single-premium policy cancellations. In addition to the positive impact on persistency rates, another benefit from the higher interest rate environment has been a significant increase in our investment income to $59 million in the first quarter of 2023, 55% higher than the $38 million reported in the first quarter a year ago, reflecting the size and strength of our investment portfolio. As shown on webcast Slide 9, our total investment portfolio of $6 billion consists of well-diversified, highly-rated securities, with 97% of our fixed income and short-term investments rated investment grade. The book yield on our investment portfolio increased during the first quarter from 3.5% to 3.8% at quarter end, and the higher rate environment should continue to be positive for the reinvestment of future cash flows. At quarter end, the duration of our investment portfolio was approximately 4.5 years, and we believe that our current assets and other claims-paying resources are appropriately structured to address the expected timing of our liabilities. As previously reported, rising interest rates had a negative effect on the fair value of our investment portfolio during 2022, resulting in unrealized losses primarily recorded directly to our stockholders' equity. However, these unrealized losses partially reversed during the first quarter of 2023 by $70 million, net of tax, with the unrealized loss reported in accumulated other comprehensive income declining from $457 million at year-end to $387 million as of the end of the first quarter. Unless we identify specific risks or opportunities in the future that result in the need to rebalance our portfolio, we do not expect to realize these losses, given our ability to hold these securities until recovery due to the significant positive operating cash flows that we continue to generate each quarter and the other liquidity considerations that Rick discussed. Our Homegenius segment revenues totaled $13 million for the first quarter of 2023 compared to $34 million for the first quarter of 2022, and continues to be negatively impacted by the higher rate environment and industry-wide decline in mortgage and real estate transactions, as Rick noted. Moving to our provision for losses. The positive trends that we have been experiencing have continued into 2023. As noted on webcast Slide 16 and consistent with the direction in recent quarters, we had a net benefit of $17 million in our mortgage provision for losses in the first quarter of 2023 compared to a net benefit of $84 million in the first quarter of 2022. These positive benefits have been due primarily to defaults curing at rates greater than our previous expectations, in part due to the impact of forbearance programs and the strong home price appreciation experienced in recent years. While still significant, the magnitude of that benefit has been declining in recent quarters as our remaining default inventory and Mortgage Insurance reserve balances have returned to pre-pandemic levels. For the first quarter of 2023, the net benefit to our mortgage provision was the result of $67 million of benefit from reserve development on prior-period defaults as we again lowered our claim assumptions for certain prior periods due to favorable cure trends, partially offset by $50 million of loss provision for new defaults reported during the quarter. Among other items, our provision for new defaults is determined largely by two key factors: first, the number of new defaults reported to us by servicers, which, as noted on webcast Slide 17, declined slightly in the first quarter of 2023 to approximately 10,600; and second, our estimate of the frequency at which those defaults will become a paid claim. Consistent with recent quarters, we maintained this default-to-claim-rate-frequency assumption for new defaults this quarter at 8% as we continue to balance the recent favorable cure trends and the benefit from embedded equity in our insured portfolio with the risks and uncertainties associated with the current economic environment. Turning to our other expenses. For the first quarter of 2023, our other operating expenses totaled $83 million, a decrease compared to $90 million in the first quarter of 2022. The actions we took during 2022, and in particular the fourth quarter of last year, to reduce our expenses in response to challenging market conditions helped to reduce the run rate of our expenses as expected. Based on our expense savings actions to date and consistent with our previous guidance, we continue to anticipate our 2023 full-year consolidated other operating expenses to be approximately $330 million to $340 million, while we expect 2023 full-year cost of services to be approximately $50 million to $60 million. On a combined basis, these amounts represent a reduction in total expenses on a year-over-year basis of $60 million to $80 million or 13% to 17%. These expenses can fluctuate due to changes in items such as volume-related costs and variable incentive compensation, and we do expect expenses to be elevated in the second quarter of 2023 due to the timing of certain employee compensation and benefits, including our annual share-based incentive grants. Moving finally to our capital and available liquidity. As Rick highlighted, following the series of capital actions completed at year-end 2022, we are pleased to report that Radian Guaranty was able to pay an ordinary dividend of $100 million to Radian Group during the first quarter, its first since the start of the financial crisis in 2007. As Rick further noted, Radian Guaranty expects to pay between approximately $200 million to $300 million of additional ordinary dividends to Radian Group during the remainder of 2023, based on current performance expectations and consistent with our prior guidance. After payment of the dividend, Radian Guaranty's excess PMIERs available assets over minimum required assets totaled $1.7 billion at quarter end, which represents a 44% PMIERs cushion, generally consistent with year-end levels. Our available holding company liquidity increased during the first quarter from $903 million to $956 million. This increase was primarily a result of the ordinary dividend from Radian Guaranty to the holding company, net of the payment of our quarterly dividend to Radian Group stockholders, which we increased by 12.5% in this most recent quarter to $0.225 per share and activities during the quarter under our current value-based share repurchase program, which resulted in the purchase of 716,000 shares at a total cost of $15 million. Following an additional $5 million of share purchases in April, $280 million remains available under our current share repurchase authorization, which expires in January 2025. To recap, our results for this quarter highlight not only the consistent earnings and cash flow power generated from our in-force Mortgage Insurance portfolio and the financial strength and flexibility at both our holding company and Radian Guaranty, but also the value we continue to deliver to our customers, policyholders, and stockholders even in a challenging macroeconomic environment. I will now turn the call back over to Rick.
