RDN 8-K

Radian Group Inc (RDN)

8-K 2020-11-04 For: 2020-11-04

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Added on April 04, 2026

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Delaware		001-11356		23-2691170
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 par value per share		RDN		New York Stock Exchange

	RADIAN GROUP INC.
	(Registrant)

Date: November 4, 2020	By: /s/ J. Franklin Hall
		J. Franklin Hall
		Senior Executive Vice President and Chief
		Financial Officer

	Quarter Ended	Quarter Ended	Quarter Ended
	September 30, 2020	June 30, 2020	September 30, 2019
Net income (loss) ⁽¹⁾	$135.1	$(30.0)	$173.4
Diluted net income (loss) per share	$0.70	$(0.15)	$0.83
Consolidated pretax income (loss)	$161.2	$(42.2)	$217.7
Adjusted pretax operating income (loss) ⁽²⁾	$145.0	$(88.5)	$212.7
Adjusted diluted net operating income (loss) per share ⁽²⁾	$0.59	$(0.36)	$0.81
Return on equity ⁽¹⁾⁽³⁾	13.3%	(3.1)%	18.0%
Adjusted net operating return on equity ⁽²⁾	11.3%	(7.1)%	17.4%
Book value per share ⁽⁴⁾	$21.52	$20.82	$19.40
PMIERs Available Assets ⁽⁵⁾	$4,468.5	$4,228.9	$3,371.0
PMIERs excess Available Assets ⁽⁶⁾	$970.3	$1,002.4	$652.0
Total Holding Company Liquidity ⁽⁷⁾	$1,375.6	$1,403.1	$998.2
Excess Available Resources to Support PMIERs ⁽⁸⁾	$2,310.9	$2,370.5	$1,616.0
Total investments	$6,584.6	$6,431.4	$5,533.7
New Insurance Written (NIW) - mortgage insurance	$33,320	$25,459	$22,037
Primary mortgage insurance in force	$245,467	$241,306	$237,158
Net premiums earned - mortgage insurance	$283.4	$247.6	$277.6
New defaults ⁽⁹⁾	20,508	63,005	10,562
Percentage of primary loans in default ⁽¹⁰⁾	5.9%	6.5%	1.9%
Provision for losses - mortgage insurance	$87.8	$304.0	$29.1
Mortgage insurance loss reserves	$821.7	$735.0	$394.1

(1)		Net income for the third quarter of 2020 includes a $17.7 million pretax net gain on investments and other financial instruments. Net loss for the second quarter of 2020 includes a $47.3 million pretax net gain on investments and other financial instruments. Net income for the third quarter of 2019 includes: (i) a $5.9 million loss on extinguishment of debt and (ii) a $13.0 million pretax net gain on investments and other financial instruments.
(2)		Adjusted results, including adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity, are non-GAAP financial measures. For definitions and a reconciliation of these measures to the comparable GAAP measures, see Exhibits F and G.
(3)		Calculated by dividing annualized net income (loss) by average stockholder's equity, based on the average of the beginning and ending balances for each period presented.
(4)		Accumulated other comprehensive income (loss) impacted book value per share by $1.21 per share as of September 30, 2020, $1.11 per share as of June 30, 2020 and $0.62 per share as of September 30, 2019.
(5)		Represents Radian Guaranty’s Available Assets, calculated in accordance with the Private Mortgage Insurer Eligibility Requirements (PMIERs) financial requirements in effect for each date shown.
(6)		Represents Radian Guaranty’s excess or "cushion" of Available Assets over its Minimum Required Assets, calculated in accordance with the PMIERs financial requirements in effect for each date shown.
(7)		Represents Radian Group's total liquidity, including the $35 million minimum liquidity requirement and available capacity under its unsecured revolving credit facility.
(8)		Represents the sum of: (1) PMIERs excess Available Assets and (2) Total Holding Company Liquidity, net of the $35 million minimum liquidity requirement under the unsecured revolving credit facility.
(9)		Represents new defaults in the number of loans reported during the period on loans related to primary mortgage insurance policies.
(10)		Represents the number of primary loans in default as a percentage of the total number of insured primary loans.

