Q1 2022 Radian Group Inc Earnings Call

May 4, 2022

Good day and thank you for standing by welcome to the first quarter 2020 to Radian Group earnings Conference call.

At this time, all participants are in listen only mode.

After the presentation, there will be a question and answer session.

To ask a question. During this session you will need to press Star then one on your telephone keypad.

Please be advised today's conference maybe recorded.

If you require operator assistance during the call. Please press Star then zero.

I would now like to hand, the conference over to John Damian Senior Vice President Investor Relations and corporate development.

Thank you and welcome to Radians first quarter 2022 conference call. Our press release, which contains radians financial results for the quarter.

Issued yesterday evening and is posted to the investors section of our website at www Dot radiant Dot 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 homogeneous segment other non-GAAP measures that will be.

Discussed today include adjusted gross profit adjusted pre tax operating income or loss before allocating corporate operating expenses and their related homogeneous profit margins.

A complete description of all of our non-GAAP measures maybe found in press release exhibit F and reconciliations of these measures to the most comparable GAAP measures maybe found in press release exhibit G. These exhibits are on the investors section of our website.

This morning, you will hear from Rick Thornberry, Radians, 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 before.

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 2021 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.

Thank you John and good morning. Thank you all for joining us today and for your interest in Radian.

I'm pleased to report a strong start to the year our team remains focused across our three areas of strategic value creation growing the economic value in the future earnings of our mortgage insurance portfolio growing our homogeneous business and managing our capital resources.

Before we started I want to highlight the 2022 marks our 45th year of business and our 30 <unk> year as a publicly traded company. We are proud of our history of ensuring affordable sustainable and equitable homeownership for some of the year. So there are even more excited about the promise of our future.

Frank will discuss the details of our financial position shortly but let me share a few highlights from the quarter.

We reported net income of $181 million or $1 per share adjusted diluted net operating income was $1.17 per diluted share return on equity was 17, 2% an increase from 11, 8% reported a year ago.

Frank will discuss the favorable prior period reserve development, which was which was largely driven by better than expected cure activity.

We grew our book value per share by more than 7% year over year or 14% after adjusting for the impact of accumulated other comprehensive income, which Frank will discuss in more detail shortly.

We also returned $116 million in dividends to stockholders over the past year.

In our mortgage segment, we wrote $18 7 billion.

<unk> in the first quarter, we are continuing to see a higher mix of purchased business with a 43% increase in purchase volume year over year.

As I mentioned last quarter, we typically deploy more capital and a purchase driven market and expect the environment in 2022 to continue to provide strong opportunities to put our capital to work at attractive risk adjusted returns, we believe our ability to leverage the strength of our proprietary analytics and radar rates platform.

Utilizing artificial intelligence and machine learning has been and continues to be a differentiator for iridium in terms of optimizing economic value across the competitive marketplace.

Our primary insurance in force, which is the main driver of future earnings for our company grew more than 4% year over year to nearly 241 billion at March 31 2022.

Monthly premiums enforced portfolio grew more than 10% year over year, while our single premium enforce portfolio declined 19%.

Additionally, nearly 70% of our mortgage insurance portfolio is comprised of business written since 2020 that historically low interest rates. We are pleased with the positive credit trends that we're seeing that our defaulted loan portfolio. The total number of loans in default declined by 49% year over year.

We've seen a sharp increase in curious over the past year for loans in forbearance programs, particularly among the population is this 12 payments or more.

As we've noted previously curious have outpaced new default each period, beginning in the third quarter of 2020.

For those borrowers who remainder of default we are actively monitoring and communicating with servicers and supporting the efforts by the GSE is to effectively navigate a successful resolution.

For our <unk> segment total revenues for the quarter were $33 9 million or.

A 31% increase compared to the first quarter of 2021.

In the first quarter, we saw increased revenue and strong performance from our real estate services, specifically, our single family rental business and our valuation products and services. We saw a decline in volume from our centralized lender refinance title business due to a significant industry wide decline in mortgage refinance activity from the <unk>.

Fourth quarter of 2021, although we and other mortgage industry participants expected to decline in refinances to occur the rise in rates during the first quarter LOE was more rapid than expected industry forecasts now anticipate a more significant slowdown in <unk>.

