Earnings Call Transcript
RADIAN GROUP INC (RDN)
Earnings Call Transcript - RDN Q4 2021
Operator, Operator
Good morning, and welcome to Radian's Fourth Quarter 2021 Earnings Call. My name is Brandon, and I'll be your operator for today. Please note, this conference is being recorded. I will now turn it over to John Damian. And John, you may begin.
John Damian, Moderator
Thank you, and welcome to Radian's fourth quarter and year-end 2021 conference call. Our press release, which contains Radian's financial results for the quarter and year-end, 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 will 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 that will be discussed today include adjusted gross profit, adjusted pretax operating income or loss before allocated corporate operating expenses, and the related Homegenius profit margins. 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. This morning, you will hear from Rick Thornberry, Radian's Chief Executive Officer, and Frank Hall, Chief Financial Officer. Also on hand for the Q&A portion of the call is Derek Brummer, President of Radian Mortgage. As all of our speakers are remote today, please excuse any sound quality or technical issues that may arise during the call. 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 2020 Form 10-K and subsequent reports filed with the SEC. These are also available on our website. Now I would like to turn the call over to Rick.
Rick Thornberry, CEO
Thank you, John, and good morning. Thank you all for joining us today and for your interest in Radian. In 2021, we remained focused across our three areas of strategic value creation. First, growing the economic value and future earnings of our Mortgage Insurance portfolio. In 2021, we wrote the second highest level of mortgage insurance business in our nearly 45-year history. Second, growing our Homegenius business. In 2021, we greatly increased Homegenius revenues, consistent with our Investor Day guidance. And third, managing our capital resources. In 2021, we returned significant capital to our stockholders through a combination of an increased dividend and share repurchases. These results and our continued strong momentum demonstrate the strength and resiliency of our business model. I believe we are well positioned to capitalize on the opportunities ahead through our Mortgage and Homegenius businesses, combined with the strength of our capital resources. As we've all developed a renewed appreciation for the meaning of home over the past two years, our mortgage and real estate products and services have become even more valuable to our customers and homeowners. Our mission to ensure affordable, sustainable, and equitable homeownership has become even more critical. We are proud to serve such an important role in the housing industry. I'd like to take a moment to recognize our talented team who continue to support our customers, launch new products, and create new technologies to make doing business faster and easier, and to thank our customers, business partners, investors, and Board for their support in helping us deliver such excellent results in 2021. Frank will discuss the details of our financial position shortly, but let me first share a few highlights for the quarter and the year. In our Mortgage segment, we wrote $92 billion of new insurance written in 2021, which, as I previously mentioned, represents one of the highest years of annual volume in our company's history, second only to the all-time record we hit in 2020. It's worth noting that with the higher mix of purchase business in 2021, we deployed more capital than we did in 2020. Based on a growing purchase market, we expect the environment to continue to provide strong opportunities to put our capital to work at attractive returns. Over the past couple of years, we believe our ability to leverage the strength of our proprietary analytics and RADAR Rates platform and utilize artificial intelligence and machine learning in order to optimize economic value has been and continues to be a differentiator for Radian. We assessed more than 10 million unique loan types as we look at all combinations of loan and borrower characteristics as well as geographical housing market trends to identify those loans that will create the most economic value and generate the most attractive returns. Our primary insurance in force, which is the main driver of future earnings for our company, was $246 billion at year-end. While our portfolio was relatively flat year-over-year, it is important to note that insurance in force grew at an annualized rate of 7% during the second half of 2021. This growth was driven by continued high levels of new mortgage insurance business, as well as an increase in persistency. Our mortgage insurance portfolio is well positioned for a rising rate environment. Our monthly premium in force portfolio grew nearly 6% year-over-year while our single premium in force portfolio declined 21%. During the quarter, we saw favorable reserve development based on better-than-expected cure activity. Despite the seasonal