RDN 8-K

Radian Announces Third Quarter 2020 Financial Results

Contacts


1500 Market Street, Philadelphia, Pennsylvania, 19102
(Address of Principal Executive Offices, and Zip Code)

	October 2020		September 2020		August 2020	July 2020
Beginning primary default inventory (# of loans)	62,737		64,888		67,433	69,742
New defaults	5,086		5,858		6,173	8,477
Cures	(8,140	)	(7,935	)	(8,670)	(10,678)
Claims paid (1)	(78	)	(85	)	(63)	(92)
Rescissions and Claim Denials, net (2)	(1	)	11		15	(16)
Ending primary default inventory	59,604		62,737		64,888	67,433

(1)		Includes those charged to a deductible under pool insurance arrangements, as well as commutations.
(2)		Net of any previous Rescissions and Claim Denials that were reinstated during the period. Such reinstated Rescissions and Claim Denials may ultimately result in a paid claim.

FINANCIAL RESULTS AND SUPPLEMENTAL INFORMATION CONTENT (Unaudited)

Exhibit A:		Condensed Consolidated Statements of Operations Trend Schedule
Exhibit B:		Net Income (Loss) Per Share Trend Schedule
Exhibit C:		Condensed Consolidated Balance Sheets
Exhibit D:		Net Premiums Earned
Exhibit E:		Segment Information
Exhibit F:		Definition of Consolidated Non-GAAP Financial Measures
Exhibit G:		Consolidated Non-GAAP Financial Measure Reconciliations
Exhibit H:		Mortgage Supplemental Information
		New Insurance Written
Exhibit I:		Mortgage Supplemental Information
		Primary Insurance in Force and Risk in Force
Exhibit J:		Mortgage Supplemental Information
		Claims and Reserves
Exhibit K:		Mortgage Supplemental Information
		Default Statistics
Exhibit L:		Mortgage Supplemental Information
		Reinsurance Programs


Radian Group Inc. and Subsidiaries Condensed Consolidated Statements of Operations Trend Schedule Exhibit A

	2020								2019
(In thousands, except per-share amounts)	Qtr 3		Qtr 2			Qtr 1			Qtr 4		Qtr 3

Revenues:
Net premiums earned	$	286,471	$	249,295		$	277,415		$	301,486	$	281,185
Services revenue		33,943		28,075			31,927			40,031		42,509
Net investment income		36,255		38,723			40,944			41,432		42,756
Net gains (losses) on investments and other financial instruments		17,652		47,276			(22,027	)		4,257		13,009
Other income		913		1,072			822			818		879
Total revenues		375,234		364,441			329,081			388,024		380,338

Expenses:
Provision for losses		88,084		304,418			35,951			34,619		29,231
Policy acquisition costs		10,166		6,015			7,413			6,783		6,435
Cost of services		24,353		17,972			22,141			27,278		29,044
Other operating expenses		69,377		60,582			69,110			80,894		76,384
Interest expense		21,088		16,699			12,194			12,160		13,492
Loss on extinguishment of debt		—		—			—			—		5,940
Impairment of goodwill		—		—			—			4,828		—
Amortization and impairment of other acquired intangible assets		961		979			979			15,823		2,139
Total expenses		214,029		406,665			147,788			182,385		162,665

Pretax income (loss)		161,205		(42,224	)		181,293			205,639		217,673
Income tax provision (benefit)		26,102		(12,273	)		40,832			44,455		44,235
Net income (loss)	$	135,103	$	(29,951	)	$	140,461		$	161,184	$	173,438

Diluted net income (loss) per share	$	0.70	$	(0.15	)	$	0.70		$	0.79	$	0.83


Radian Group Inc. and Subsidiaries Net Income (Loss) Per Share Trend Schedule
Exhibit B

	The calculation of basic and diluted net income (loss) per share was as follows:

		2020							2019
(In thousands, except per-share amounts)		Qtr 3		Qtr 2			Qtr 1		Qtr 4		Qtr 3
Net income (loss)—basic and diluted		$	135,103	$	(29,951	)	$	140,461	$	161,184	$	173,438

Average common shares outstanding—basic (1)			193,176		193,299			200,161		203,431		203,107
Dilutive effect of share-based compensation arrangements (2)			980		—			1,658		1,734		5,584
Adjusted average common shares outstanding—diluted			194,156		193,299			201,819		205,165		208,691