Rick Thornberry, CEO
Thank you, Rob. Before we open the call to your questions, I want to highlight that we are pleased with our results and remain focused on executing our strategic plans. We are driving operational excellence across our businesses and aligning our overall expense structure and resources to reflect the market environment. Our $261.5 billion Mortgage Insurance portfolio is highly valuable and is expected to deliver significant earnings going forward. We continue to strategically manage capital by maintaining strong holding company liquidity and PMIERs cushion while expecting to continue to pay ordinary dividends from Radian Guaranty to Radian Group, opportunistically repurchasing shares, and paying the highest-yielding dividend in the industry to stockholders. Importantly, we believe we are well positioned to navigate a modest recession, which many economists are predicting for later this year. I want to thank our team for helping to drive our strong results and for the outstanding work they do every day. Lastly, I'd like to invite you to join us for our next Investor Day, which will be held on Tuesday, June 20, at the New York Stock Exchange. We look forward to providing details on our business strategy, priorities, key business and product initiatives, and financial metrics. Now, operator, we would be happy to take questions.
Operator, Operator
Our first question comes from Bose George with KBW.
Bose George, Analyst
Good afternoon. Just wanted to follow up on the expense guidance you guys gave. Actually, what's the expectation for expenses just within the title segment for 2023?
Rick Thornberry, CEO
Bose, this is Rick. I don’t believe we provide that level of guidance. However, from a Homegenius perspective, we have significantly adjusted our expenses over the past few quarters, and you should start seeing that reflected as we enter the first quarter of this year regarding overall Homegenius expenses. We are continuing to align our expense structure in the title business with the current volume and our near-term expectations. For specific dollar amounts, I would suggest referring back to Rob's overall expense guidance.
Bose George, Analyst
Thank you. Switching to investment income, it appears that the investment income in the title segment decreased, while the other segments increased. Was this simply cash movement from the holding company, or what factors contributed to this change?
Rob Quigley, Controller and Chief Accounting Officer
Yes, thank you, Bose. This is Rob. I think you might be referring to the Mortgage segment compared to the others. That is primarily due to the distributions we made at year-end. We transferred $382 million from Radian Guaranty to Radian Group at year-end and then paid an additional $100 million dividend during the quarter. So it's mainly a result of those asset shifts, but there was no impact on a consolidated basis.
Bose George, Analyst
Okay. And just a follow-up. The investment income was overall roughly flat quarter-over-quarter. But should we expect the trajectory of that to keep increasing? Just if rates remain stable, I assume your reinvestment yield is higher than the existing portfolio?
Rob Quigley, Controller and Chief Accounting Officer
Yes, that's exactly right. I think we would expect it to trend higher as we reinvest new cash flows. Yes.
Rick Thornberry, CEO
So we have the benefit, Bose, as you know that. Just the quarterly cash flows that come in through our business from our MI business, combined with just reinvesting those investments that mature, and we invest at higher rates. So higher rates actually have benefited greatly our investment portfolio, and we would expect to see that continue to come through.
Bose George, Analyst
Okay, great. Thanks.
Operator, Operator
Our next question comes from Mark DeVries with Barclays.
Mark DeVries, Analyst
Thank you. Just in light of the revenue weakness at Homegenius and kind of the continued drag on earnings that's creating, I was hoping to get your latest thoughts on the outlook for that business and your appetite to continue to invest in it.