increase in new defaults that we typically experience in the fourth quarter, we saw another positive cure-to-new default ratio. We are pleased with how the credit performance of our portfolio continues to improve. In terms of those borrowers in default, we are actively monitoring and communicating with servicers and supporting the efforts by the GSEs to effectively navigate a successful resolution. For our Homegenius segment, total revenues for the full year were $149 million, a 45% increase compared to 2020, and as mentioned, consistent with our 2021 Investor Day guidance. During 2021, we saw strong growth in our Title business, which represented a 73% increase year-over-year. We invested in the development of our Homegenius software-as-a-service platforms for real estate agents. We are positioned to launch these innovative platforms in 2022, with the first being GENIUSPRICE, an innovative property intelligence technology platform offered by our Red Bell Real Estate brokerage. We have also launched our digital purchase title platform, TITLEGENIUS, leveraging patent-pending blockchain technology. This platform transforms the purchase title process for real estate agents, homebuyers, and lenders. As we enter 2022, we are focused on growing our penetration of the purchase title market, leveraging this digital platform. Frank will provide additional details on our Homegenius financial results and expectations for this business. We are pleased with the progress, the traction we're gaining in the market and the new customers we're attracting with our innovative products and services. During 2021, we continued to strengthen our capital and liquidity profile, while enhancing financial flexibility and returning value to stockholders. We grew our book value per share by 9% year-over-year in 2021, even after accounting for the $104 million of dividends paid in that year. We repurchased 17.8 million shares of Radian Group common stock, representing 9.3% of shares outstanding at year-end 2020, at a total cost of $399 million. Our return on equity for 2021 was 14.1%. At December 31, Radian Group maintained a strong capital position with $880 million of total holding company liquidity. Radian Guaranty's PMIERs excess available assets grew 19% from the third quarter of 2021 to more than $2 billion during the fourth quarter. Earlier this month, we announced plans to continue returning capital to stockholders by increasing our quarterly dividend by 43%, the second increase in the past year, and by authorizing a new $400 million share repurchase program. We were able to do this based on our strong capital position and financial flexibility. Looking at the broader mortgage and real estate market, we continue to see this market performing well, with strong purchase volume and ongoing home price appreciation. Based on December data from our own Radian Home Price Index, strong housing demand and relatively limited supply in the market led to a 14.2% year-over-year increase in home prices across the country. We expect home price appreciation to moderate in 2022. Total mortgage originations for 2022 are estimated to be approximately $3 trillion, reflecting an 8% increase in purchase originations and a 58% decrease in refinance activity. This growth in the purchase market is positive for the mortgage insurance industry and is expected to result in a private MI market of $500 billion to $550 billion in 2022. We will continue to monitor our operating environment, including the impact of inflation and rising interest rates on our business. Although affordability declines as rates go up, mortgage rates remain low on historical terms. We believe the strong demand and low supply dynamic in the housing market will balance this decline in affordability. The expected increase in interest rates in 2022 is likely to result in improved persistency in our mortgage insurance in force portfolio and support higher yields in our investment portfolio. Overall, we believe the macroeconomic conditions and strong home purchase market provide significant tailwinds for long-term growth and the economic value of projected future earnings of our Mortgage Insurance portfolio. Turning to the regulatory and legislative landscape, housing policy efforts in Washington continue to focus on equitable access to sustainable homeownership, particularly for underserved markets. We remain committed to working with the FHFA, the GSEs, our trade associations, and other partners on solutions to support increased access to affordable homeownership for low and moderate-income borrowers. We delivered on our core mission in 2021, helping ensure that borrowers ready to own a home could afford to do so. During the year, we helped nearly 300,000 families buy a home or lower their monthly mortgage payment through refinance. With subject-matter expertise across various areas of housing finance, we believe we are well-positioned to play an important role in expanding affordable, sustainable, and equitable homeownership. Now I would like to turn the call over to Frank for details of our financial position.