Basic net income (loss) per share		$	0.70	$	(0.15	)	$	0.70	$	0.79	$	0.85

Diluted net income (loss) per share		$	0.70	$	(0.15	)	$	0.70	$	0.79	$	0.83

(1)	Includes the impact of fully vested shares under our share-based compensation programs.
(2)	There were no dilutive shares for the three months ended June 30, 2020, as a result of our net loss for the period. The following number of shares of our common stock equivalents issued under our share-based compensation arrangements were not included in the calculation of diluted net income (loss) per share because they were anti-dilutive:

		2020							2019
	(In thousands)	Qtr 3		Qtr 2			Qtr 1		Qtr 4		Qtr 3
	Shares of common stock equivalents		710		2,295			132		—		—


Radian Group Inc. and Subsidiaries Condensed Consolidated Balance Sheets Exhibit C

(In thousands, except per-share amounts)	September 30,			June 30,			March 31,			December 31,			September 30,
(In thousands, except per-share amounts)	2020			2020			2020			2019			2019

Assets:
Investments	$	6,584,577		$	6,431,350		$	5,608,627		$	5,658,747		$	5,533,724
Cash		82,020			68,387			54,108			92,729			49,393
Restricted cash		4,424			16,279			7,817			3,545			2,853
Accounts and notes receivable		145,164			110,722			123,381			93,630			144,113
Goodwill and other acquired intangible assets, net		25,268			26,229			27,208			28,187			52,533
Prepaid reinsurance premium		295,062			330,476			356,104			363,856			374,339
Other assets		640,830			585,866			513,187			567,619			513,647
Total assets	$	7,777,345		$	7,569,309		$	6,690,432		$	6,808,313		$	6,670,602

Liabilities and stockholders’ equity:
Unearned premiums	$	501,787		$	561,280		$	605,045		$	626,822		$	647,856
Reserve for losses and loss adjustment expense		825,792			738,885			418,202			404,765			398,141
Senior notes		1,404,759			1,403,857			887,584			887,110			886,643
FHLB advances		141,058			175,122			173,760			134,875			104,492
Reinsurance funds withheld		318,773			312,350			302,551			291,829			352,532
Other liabilities		462,797			391,810			438,782			414,189			358,431
Total liabilities		3,654,966			3,583,304			2,825,924			2,759,590			2,748,095

Common stock		210			210			208			219			220
Treasury stock		(909,745	)		(909,738	)		(902,024	)		(901,657	)		(901,556	)
Additional paid-in capital		2,238,869			2,232,949			2,231,670			2,449,884			2,469,097
Retained earnings		2,561,076			2,450,423			2,504,853			2,389,789			2,229,107
Accumulated other comprehensive income		231,969			212,161			29,801			110,488			125,639
Total stockholders’ equity		4,122,379			3,986,005			3,864,508			4,048,723			3,922,507
Total liabilities and stockholders’ equity	$	7,777,345		$	7,569,309		$	6,690,432		$	6,808,313		$	6,670,602

Shares outstanding		191,556			191,492			190,387			201,164			202,219

Book value per share	$	21.52		$	20.82		$	20.30		$	20.13		$	19.40

Debt to capital ratio (1)		25.4	%		26.0	%		18.7	%		18.0	%		18.4	%
Risk to capital ratio-Radian Guaranty only	13.2:1			13.3:1			13.8:1			13.6:1			14.2:1

(1) Calculated as senior notes divided by senior notes and stockholders’ equity.

(1)		Includes a cumulative impact related to the recognition of deferred initial premiums on monthly policies.
(2)		Includes premiums earned from our participation in certain credit risk transfer programs.
(3)		Includes the impact of related profit commissions.
(4)		The amounts represent the profit commission on the Single Premium QSR Program, excluding the impact of Single Premium Policy cancellations.
(5)		See Exhibit L for additional information on ceded premiums for our various reinsurance programs.


Radian Group Inc. and Subsidiaries Segment Information Exhibit E (page 1 of 3)

Summarized financial information concerning our reportable operating segments and all other activities as of and for the periods indicated is as follows. For a definition of adjusted pretax operating income (loss) and Real Estate adjusted EBITDA, along with reconciliations to consolidated GAAP measures, see Exhibits F and G.