Total refinance activity for the year versus the original 2022 projections. Despite this decrease in overall volume we remain well positioned with our current customers to continue growing our share in this market, while also attracting new centralized lender customers.

We continue to develop our innovative direct purchase cycle business, leveraging our award winning title genius technology platform.

And although volumes are small we are encouraged by the traction we are gaining with homebuyers real estate agents lenders and investors.

In terms of our technology products. We are pleased with the customer response to our software as a service solutions for real estate agents, specifically genius price.

Property intelligence technology platform offered by our Red Bell real estate brokerage.

Over the last couple of months, we've signed genius price contracts with real estate brokers as well as marketing partnerships with large real estate franchise companies. These relationships provide us with sponsored access to market and deliver our genius priced SaaS solution to more than 200000 real estate agents across the country.

Additionally, I am proud to highlight that in March from genius was named the 2022 Tech 100 real estate whether by housing water.

The award recognizes the most innovative technology companies in our industries and we were honored to be chosen for our genius price technology at our digital purchase title platform title genius, which leverages patent pending blockchain technology.

Frank will provide additional details on our homogeneous financial results and an update on our expectations for this business.

Turning now to our capital and liquidity at March 31, Radian group maintained a strong capital position with $1 3 billion of total holding company liquidity.

March 31, Radian guaranty's available assets under Pmiers total approximately $5 1 billion.

Resulting in a cushion of $1 6 billion or 44% Frank will update on our capital actions during the quarter moving now to the broader mortgage and real estate market. We are closely monitoring the impact from inflation and the rising interest rates on the mortgage and housing markets as well as our businesses.

Despite current depletion every pressure rising interest rates and steady home price appreciation. The strong demand for housing continues this is fueled largely by the constrained supply of homes available for sale and demand for first time homebuyers, who are most likely to use private EMI.

In terms of the overall housing market, we saw positive momentum continuing into the first quarter with purchase originations, increasing 11% year over year.

Based on the latest data from our own Radiant home price index over the first three months of 2022 continued strong housing demand and relatively limited supply in the market led to an annualized 13% increase in home prices across the country.

We expect the rate of home price appreciation to moderate this year and we believe the combination of low unemployment.

And positive housing market dynamics in terms of low supply and strong demand will support a strong and sustainable national housing market in 2022.

The increase in mortgage interest rates is expected to drive higher persistency on our existing in force portfolio and in turn contribute to.

Growth at our large high quality insurance in force portfolio.

Additionally, the increase in interest rates is likely to result in higher reinvestment yields.

Our investment portfolio.

Based on the most recent origination projections for 2022, we expect the private mortgage insurance market to be approximately 500 to 525 billion.

Which would represent the third largest semi volume year in history.

And finally, while we are extremely proud of our success over the years and ensuring the American dream of homeownership.

We know we are in a unique position to do even more.

That's why we launched the affordable Homeownership initiative within <unk> to further drops.

Access to affordable sustainable and equitable homeownership with a particular focus on closing the homeownership gap for underserved communities. Our initiative builds upon our industry and trade Association partnerships, our research and analytics capability, our unique expertise across the mortgage and real estate ecosystem and our.

Training and education platforms. We believe we can play an important role in extending the homeownership opportunity to even more deserving families and look forward to reporting on our progress now I would like to turn the call over to Frank for details of our financial position.

Thank you Rick and good morning, everyone.

To recap our financial results issued last evening, we reported GAAP net income of $181 1 million or $1 <unk> per diluted share for the first quarter of 2022.

As compared to $1 seven per diluted share in the fourth quarter of 2021.

And <unk> 64 per diluted share in the first quarter of 2021.

Adjusted diluted net operating income was $1 17 per share in the first quarter of 2022 compared to $1 seven in the fourth quarter of 2021, and <unk> 68 in the first quarter of 2021.

I'll now turn to the key drivers of our revenue.

Our new insurance written was $18 $7 billion during the quarter compared to $23 7 billion in the fourth quarter of 2021 and.

$22 billion in the first quarter of 2021.

New insurance written for purchase transactions with $17 billion in.