Frank Hall, CFO
Thank you, Rick, and good morning, everyone. To recap our financial results issued last evening, we reported GAAP net income of $193.4 million or $1.07 per diluted share for the fourth quarter of 2021 compared to $0.67 per diluted share in the third quarter of 2021 and $0.76 per diluted share in the fourth quarter of 2020. Adjusted diluted net operating income was $1.07 per share in the fourth quarter of 2021 compared to $0.67 in the third quarter of 2021 and $0.69 in the fourth quarter of 2020. I'll now turn to the key drivers of our revenue. Our new insurance written was $23.7 billion during the quarter compared to $26.6 billion in the third quarter and $29.8 billion in the fourth quarter of 2020. New insurance written for purchase transactions was $21.6 billion, an increase of 12% year-over-year. Purchase volume accounted for 91% of our total new insurance written for the fourth quarter of 2021 compared to 65% in the fourth quarter of 2020. Our reported quarterly annualized persistency rate increased to 71.7% this quarter compared to 60.4% a year ago. Market expectations of rising interest rates in 2022 are expected to result in continued declines in refinance activity, which we would expect to drive further increases in our portfolio persistency and support insurance in force growth. Today, more than 65% of our insurance in force consists of business written in 2020 and 2021 and is of high quality and at relatively low mortgage rates. Primary insurance in force increased $4.4 billion during the quarter to $246 billion. Our outlook for 2022 insurance in force growth, given the expected higher persistency and strong new insurance written volume, is approximately 10%. Total net premiums earned were $261.4 million in the fourth quarter of 2021 compared to $249.1 million in the third quarter and $302.1 million in the fourth quarter of 2020. The increase on a linked quarter basis is driven by an increase in profit commissions recognized this quarter due to lower ceded incurred losses, along with several small items that drove a positive impact of approximately $5.5 million in mortgage insurance earned premiums compared to the prior quarter. The decline in quarterly net premiums earned year-over-year was chiefly due to lower single premium policy cancellations. Our direct in-force premium yield was 41.0 basis points this quarter compared to 40.3 basis points last quarter and 42.8 basis points in the fourth quarter of 2020. It is crucial to note that the in-force premium yield would have decreased slightly this quarter to 40.1 basis points without the $5.5 million of adjustments noted earlier. Over the past several years, we've noted our expectations for declines in our in-force premium yield due to a variety of factors, including the pricing and credit mix of new insurance written compared to the policies canceling within our portfolio. Based on the mix of more recent vintages in our portfolio, coupled with increased persistency, we currently expect in-force premium yield declines in 2022 of approximately two basis points, a slower rate of decline than we have seen recently. Our Homegenius segment revenues were $44.7 million for the fourth quarter of 2021 compared to $45.1 million for the third quarter and $23.6 million in the fourth quarter of 2020, representing a 90% increase year-over-year. Title premiums of $11.8 million in the fourth quarter of 2021 were 55% higher than the fourth quarter of 2020. Our reported Homegenius pretax operating income before allocated corporate operating expenses was $2.7 million for the fourth quarter, compared to a loss of $600,000 for the third quarter of 2021. A reconciliation to the comparable GAAP measures can be found on press release Exhibit G. Our Homegenius results were in line with our projected targets as communicated earlier in 2021, with revenue of $149 million for the full year. Our expectations for 2022 is that we will be within our previously stated target revenue range of $225 million to $275 million, likely at the lower end of that range. Moving now to our loss provision and credit quality, we had a benefit of $46.5 million in our mortgage provision for losses for the fourth quarter of 2021 compared to losses of $16.8 million in the third quarter and $56.3 million in the fourth quarter of 2020. The provision for losses includes positive reserve development on prior period defaults of $85.8 million, primarily driven by more favorable trends in cures than originally estimated, aided by outcomes from forbearance programs implemented in response to the COVID-19 pandemic, as well as positive trends in home price appreciation, resulting in a reduction in ultimate claim assumptions. We maintained our prior quarter assumptions for new defaults reported in 2021, including the default to claim rate assumption on new defaults