	Mortgage
	2020									2019
(In thousands)	Qtr 3			Qtr 2			Qtr 1			Qtr 4				Qtr 3
Net premiums written (1)	$	259,278		$	229,458		$	260,974		$	287,952		(2)	$	270,567
(Increase) decrease in unearned premiums		24,078			18,138			14,025			10,552				7,031
Net premiums earned		283,356			247,596			274,999			298,504				277,598
Services revenue (3)		3,914			3,918			3,216			2,936				2,375
Net investment income (3)		32,054			34,708			36,198			37,818				37,032
Other income (3)		689			721			671			719				641
Total (3)		320,013			286,943			315,084			339,977				317,646

Provision for losses		87,753			304,021			35,246			34,411				29,053
Policy acquisition costs		10,166			6,015			7,413			6,783				6,435
Cost of services (3)		2,908			2,133			1,757			1,713				1,621
Other operating expenses before corporate allocations (3) (4)		21,327			18,705			23,733			32,604				30,773
Interest expense before corporate allocations (5)		1,983			3,064			680			688				682
Total (3) (6)		124,137			333,938			68,829			76,199				68,564
Adjusted pretax operating income (loss) before corporate allocations (3)		195,876			(46,995	)		246,255			263,778				249,082
Allocation of corporate operating expenses		29,435			25,191			29,074			27,394				26,671
Allocation of corporate interest expense		20,605			16,135			11,514			11,472				12,810
Adjusted pretax operating income (loss) (3)	$	145,836		$	(88,321	)	$	205,667		$	224,912			$	209,601


	Real Estate
	2020									2019
(In thousands)	Qtr 3			Qtr 2			Qtr 1			Qtr 4				Qtr 3
Net premiums earned	$	3,115		$	1,699		$	2,416		$	2,982			$	3,587
Services revenue (3) (6)		30,146			24,267			26,042			23,826				26,375
Net investment income		67			126			125			144				177
Total (3)		33,328			26,092			28,583			26,952				30,139

Provision for losses		370			426			743			238				211
Cost of services (3)		21,464			15,893			17,933			16,275				18,155
Other operating expenses before corporate allocations (3) (4)		13,617			11,251			10,938			11,972				11,404
Total (3)		35,451			27,570			29,614			28,485				29,770
Adjusted pretax operating income (loss) before corporate allocations (3) (7)		(2,123	)		(1,478	)		(1,031	)		(1,533	)			369
Allocation of corporate operating expenses (3)		3,818			3,339			3,836			2,987				2,910
Adjusted pretax operating income (loss) (3)	$	(5,941	)	$	(4,817	)	$	(4,867	)	$	(4,520	)		$	(2,541	)


Radian Group Inc. and Subsidiaries Segment Information Exhibit E (page 2 of 3)

	All Other (3) (8)
	2020							2019
(In thousands)	Qtr 3		Qtr 2			Qtr 1		Qtr 4		Qtr 3
Services revenue (6)	$	—	$	—		$	2,861	$	13,559	$	14,027
Net investment income		5,634		6,389			4,621		3,470		5,547
Other income		224		104			151		99		238
Total		5,858		6,493			7,633		17,128		19,812

Cost of services		—		(35	)		2,556		9,500		9,387
Other operating expenses		773		1,889			1,278		4,037		4,742
Total		773		1,854			3,834		13,537		14,129
Adjusted pretax operating income	$	5,085	$	4,639		$	3,799	$	3,591	$	5,683


	2020							2019
	Qtr 3		Qtr 2			Qtr 1		Qtr 4		Qtr 3
Inter-segment revenue included in:
Mortgage	$	—	$	—		$	83	$	160	$	35
Real Estate		117		110			109		88		111
All Other		1,500		2,500	(a)		—		42		122
Total inter-segment revenue	$	1,617	$	2,610		$	192	$	290	$	268

Inter-segment expense included in:
Mortgage	$	1,598	$	2,591	(a)	$	87	$	79	$	150
Real Estate		19		19			22		16		(1	)
All Other		—		—			83		195		119
Total inter-segment expense	$	1,617	$	2,610		$	192	$	290	$	268