An increase of 43% year over year.

Purchase volume accounted for 91% of our total new insurance written for the first quarter of 2022 compared to 59% in the first quarter of 2021.

Our reported quarterly annualized persistency rate increased to 76, 9% this quarter compared to 62, 5% a year ago.

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.

Primary insurance in force increased $3 billion during the quarter to $249 billion.

Our outlook for 2022 insurance in force growth remains at approximately 10% given the expected higher persistency and strong <unk> volume.

Total net premiums earned were $254 $2 million in the first quarter of 2022 down compared to $261 4 million in the fourth quarter of 2021.

$271 9 million in the first quarter of 2021.

As noted last quarter premiums earned in the fourth quarter were elevated by approximately $5 $5 million due to several small items and the earned premium decrease on a linked quarter basis is primarily driven by these items as premiums would have otherwise been roughly in line with prior quarter.

The decline in net premiums earned year over year was due primarily to lower single premium policy cancellations, along with lower monthly premiums.

Webcast slide 11 shows the mortgage insurance in force portfolio premium yields trend over the past five quarters.

Our direct in force premium yield was 39 six basis points this quarter compared to 41 basis points last quarter.

42, seven basis points in the first quarter of 2021.

As noted in the prior quarter the enforced yields for the fourth quarter of 2021.

It has been approximately 41 basis points absent five $5 million of adjustments noted earlier.

The decline from this adjusted level of approximately half a basis point is consistent with our expectation for a two basis point decline for the full year of 2022.

Investment income increased 2% on a linked quarter basis and was relatively flat to the same quarter prior year.

While the rising rate environment is expected to be positive for the reinvestment rate of future cash flows there was a negative impact on period end market values.

As a result, we experienced an increase in unrealized losses on the investment portfolio.

These unrealized losses also negatively impacted our book value and GAAP earnings. So it is not included in our adjusted pretax operating income.

We do not however expect to realize these losses as we have the ability to hold our investments to maturity and the unrealized losses are expected to diminish as securities are expected to trend to par value the closer they get to maturity.

Our ability to hold securities to maturity is another benefit of our strong operating cash flow.

Our homogeneous segment revenues were $33 9 million for the first quarter of 2022.

Compared to $44 7 million for the fourth quarter and $25 8 million in the first quarter of 2021, which is a 31% increase year over year.

Title premiums of $9 million in the first quarter of 2022 were up 25% from the first quarter of 2021, but down 23% from the fourth quarter of 2021.

Our reported hone genius pre tax operating loss before allocated corporate operating expenses was $8 2 million for the first quarter of 2022 compared to income of $2 7 million for the fourth quarter of 2021, and a loss of $6 five.

For the first quarter of 2021.

Our reported homogeneous adjusted gross profit for the first quarter of 2022 was $12 1 million compared.

Compared to $19 7 million for the fourth quarter of 2021, and $8 5 million for the first quarter of 2021.

A reconciliation of our homogeneous non-GAAP measures to the comparable GAAP measures can be found on exhibit G.

As Rick previously mentioned the rapid increase in mortgage rates has driven a significant decline in refinance activity, which negatively impacts our title business.

While we anticipated a decline in refinance activity and our long term homogeneous plans the accelerated timing of this volume decline does create downward pressure on our near term financial projections.

Accordingly, we are revising our 2022 full year revenue estimates downward for homogeneous to be between 160 and $180 million, but still an increase over our 2021 actual results of $149 million.

We have also updated our 2022 guidance for adjusted gross profit now expected to be between 70 and $80 million.

And adjusted pre tax operating income before corporate allocations to be between one and $5 million for the full year 2022.

Our 2025 estimates however are still expected to be within range of our original guidance shared at our Investor Day in June 2021.

We remain confident about this business and are making steady progress on our client acquisition and operational milestones.

Moving now to our loss provision and credit quality.

As noted on webcast slide 14, we had a benefit of $84 2 million and our mortgage provision for losses for the first quarter of 2022 compared to a benefit of $46 5 million in the fourth quarter of 2021.

And a loss of $45 9 million in the first quarter of 2021.

Also as noted on webcast slide 14, the provision for losses for the first quarter 2022 includes positive reserve development on prior defaults of $124 $9 million.