at 8.0% for the fourth quarter. We continue to closely monitor the trends in cures and claims for our default inventory, including the resolution of COVID-related forbearance programs. As of December 31, 2021, 92% of new defaults from the second quarter of 2020, the largest COVID-related default quarter, had cured. These favorable trends in defaults reported in 2020 were the primary catalyst for the positive reserve development reported this quarter. In terms of expenses, other operating expenses were $80.5 million in the fourth quarter of 2021, a decrease compared to $86.5 million in the third quarter and $81.6 million in the fourth quarter of 2020. The decrease in expenses as compared to the prior quarter is primarily related to a decrease in incentive compensation expense, including long-term share-based compensation. To assess our operating expenses, we provided new segment-level expense detail on press release Exhibit E. Now moving to capital and available liquidity. Radian Guaranty's excess PMIERs available assets over minimum required assets was $2.1 billion as of the end of the fourth quarter, representing a 62% PMIERs cushion. After considering our recent $500 million return of capital from Radian Guaranty, our pro forma year-end 2021 cushion would have been 47%. We have reduced Radian Guaranty's PMIERs minimum required asset requirements by $1.3 billion through distributions of risk via insurance-linked notes reinsurance and other third-party reinsurance arrangements. By year-end 2021, Radian Guaranty had risk distribution covering approximately 73% of our risk in force. For Radian Group, as of December 31, 2021, we maintained $605 million of available liquidity. Considering our recent $500 million return of capital, available liquidity would have been roughly $1.1 billion. Our liquidity was affected by share repurchase activity in the quarter. Total liquidity, including the new 5-year $275 million credit facility signed in the fourth quarter, was $880 million as of December 31, 2021, and pro forma, after accounting for the $500 million capital return, would be approximately $1.4 billion. During the fourth quarter, we repurchased 6.4 million shares. For the full year 2021, we purchased 17.8 million shares at an average share price of $22.23 and $22.48, respectively. Our Board approved a new two-year $400 million share repurchase authorization anticipated to implement with our customary value-based 10b5-1 execution. We have continued to pay dividends to common stockholders through the pandemic. During the fourth quarter, approximately $26 million was returned to stockholders through dividends. As a result of our financial strength, we have announced a 43% increase to our quarterly dividend in the first quarter of this year, bringing our current quarterly dividend to $0.20 per share. We had most recently increased our quarterly dividend by 12% less than a year ago during the second quarter of 2021. The combination of dividend payments and share repurchases in 2021 represented a capital return of approximately 84% of our after-tax operating income for the year. These actions reflect our confidence in the future cash flows of our business, enhanced by the $500 million return of capital from Radian Guaranty to Radian Group approved by the Pennsylvania Insurance Department. Our state regulatory capital levels have restricted capital movements from Radian Guaranty to the parent company since the financial crisis due to negative statutory unassigned funds and contingency reserve requirements. Such capital flows' mechanics are unique to the mortgage insurance industry, as explained during our Investor Day in 2019. Contingency reserves are intended to protect policyholders against industry credit cycles. When these reserves release on their 10-year anniversary on a first-in first-out basis, it increases the unassigned funds' regulatory capital category. When unassigned funds turn positive, Radian Guaranty can begin paying ordinary dividends without prior regulatory approval. This could enable issuing dividends of up to last year's net income, amounting to roughly $500 million annually, based on current analyst consensus net income levels. Assuming continued favorable trends in our mortgage insurance business, we expect this transition from negative to positive unassigned funds around 2024, coinciding with expected material contingency reserve releases that same year, 10 years after rebuilding these reserves post-financial crisis. We are approaching an important inflection point with our capital flexibility, potentially allowing capital releases from the operating company to the parent company on ordinary bases without regulatory approval. We believe we are well positioned to support our businesses and deliver value to our shareholders. I will now turn the call back to Rick.