(1)		*Net gains (losses) on investments and other financial instruments.* The recognition of realized investment gains or losses can vary significantly across periods as the activity is highly discretionary based on the timing of individual securities sales due to such factors as market opportunities, our tax and capital profile and overall market cycles. Unrealized gains and losses arise primarily from changes in the market value of our investments that are classified as trading or equity securities. These valuation adjustments may not necessarily result in realized economic gains or losses.
		Trends in the profitability of our fundamental operating activities can be more clearly identified without the fluctuations of these realized and unrealized gains or losses and changes in fair value of other financial instruments. We do not view them to be indicative of our fundamental operating activities.
(2)		*Loss on extinguishment of debt.* Gains or losses on early extinguishment of debt and losses incurred to purchase our debt prior to maturity are discretionary activities that are undertaken in order to take advantage of market opportunities to strengthen our financial and capital positions; therefore, we do not view these activities as part of our operating performance. Such transactions do not reflect expected future operations and do not provide meaningful insight regarding our current or past operating trends.
(3)		*Amortization and impairment of goodwill and other acquired intangible assets.* Amortization of acquired intangible assets represents the periodic expense required to amortize the cost of acquired intangible assets over their estimated useful lives. Acquired intangible assets are also periodically reviewed for potential impairment, and impairment adjustments are made whenever appropriate. We do not view these charges as part of the operating performance of our primary activities.
(4)		*Impairment of other long-lived assets and other non-operating items.* Includes activities that we do not view to be indicative of our fundamental operating activities, such as: (i) gains (losses) from the sale of lines of business and (ii) acquisition-related expenses.


Radian Group Inc. and Subsidiaries Mortgage Supplemental Information - New Insurance Written Exhibit H

	2020									2019
($ in millions)	Qtr 3			Qtr 2			Qtr 1			Qtr 4			Qtr 3

Total primary new insurance written	$	33,320		$	25,459		$	16,706		$	19,953		$	22,037

Percentage of primary new insurance written by FICO score (1)
>=740	66.2		%	67.3		%	65.7		%	66.3		%	64.1		%
680-739	30.7			30.1			31.1			30.5			31.5
620-679	3.1			2.6			3.2			3.2			4.4
Total primary new insurance written	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%

Percentage of primary new insurance written
Borrower-paid	98.5		%	97.8		%	96.7		%	97.4		%	97.1		%

Percentage by premium type
Direct monthly and other recurring premiums	90.0		%	84.7		%	81.1		%	82.1		%	85.0		%
Borrower-paid (2) (3)	9.0			13.6			16.5			16.0			13.1
Lender-paid (2)	1.0			1.7			2.4			1.9			1.9
Direct single premiums	10.0			15.3			18.9			17.9			15.0
Total primary new insurance written	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%

Primary new insurance written for purchases	70.5		%	56.4		%	66.2		%	67.5		%	80.7		%
Primary new insurance written for refinances	29.5		%	43.6		%	33.8		%	32.5		%	19.3		%

Percentage by LTV
95.01% and above	9.7		%	8.3		%	9.9		%	11.5		%	16.8		%
90.01% to 95.00%	39.6			36.4			37.6			35.8			37.4
85.01% to 90.00%	28.3			29.8			30.3			30.0			27.4
85.00% and below	22.4			25.5			22.2			22.7			18.4
Total primary new insurance written	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%


Radian Group Inc. and Subsidiaries Mortgage Supplemental Information - Primary Insurance in Force and Risk in Force Exhibit I (page 1 of 2)

	September 30,			June 30,			March 31,			December 31,			September 30,
($ in millions)	2020			2020			2020			2019			2019
Primary insurance in force (1)
Prime	$	241,166		$	236,835		$	236,958		$	235,742		$	232,086
Alt-A and A minus and below	4,301			4,471			4,628			4,816			5,072
Total Primary	$	245,467		$	241,306		$	241,586		$	240,558		$	237,158

Primary risk in force (1) (2)
Prime	$	59,972		$	59,253		$	59,827		$	59,780		$	59,217
Alt-A and A minus and below	1,017			1,058			1,096			1,141			1,203
Total Primary	$	60,989		$	60,311		$	60,923		$	60,921		$	60,420

Percentage of primary risk in force
Direct monthly and other recurring premiums	76.8		%	73.8		%	72.6		%	72.4		%	72.0		%
Direct single premiums	23.2		%	26.2		%	27.4		%	27.6		%	28.0		%