Rick Thornberry, CEO
Yes, Mark. This is Rick. Thank you for your question. As we mentioned last quarter, we are closely monitoring this business and exploring the future opportunities we see. While our revenues were lower, the operating loss also decreased due to our expense management. The market conditions remain very challenging, and Homegenius is not an exception. A quick look at mortgage and real estate businesses across the markets shows that anything related to transactions has been significantly impacted. It’s a tough environment, and we are managing the Homegenius business by focusing on disciplined cost management. Currently, the main issue we face is related to revenue. We are cutting expenses, but revenues need to start growing again, mainly due to the significantly depressed mortgage and real estate volumes in the market. Additionally, some newer products from our technology side have a start-up quality, making things more challenging than we anticipated a year or two ago. However, our team remains dedicated, and we continue to receive positive feedback on our products and service delivery, having participated in several meetings to that effect. Right now, we are focused on adding customers, which we are doing successfully, although there isn’t a lot of volume with those customers, increasing awareness of our products, and making strategic investments in areas we believe hold future value. We will keep you updated on this business as we progress. For now, we are managing our cost structure, strategically investing, and growing our customer base to put us on the path to profitability while considering the environment we expect in the near, mid, and long terms, which I believe has changed significantly. I appreciate your question. While I cannot provide specific guidance, I can assure you that we are highly focused on steering this toward a positive outcome.
Mark DeVries, Analyst
Okay. Understood. And then just a question on kind of the favorable developments in the reserves. I get that that's kind of down meaningfully year-over-year, but it's still pretty significant. Kind of surprised, given how little of the pandemic-related delinquencies remain. How much more room is there for favorable development? When should we expect that to kind of disappear?
Rob Quigley, Controller and Chief Accounting Officer
Yes. Thank you, Mark. This is Rob. I think it's difficult to predict in future quarters. We try to come up with our best estimate each period, but we continue to be pleasantly surprised by the benefits and the strong cure trends. It's actually continued into April, where cures outpaced new defaults by 136%, or the cure-to-new default ratio rather was 136%. And our total defaults are trending below 20,000. I think we continue to see, even from the 2020, 2021, default vintages, continue to see good cure activity and continue to monitor it each quarter and try to come up with our best estimate. But it's hard to predict exactly how much more favorable development there could be. So we'll continue to update each quarter.
Mark DeVries, Analyst
Okay. And fair enough. But can I infer from your comments that at least in April, these trends continue to exceed what kind of you expected in the reserve levels?
Rick Thornberry, CEO
Yes. Well, I don't know that we want to comment on the reserve levels per se because we'll make that assessment at the end of the quarter. But I would say we're seeing very positive performance, which we're pleased with. Where cures and actually, in the month of April, as Rob said, 136%, did I get that right? 136% cures over defaults, really very positive, given the macroeconomic environment. So I think we're going to continue to watch the trends. We look and say, hey, we have to expect a recession at some point. At least, that seems to be the general consensus. But housing remains strong. Unemployment remains strong. As demonstrated through our cure rates so far, people are finding ways to kind of cure their defaults effectively. So as I said in my prepared remarks, the GSEs also continue to strengthen the loss mitigation plans associated with some borrowers who fall into hardship. Overall, I don't want to be overly optimistic, but I think the trends remain positive so far.
Mark DeVries, Analyst
Got it. All right. Thank you.
Operator, Operator
Our next question comes from Doug Harter with Credit Suisse.
Douglas Harter, Analyst
Thanks. Can you talk about your expectations for the pace of capital return? Obviously, the dividend, as you mentioned, is among the higher end. But to kind of how you see share repurchase, going forward?
Rick Thornberry, CEO
Thank you for the question, Doug. We find ourselves in a strong position with significant capital resources and ample cushions within our PMIERs and our holding company's liquidity, even after our recent buybacks over the last five years. It's important to highlight that we have returned $1.75 billion to shareholders in that time, primarily through $1.5 billion in share buybacks and the remainder in dividends. In the first quarter, we followed our plan by returning $50 million to shareholders through dividends and buybacks, increasing our quarterly dividend by 12.5% to $0.225 per share. We also initiated our first ordinary dividend payment from Radian Guaranty to Radian Group since the financial crisis, totaling $100 million, and we expect an additional $200 million to $300 million this year, bringing the total to $300 million to $400 million from Radian Guaranty. Overall, we are managing our capital effectively. While we do not provide forward-looking capital plans, our internal capital management remains consistent. We focus on organic investments, maintaining a healthy risk buffer in our holding company and ensuring adequate PMIERs cushion in our operating company. We also assess strategic opportunities for capital use. Our debt-to-capital ratio is manageable, and we are committed to returning capital to shareholders in a thoughtful and proactive manner. Our share buyback strategy is value-driven, following a preset 10b5 plan. It is crucial that we approach capital return judiciously given the uncertain economic climate, allowing us to capitalize on market opportunities to enhance revenues and profits. We aim to act prudently for our shareholders, as our past performance reflects our disciplined capital stewardship, and we will continue to operate in this manner.