Rick Thornberry, CEO
Thank you, Frank. Before we open the call to your questions, let me remind you that our team delivered excellent results in 2021, focused on growing our Mortgage and Homegenius businesses while managing capital. We wrote high levels of new Mortgage Insurance business while significantly growing Homegenius revenues. The credit performance of our portfolio continues to improve. During 2021, we upheld our long-standing track record of prudently managing capital, returning over $500 million to stockholders through dividends and share repurchases. We increased our quarterly dividend this month, providing the highest dividend yield in the private MI industry. We also announced a new $400 million share repurchase authorization. We are pleased with our business momentum heading into 2022 and will continue to leverage our team's strength and utilize data analytics and technology to differentiate ourselves from the competition and help our customers succeed in a fast-moving digital market. Now, operator, we would like to take questions.
Operator, Operator
And from Barclays, we have Mark DeVries. Please go ahead.
Mark DeVries, Analyst
Yes, first question is just to clarify one, on Frank's comments around the premium yield. Frank, is the roughly two basis points of additional compression you kind of guided to for this year, is that off the 40.1 basis points you would have had without that $5 million of adjustments or is that off of the 41 or so you actually posted this quarter?
Frank Hall, CFO
Yes, so the adjustments are also the reported 41.
Mark DeVries, Analyst
Okay, got it.
Frank Hall, CFO
1.0, taking - I'm sorry, there's a lot of 40s and 1s there, taking it from 41 down to 40.1.
Mark DeVries, Analyst
Yes, no, my question is, but then I think you guided correct to maybe another two basis points of additional pressure. Is it off that 40.1?
Frank Hall, CFO
Correct.
Mark DeVries, Analyst
Okay, got it, got it. And then my second question is trying to get at kind of the impact on the addressable market for MI of all the home price appreciation we've seen. If I heard Rick's comments properly, I think you indicated that HPA was roughly 14.2% for your book. And I think the FHFA used 19% to kind of reset the conforming loan limits? Does that kind of imply that MI tends to get deeper penetration in markets that have seen less home price appreciation and therefore, kind of moving that bar up nationally actually increases the addressable market for you?
Rick Thornberry, CEO
Yes, thank you, Mark. I think our reference was to our Radian Home Price Index, which was a year-over-year increase. The FHFA, I think, was an annualized number, if I remember correctly. So we're referencing not our MI portfolio, but our view based upon literally millions of observations of transactions across the country of our view on the national home price appreciation year-over-year. I would say, overall, it has been a very strong market for the MI kind of borrower. Derek, do you want to add anything to that?
Derek Brummer, President of Radian Mortgage
No.
Operator, Operator
From Bank of America, we have Mihir Bhatia. Please go ahead.
Mihir Bhatia, Analyst
Thank you for taking my questions. The first one I had maybe just I wanted to turn to Exhibit H. And I had a quick question just on the - when we look at the FICO of the LTV percentages, clearly, there's been a little bit of - I mean, deterioration is probably way, way too strong word to use here. But certainly, the high FICOs have come down a little bit and the higher LTVs have increased a little bit there? And what I wanted to understand is, is that a function of the market or is that also a you mentioned your pricing and engine looks at so many different variables. It's just calls by you where you're seeing maybe a little bit better risk reward, a little bit better intrinsic value, if you will. Is that what's happening there? I imagine you do a little bit deeper analysis than what's presented here. So just trying to understand what's going on there?
Derek Brummer, President of Radian Mortgage
Mihir, it's Derek. So it's really a combination of the two. Much of it's just driven by a shift to a purchase market. And so you had to kind of expect that. If you go back a year ago, I think our refi volume was about 35% Q4. Now it's down to, in the most recent quarter, under 10%, so a lot of it's driven there. And then some of it is just risk selection. So when we're trying to find economic value, we're looking at a combination of, one, where we see those loans performing over a long term given kind of where the economic environment is and our projections going forward, but also where we see the market clearing rate. To the extent we see relative value in certain segments, we might be a bit overweight, underweight in certain areas, and we're constantly shifting that. Also, we are very mindful of not becoming over-allocated. So even if we have strong conviction that there is more economic value in a segment, we'll moderate there for a more qualitative perspective. So it's really both in short.