This positive development was primarily driven by more favorable trends in cures than previously estimated.

<unk> aided by forbearance programs as well as positive trends in home price appreciation, which resulted in a change to the assumptions related to prior period defaults.

We maintained our prior quarter assumptions for new defaults reported in 2022, including the default to claim rate assumption on new defaults at 8% for the first quarter of 2022.

We continue to closely monitor the trends and tours and claims for our default inventory, including the resolution of Covid related forbearance programs.

As of March 31, 2022, 95% of new defaults from the second quarter of 2020, the largest COVID-19 related default quarter gets cured.

These favorable trends for defaults reported in 2020 were the primary catalyst for the positive reserve development reported this quarter.

For additional context based on the continued strong tour volume.

We've reduced the default to claim rate assumption for the large population of defaults first reported in the second quarter of 2020 to an ultimate rate of approximately 4% this quarter compared to six 5% last quarter and our original assumption of eight 5% set in the second quarter of 2020.

Now turning to expenses.

Other operating expenses were $89 5 million in the first quarter of 2022.

The increase compared to $85 million in the fourth quarter of 2021 and $73 million in the first quarter of 2021.

The increase in other operating expenses as compared to the prior quarter and the same quarter. Prior year is primarily related to an increase in variable incentive compensation expense, including share based compensation.

The increase compared to prior year also includes a $3 $7 million decrease in ceding commissions associated with lower single premium acceleration.

To aid in the analysis of our operating expenses, we have provided segment level detail on press release exhibit E.

Moving on to taxes, our overall effective tax rate for the first quarter of 2022 was 22, 6%.

Increase in our effective tax rate over the statutory rates for the first quarter was primarily due to the impact of permanent book to tax adjustments relating to equity compensation and our company owned life insurance.

Our annualized effective tax rate for 2022 before discrete items is expected to be approximately 21, 8%.

Now moving to capital and available liquidity.

Radian guaranty's excess pmiers available assets over minimum required assets was $1 6 billion as of the end of the first quarter, which represents a 44% pmiers cushion.

As of March 31, 2022, we have reduced radian guaranty's pmiers minimum required asset requirements by $1 2 billion.

By distributing risk through both insurance linked notes reinsurance and other third party reinsurance arrangements as noted on press release exhibit K.

As of March 31, 2020 to Radian Guaranty had risk distribution covering approximately 67% of our risk in force.

For Radian group as of March 31, 2022.

We maintained $1 billion of available liquidity.

Our liquidity in the first quarter was enhanced by the $500 million return of capital from Radian Guaranty to Radian group approved by the Pennsylvania Insurance Department in February 2022.

Total liquidity, which includes the company's five year $275 million credit facility was $1 3 billion as of March 31 2022.

During the first quarter of 2022, we repurchased 927000 shares and through the end of April 2022, we purchased an additional one 8 million shares at an average share price of $23 one.

And $21 89, respectively.

We have also continued to pay a dividend to common stockholders throughout the pandemic. During the first quarter of 2022, we returned approximately $36 million to shareholders through dividends.

As a reminder, we most recently increased our quarterly.

Dividends by 43% during the first quarter of 2022.

Last quarter I spoke about the mechanics of our statutory capital and the importance of having positive unassigned funds to support ordinary dividend capacity from Radian Guaranty to Radian group.

Given the strong financial performance this quarter and assuming the continuation of the current positive trends in our mortgage insurance business. We expect this transition from negative to positive unassigned funds could now potentially.

<unk> occur as soon as 2023 early 2024.

Given the capital strength at Radian Guaranty and the financial flexibility provided by our available liquidity at Radian group. We believe that we are well positioned to support our businesses and deliver value to our shareholders I will now turn the call back over to Rick.

Thank you Frank before we open the call to your questions I want to highlight.

We are pleased with our start for 2022 and remained focus across our three areas of strategic value creation.

Growing the economic value and the future earnings of our mortgage insurance portfolio growing our homogeneous business and managing our capital resources overall, we believe the macroeconomic conditions and strong home purchase market provides significant tailwind for long term growth and the economic value of projected future earnings of our mortgage.