Percentage of primary risk in force by FICO score (3)
>=740	57.6		%	57.4		%	57.2		%	56.9		%	56.2		%
680-739	34.3			34.3			34.2			34.2			34.5
620-679	7.5			7.7			8.0			8.2			8.6
<=619	0.6			0.6			0.6			0.7			0.7
Total Primary	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%

Percentage of primary risk in force by LTV
95.01% and above	14.3		%	14.2		%	14.3		%	14.2		%	13.9		%
90.01% to 95.00%	50.1			50.4			51.0			51.3			51.9
85.01% to 90.00%	27.9			28.1			27.9			27.9			27.9
85.00% and below	7.7			7.3			6.8			6.6			6.3
Total	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%

Percentage of primary risk in force by policy year
2008 and prior	6.6		%	7.2		%	7.5		%	7.8		%	8.4		%
2009 - 2012	2.3			2.8			3.0			3.3			3.5
2013	2.9			3.5			3.9			4.2			4.6
2014	3.0			3.6			4.0			4.3			4.8
2015	5.1			6.1			6.9			7.4			8.1
2016	8.9			10.6			11.7			12.5			13.5

(1)		Net of ceded premiums written under the QSR Programs and the Excess-of-Loss Program. See Exhibit L for additional information.
(2)		Includes a cumulative impact related to the recognition of deferred initial premiums on monthly policies.
(3)		Certain organizational changes implemented in the first quarter of 2020 caused the composition of our reportable segments to change. These changes to our reportable segments have been reflected in our segment operating results for all periods presented.
(4)		Does not include impairment of other long-lived assets and other non-operating items, which are not considered components of adjusted pretax operating income (loss).
(5)		Primarily relates to FHLB borrowings made by our mortgage insurance subsidiaries. Prior to March 31, 2020, this amount had been presented in allocation of corporate interest expense. All prior periods have been restated to reflect the current presentation.
(6)		Inter-segment information:

		(a)		Primarily relates to interest on the $200.0 million 3% intercompany surplus note issued by Radian Guaranty to Radian Group.
(7)		Supplemental information for Real Estate adjusted EBITDA (see definition in Exhibit F):


Radian Group Inc. and Subsidiaries Segment Information Exhibit E (page 3 of 3)

Selected Mortgage Key Ratios
	2020						2019
	Qtr 3		Qtr 2		Qtr 1		Qtr 4		Qtr 3

Loss ratio (1)	31.0	%	122.8	%	12.8	%	11.5	%	10.5	%
Expense ratio (1)	21.5	%	20.2	%	21.9	%	22.4	%	23.0	%

(1) Calculated on a GAAP basis using net premiums earned.

Radian Group Inc. and Subsidiaries Consolidated Non-GAAP Financial Measure Reconciliations Exhibit G (page 1 of 3)
Reconciliation of Consolidated Pretax Income (Loss) to Adjusted Pretax Operating Income (Loss)

	2020									2019
(In thousands)	Qtr 3			Qtr 2			Qtr 1			Qtr 4			Qtr 3
Consolidated pretax income (loss)	$	161,205		$	(42,224	)	$	181,293		$	205,639		$	217,673
Less reconciling income (expense) items:
Net gains (losses) on investments and other financial instruments		17,652			47,276			(22,027	)		4,257			13,009
Loss on extinguishment of debt		—			—			—			—			(5,940	)
Impairment of goodwill		—			—			—			(4,828	)		—
Amortization and impairment of other acquired intangible assets		(961	)		(979	)		(979	)		(15,823	)		(2,139	)
Impairment of other long-lived assets and other non-operating items (1)		(466	)		(22	)		(300	)		(1,950	)		—
Total adjusted pretax operating income (loss) (2)	$	144,980		$	(88,499	)	$	204,599		$	223,983		$	212,743

(1)		The amounts for all the periods are included in other operating expenses on the Condensed Consolidated Statement of Operations in Exhibit A and primarily relate to impairments of other long-lived assets.
(2)		Total adjusted pretax operating income (loss) consists of adjusted pretax operating income (loss) for each reportable segment and All Other activities as follows:


Radian Group Inc. and Subsidiaries
Consolidated Non-GAAP Financial Measure Reconciliations
Exhibit G (page 2 of 3)

Reconciliation of Diluted Net Income (Loss) Per Share to Adjusted Diluted Net Operating Income (Loss) Per Share