Mihir Bhatia, Analyst
Okay, no that's helpful, thank you. And then just my other question, just on Homegenius - and I'll just ask both to them like pretty related and then jump back in queue. Just - the first was - there used to be a SaaS line item, I think is to go forward to just combine that with the SFR and call it real estate. Is that the go-forward plan? And then the other question on Homegenius I just had was, you mentioned revenue at the low end of the prior guidance. How are you feeling about margins in that segment is the 14% margin still achievable? Thank you.
Rick Thornberry, CEO
Yes, thank you, Mihir. I think we see a few timing differences in our forecast, but we believe we're well-positioned against the strategic plan we laid out for Investor Day last year. We mention a few timing differences related to market changes, and also timing of rollout of some technology products. We feel good about the growth in title and are expanding existing relationships based on service and the value proposition. We have a strong customer pipeline. For the SaaS business, we are tracking our initial guidance related to SaaS users for 2022. As we prepare to commercially launch these products, the first one, Genius Price, will start to provide more highlights as we break that out appropriately. We feel like we're in a strong position in the market and see tremendous opportunities, especially with a 50% year-over-year growth target of at least $225 million as the low end. If anything, it's just timing with strong participation from title, and growing opportunities in SaaS.
Mihir Bhatia, Analyst
No absolutely. Sorry, I just - I did want to ask the one question on that, was just the margin. I think you said 14% margin. Do you feel good about that or are you guiding on that still?
Rick Thornberry, CEO
Yes. I think we still have not changed our view on that from our initial guidance. There can be some timing differences due to mix differences, but overall product profitability across Homegenius remains strong.
Operator, Operator
From Credit Suisse, we have Doug Harter. Please go ahead.
Doug Harter, Analyst
Thanks, Frank. Thanks for the detail on the contingency reserve. Can you just talk about your ability over 2022, 2023 to continue to get capital out of the subsidiaries until those contingency reserves release? And how we should be thinking about that until you can give regular dividends?
Frank Hall, CFO
Sure, yes, I appreciate the question, Doug. When you consider the amount of holding company resources we have currently, post the $500 million return of capital, we're sitting with holding company cash on a pro forma basis of about $1.1 billion. If you think about intended uses of that capital over the next two years including a $400 million share repurchase authorization and the new dividend level at $0.20 a share, it sums up to roughly $688 million. We believe that we have a nice bridge to achieve our capital return plans until we hit that 2024 timeline.
Operator, Operator
From KBW, we have Bose George. Please go ahead.
Bose George, Analyst
I would like to follow up on the question regarding capital return or dividends from the insurance company. In 2024, can you clarify the timing for the ability to return capital? I believe you mentioned a $500 million figure at some point; could you review that again?
Frank Hall, CFO
Sure. The way that it works is calibrated to when the unassigned funds turn positive. That balance is influenced by contingency reserves’ movements along with earnings. This creates a position where unassigned funds can turn positive, allowing for ordinary dividends to be returned from Radian Guaranty. As mentioned before, that could allow returning capital of roughly $500 million.
Bose George, Analyst
Okay. Great. Perfect. And then actually switching to expenses. Can you just talk about where you think expenses at the mortgage insurance company go next year?
Frank Hall, CFO
Absolutely. We guide roughly $85 million on a total quarterly basis for total expenses. When considering the mortgage segment specifically, we're guiding to a range of about $55 million to $60 million moving forward.
Bose George, Analyst
Okay. And the $55 million to $60 million, that doesn't include the policy acquisition cost. So that should be sort of the run rate of $7 million a quarter-ish?
Frank Hall, CFO
Yes, I believe that’s correct.
Bose George, Analyst
Okay. Great. And then just one more. There was a, I guess, press report about potential M&A involving Radian. Just curious if you can say anything, and to the extent you can, just any thoughts on just M&A in the industry in general, how you guys think if that's a possibility would be great.