Douglas Harter, Analyst
Great. Appreciated. Thank you.
Operator, Operator
Our next question comes from Eric Hagen with BTIG.
Eric Hagen, Analyst
Good afternoon. I think maybe just one follow-up here. Can you talk about the nature of the modifications and the loans that are carrying? Like are they principal modifications, interest rate modifications? And even what the cures look like for the early-stage delinquencies versus the middle or later stage? And even how sustainable you see those cures being really across the board right now?
Derek Brummer, President of Radian Mortgage
Yes. Sure. Eric, this is Derek. So in terms of the activities, I mean in terms of the modifications, most of them are curing organically. You still have forbearance programs. A lot of them are going through kind of payment deferrals, where they take the mispayment and tack it on at the end. As Rick alluded to, a lot of programs that are very borrower-friendly, that we expect to continue. The other thing I would say, looking at the characteristics kind of across the board, the cure activity is strong kind of across the board, looking at early payment defaults and later stages. One thing to keep in mind, Rob alluded to April cure trends outpacing new defaults. The other thing I'd point out is the new defaults are coming in with substantial embedded equity, which also is the case for outstanding defaults. If you look at our new defaults in Q1, they were coming in at about 90%. A little more than 90% were coming in with 10% equity at least. That gives you an indication from a performance perspective. And coupling that with home prices starting to firm up, so after some decreases in Q4, you have home prices kind of stabilizing and starting to increase. From a trend perspective, we feel pretty positive.
Eric Hagen, Analyst
That's helpful. Thank you very much. One more maybe. I mean how does the structure of the origination market drive the way you think about the business? We're talking about banks potentially tightening the credit box, a lot of noise with regional banks here, maybe some more shift to the non-banks, MSRs getting sold, all sorts of things in this market. Does this have any bearing on the way that you think about growth rates in the industry, even the way that you price for new risk?
Rick Thornberry, CEO
Yes. I'll address the first part of that, and then Derek can discuss pricing. It's a great question, and we're all observing market developments closely. Your observations about the changing dynamics in the business are very accurate, particularly regarding how banks are adjusting to their liquidity and capital readiness. Currently, the majority of the mortgage market is influenced by the supply and demand imbalance in housing. Refinancing is unlikely to increase given today’s rate levels compared to the past. We're primarily in a purchase market, which will significantly shape the mortgage and mortgage insurance markets. First-time homebuyers and the ability to make down payments of less than 20% play a crucial role here, and we are committed to supporting them. We're also monitoring the evolving players in the industry and the consolidation happening, along with how banks are adjusting their strategies in the market. So far, this has mainly affected portfolio loans, where we have limited involvement in mortgage insurance. Conversely, GSE-type volume continues to be a focus. The positive aspect is that we are working with around 1,200 or 1,300 customers daily, adapting to where the volume shifts. Ultimately, the supply and demand imbalance, especially due to the lack of affordable housing nationwide, will dictate volume levels. Derek, would you like to provide some insights on pricing?
Derek Brummer, President of Radian Mortgage
Yes. Some of what's happening on the origination side isn't a driver when we look at the competitive dynamics in the MI industry and how we're pricing. Overall, I would characterize that environment as being positive in the sense that it is rational and disciplined at this point. We're also continuing to be in an increasing cycle. From our perspective, that's a good place for us to be and allows us to take our strategic focus, which is on generating long-term economic value and really focus on identifying and writing the portion of the MI market that has the highest potential projected returns. We are using our analytics and very granular risk-based pricing, regional economic forecasting, to have the ability in kind of a positive and stable market to deploy capital at this point.
Eric Hagen, Analyst
That’s really insightful, guys. Thank you very much.
Operator, Operator
That concludes today's question-and-answer session. I'd like to turn the call back over to Rick Thornberry for closing remarks.
Rick Thornberry, CEO
Thank you. I want to start by expressing my gratitude to our team for the exceptional work they do every day during these challenging times in the mortgage and real estate sectors. I also appreciate everyone for joining us today. I want to remind you that we are excited to see you in New York at the New York Stock Exchange on June 20 for our Investor Day, and I hope many of you can attend. We have a lot of exciting topics to discuss, and I look forward to seeing you there. Most importantly, take care, and we hope to speak with you soon to share more about our quarterly results. Thank you.
Operator, Operator
This concludes today's conference call. Thank you for participating. You may now disconnect.