	2020									2019
	Qtr 3			Qtr 2			Qtr 1			Qtr 4			Qtr 3
Diluted net income (loss) per share	$	0.70		$	(0.15	)	$	0.70		$	0.79		$	0.83

Less per-share impact of reconciling income (expense) items:
Net gains (losses) on investments and other financial instruments		0.09			0.24			(0.11	)		0.02			0.06
Loss on extinguishment of debt		—			—			—			—			(0.03	)
Impairment of goodwill		—			—			—			(0.02	)		—
Amortization and impairment of other acquired intangible assets		—			(0.01	)		—			(0.08	)		(0.01	)
Impairment of other long-lived assets and other non-operating items		—			—			—			(0.01	)		—
Income tax (provision) benefit on reconciling income (expense) items (1)		(0.02	)		(0.05	)		0.02			0.02			—
Difference between statutory and effective tax rates		0.04			0.03			(0.01	)		—			—
Per-share impact of reconciling income (expense) items		0.11			0.21			(0.10	)		(0.07	)		0.02
Adjusted diluted net operating income (loss) per share (1)	$	0.59		$	(0.36	)	$	0.80		$	0.86		$	0.81


Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity (1)

	2020						2019
	Qtr 3		Qtr 2		Qtr 1		Qtr 4		Qtr 3
Return on equity (1)	13.3	%	(3.1	)%	14.2	%	16.2	%	18.0	%
Less impact of reconciling income (expense) items: (2)
Net gains (losses) on investments and other financial instruments	1.7		4.8		(2.2	)	0.4		1.4
Loss on extinguishment of debt	—		—		—		—		(0.6	)
Impairment of goodwill	—		—		—		(0.5	)	—
Amortization and impairment of other acquired intangible assets	(0.1	)	(0.1	)	(0.1	)	(1.6	)	(0.2	)
Impairment of other long-lived assets and other non-operating items	—		—		—		(0.2	)	—
Income tax (provision) benefit on reconciling income (expense) items (3)	(0.3	)	(1.0	)	0.5		0.4		(0.1	)
Difference between statutory and effective tax rates	0.7		0.3		(0.3	)	(0.1	)	0.1
Impact of reconciling income (expense) items	2.0		4.0		(2.1	)	(1.6	)	0.6
Adjusted net operating return on equity	11.3	%	(7.1	)%	16.3	%	17.8	%	17.4	%

(1)		Calculated by dividing annualized net income (loss) by average stockholders’ equity, based on the average of the beginning and ending balances for each period presented.
(2)		Annualized, as a percentage of average stockholders’ equity.
(3)		Calculated using the company’s federal statutory tax rate of 21%. Any permanent tax adjustments and state income taxes on these items have been deemed immaterial and are not included.


Radian Group Inc. and Subsidiaries Consolidated Non-GAAP Financial Measure Reconciliations Exhibit G (page 3 of 3)

Reconciliation of Net Income (Loss) to Real Estate Adjusted EBITDA

	2020									2019
(In thousands)	Qtr 3			Qtr 2			Qtr 1			Qtr 4			Qtr 3

Net income (loss)	$	135,103		$	(29,951	)	$	140,461		$	161,184		$	173,438
Less reconciling income (expense) items:
Net gains (losses) on investments and other financial instruments		17,652			47,276			(22,027	)		4,257			13,009
Loss on extinguishment of debt		—			—			—			—			(5,940	)
Impairment of goodwill		—			—			—			(4,828	)		—
Amortization and impairment of other acquired intangible assets		(961	)		(979	)		(979	)		(15,823	)		(2,139	)
Impairment of other long-lived assets and other non-operating items		(466	)		(22	)		(300	)		(1,950	)		—
Income tax (provision) benefit		(26,102	)		12,273			(40,832	)		(44,455	)		(44,235	)
Mortgage adjusted pretax operating income (loss)		145,836			(88,321	)		205,667			224,912			209,601
All Other adjusted pretax operating income		5,085			4,639			3,799			3,591			5,683
Real Estate adjusted pretax operating income (loss)		(5,941	)		(4,817	)		(4,867	)		(4,520	)		(2,541	)
Less reconciling income (expense) items:
Allocation of corporate operating expenses to Real Estate		(3,818	)		(3,339	)		(3,836	)		(2,987	)		(2,910	)
Real Estate depreciation and amortization		(683	)		(776	)		(666	)		(553	)		(560	)
Real Estate adjusted EBITDA	$	(1,440	)	$	(702	)	$	(365	)	$	(980	)	$	929

(1)		For loans with multiple borrowers, the percentage of primary new insurance written by FICO score represents the lowest of the borrowers’ FICO scores.
(2)		Percentages exclude the impact of reinsurance.
(3)		Borrower-paid Single Premium Policies have lower Minimum Required Assets under PMIERs as compared to lender-paid Single Premium Policies.