Rick Thornberry, CEO
Bose, this is Rick. I appreciate the question, but it's our long-standing policy not to comment on market rumors. Our business strategy and objectives remain unchanged. We reported excellent financial results this past year, and our focus remains on returning capital to stockholders. The market has a healthy number of players today, and the GSEs have expressed interest in not expanding their counter-party concentration risk. Thus, it's challenging to make numbers work for combinations or consolidation within the industry. It's hard to find enough cost synergy to offset the market share decline, so that's the perspective we have.
Operator, Operator
From BTIG, we have Ryan Gilbert. Please go ahead.
Ryan Gilbert, Analyst
Hi, thanks, good morning. First question is just around persistency. It sounded like the view was maybe a little more positive around persistency in 2021. I think last quarter we talked about persistency remaining below historical levels. So just any more details on your thoughts around how persistency trends in 2022 would be helpful?
Frank Hall, CFO
Sure, Ryan. Our thoughts on persistency are optimistic, particularly with increased rates where we would expect persistency to continue to improve. We have historically suggested a normalized persistency level somewhere in the low 80s, but how long it might take to reach that is uncertain. The economic backdrop currently supports a trend line in that direction.
Ryan Gilbert, Analyst
Okay, great. And then in your title business, 70-plus percent revenue growth, seems like a pretty sizable market share gain. Is that - are you still operating primarily in refinance? And maybe you can talk about the factors that drove your growth in 2021? And as we look to expanding your purchase footprint in 2022, just more details on the go-to-market strategy?
Rick Thornberry, CEO
Yes, thank you, Ryan. Our title business’s growth was driven by developing new customers across our platform and expanding existing relationships. We signed 34 new customers in 2021, have seven of the top 20 lenders as title customers, and continue to see client growth momentum. While volatility exists in refinances, our current growth comes from centralized lender relationships primarily focused on refinance. We aim to expand our presence in the title business through our digital platform, TITLEGENIUS, working with realtors, consumers, and lenders to transform the title experience.
Operator, Operator
From Dowling, we have Geoffrey Dunn. Please go ahead.
Geoffrey Dunn, Analyst
Frank, I wanted to follow up on the surplus capital management discussion and try to better understand what this $500 million dividend move is. Is this front-end loading what you consider your capacity over the next two years? Meaning that $278 million pro forma is kind of the minimum surplus you want to be at, and we grow from here until 2024? Or do you think there's more capacity if you put on an additional $100 million of surplus in the next year?
Frank Hall, CFO
Sure great question, Geoff. We believe our actions provide a good bridge between where we sit today and where we expect to be in 2024. We are well balanced and calibrated to support organic desires and plans with the operating companies.
Operator, Operator
And from B. Riley Securities, we have Cullen Johnson. Please go ahead.
Cullen Johnson, Analyst
Good morning and thanks for taking my question. We touched a little bit earlier on 80% as maybe a longer-term average for persistency. But I'm wondering if rates continue to go significantly higher could we see persistency upwards of that? Or should we think of the 80s as more of an upper bound that we would just start to approach over time in a much higher rate environment?
Frank Hall, CFO
Yes, great question. When we consider low 80s, if you think about the natural turn in the portfolio that occurs with roughly a five to six-year duration type asset, it would imply an 80%-ish persistency or a 20% turn each year. While one should not entirely discount the possibility, it does not seem likely.
Cullen Johnson, Analyst
Okay, great, that's helpful. Are you still seeing favorable outcomes for the borrowers that are still exiting forbearance with respect to loss mitigation or just the ability to resume paying or has there been any change relative to previous quarters?
Derek Brummer, President of Radian Mortgage
Yes, this is Derek. The trend remains positive, with many borrowers shifting to payment deferral or some sort of modification option. Trends are consistent and favorable.
Operator, Operator
Thank you. We will now turn it back to Rick Thornberry for closing comments.
Rick Thornberry, CEO
Thank you. Thank you all for your questions and your interest in Radian. We look forward to talking more about our business in the coming quarter and hopefully seeing many of you in person as we all come back out of this pandemic environment. Again, thank you and be safe out there. We look forward to our next discussion. Take care.
Operator, Operator
Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for joining. You may now disconnect.