Radian Group Inc. and Subsidiaries Mortgage Supplemental Information - Primary Insurance in Force and Risk in Force Exhibit I (page 2 of 2)

Table continued from prior page.

	September 30,			June 30,			March 31,			December 31,			September 30,
	2020			2020			2020			2019			2019
Persistency Rate (12 months ended)		65.6	%⁽⁴⁾		70.2	%		75.4	%		78.2	%		81.5	%
Persistency Rate (quarterly, annualized) (5)		60.0	%⁽⁴⁾		63.8	%		76.5	%		75.0	%		75.5	%

(1)		Excludes the impact of premiums ceded under our reinsurance agreements.
(2)		Does not include pool risk in force or other risk in force, which combined represent approximately 1.0% of our total risk in force for all periods presented.
(3)		For loans with multiple borrowers, the percentage of primary risk in force by FICO score represents the lowest of the borrowers’ FICO scores.
(4)		The Persistency Rate was reduced by an increase in cancellations of Single Premium Policies due to increased cancellations identified by our ongoing servicer monitoring process for Single Premium Policies.
(5)		The Persistency Rate on a quarterly, annualized basis is calculated based on loan-level detail for the quarter ending as of the date shown. It may be impacted by seasonality or other factors, including the level of refinance activity during the applicable periods, and may not be indicative of full-year trends.

(1)		Net of reinsurance recoveries.
(2)		Includes payments to commute mortgage insurance coverage on certain performing and non-performing loans.
(3)		Calculated without giving effect to the impact of other commutations.
(4)		Before reinsurance recoveries.

($ in thousands, except per default amounts)	September 30,		June 30,		March 31,		December 31,		September 30,
($ in thousands, except per default amounts)	2020		2020		2020		2019		2019

Reserve for losses by category (1)
Mortgage reserves
Prime	$	655,754	$	573,463	$	264,694	$	248,727	$	236,382
Alt-A and A minus and below	88,879		86,646		88,481		91,093		95,723
IBNR and other (2)	43,153		43,342		40,583		40,920		42,117
LAE	18,745		16,807		9,216		8,918		9,000
Total primary reserves	806,531		720,258		402,974		389,658		383,222
Total pool reserves	14,779		14,398		11,297		11,322		10,605
Total 1st lien reserves	821,310		734,656		414,271		400,980		393,827
Other	398		335		407		293		260
Total Mortgage reserves	821,708		734,991		414,678		401,273		394,087
Real Estate reserves	4,084		3,894		3,524		3,492		4,054
Total reserves	$	825,792	$	738,885	$	418,202	$	404,765	$	398,141

1st lien reserve per default
Primary reserve per primary default excluding IBNR and other	$	12,168	$	9,706	$	18,320	$	16,399	$	16,900

(1)		Includes ceded losses on reinsurance transactions, which are expected to be recovered and are included in the reinsurance recoverables reported in other assets in our condensed consolidated balance sheets.
(2)		For the quarter ended September 30, 2019 includes an increase of $11.8 million in the Company’s IBNR reserve estimate related to previously disclosed legal proceedings involving challenges from certain servicers regarding loss mitigation activities.

(1)		Net of profit commission, where applicable.
(2)		Includes amounts reported in policy acquisition costs and other operating expenses. Operating expenses include the following ceding commissions, net of deferred policy acquisition costs, for the periods indicated:


	2020									2019
($ in thousands)	Qtr 3			Qtr 2			Qtr 1			Qtr 4			Qtr 3

Ceding commissions	$	(12,337	)	$	(10,406	)	$	(7,967	)	$	(7,973	)	$	(8,160	)

(3)		Included in primary RIF.
(4)		Excludes the impact of intercompany reinsurance.