Insurance portfolio, we are pleased with how the credit performance of our portfolio continues to improve as we emerge from the pandemic environment.

In our home <unk> business, where we remain excited about the future for this business based on the market response to our innovative products and services and look forward to reporting on our progress in the coming quarters, and we continue to strategically manage capital by maintaining strong holding company liquidity and Pmiers cushion Opportunistically REIT.

Purchasing shares and paying the highest yielding dividend in the industry to stockholders and finally, we will continue to leverage the strength of our team and utilize data analytics and technology to differentiate ourselves from the competition and help our customers succeed in this fast moving digital market now.

Now operator, we would be happy to take questions.

If you'd like to ask a question at this time. Please press. The Star then the number one key on your Touchtone telephone.

To withdraw your question press the pound key.

Again that is star then one to ask a question.

Our first question comes from Mark Devries with Barclays.

Yes. Thanks.

My first question is probably for Derrick wood.

We've obviously had a pretty significant deterioration in housing affordability with the big Spike in mortgage rates and high HPA could you just discuss kind of what history has taught you what the implications are for for default rates and also for your ability.

To grow risk.

Sure. So as we were kind of looking at it historically I think you also have to be.

Different context, where you've kind of seen this run up in home prices certainly very different from what you would have seen.

Kind of going into the financial crisis, I think what's driving at here is not kind of I would say excess demand thats being driven kind of on the credit side credit continues to be.

Very tight underwriting continues to be very high quality.

Also there is a lot of paper.

Favorable demographic tailwind as well so as a result.

In terms of an adjustment.

Makes it more likely that youre, probably going to have a decrease in the acceleration of home price appreciation and you're starting to see some of that in the first express and home sale measures right. So existing home sales new home sales pending home sales are starting to come down a bit.

We think that's healthy so in terms of having rates go up a moderation in home price appreciation.

The positive from our perspective, having it go up at the rate, it's been going up with leg down was <unk> I would say it could create more markets, where youll become concerned that the values were out of line with fundamentals, but kind of thing that the adjustment now we see that probably kind of moderating out.

Okay got it and then.

Next question because somebody just addressed the latest trends of what youre seeing in terms of pricing across the industry.

Sure I'll take that as well.

Competitive environment and pricing environment, I would characterize it pretty.

Pretty stable and normal iPhone, what we're seeing now a different company picking their spots and adjusting pricing our focus continues to be identifying and deploying capital in the highest value segments of the market.

Constantly adjusting pricing up and down based upon credit characteristics that we see relative value same thing with respect to geos.

We also this quarter our pricing was probably overall flat we did implement a kind of a moderate price increase in that 3% range I think we've seen our estimate on clearing rates kind of some competitors, we probably saw that go down moderately so maybe about 2% to 3% range.

And I think some of that translated we probably gave up a bit of market share, which we would expect that my environment, where again, we're not going to be a price leader going down.

Look at this as an opportunity to potentially increase rates a little bit.

Got it and would you expect rates to be biased more higher than lower just given some of the increasing macro uncertainty and risk around recession.

Well all I can do is kind of take from our perspective, we certainly took that into account and that was expressed in an increase in rates this quarter.

Okay, great. Thank you.

Our next question comes from Doug Harter with credit Suisse.

Okay.

Thanks.

Hoping you could just talk about the impact of.

Lower refinance activity and how that plays out in terms of the premium yields you expect.

Sure.

Just kind of when we might see the bottom in that.

Yeah.

This is Frank the guidance that we gave on portfolio yields Lamb.

Last quarter, which was about a two basis point decrease throughout the year, we still expect to hold so.

That's updated for our current expectations around what the what the mix, but then IW looks like on a go forward basis. So last quarter, we had an adjusted 41 basis point portfolio yields.

That was at 39 six basis points this quarter and we expect to see again that trend down to probably 38 basis points by the fourth quarter.

But again mindful of and inclusive.

The mix of business that we would see.

And then lastly, obviously rates, having risen a fair amount and how does that play out in kind of the.

Your investment yield and.

Kind of how do you expect that to trend over the course of the year.

Sure I mean, certainly rising rates are helpful for persistency. So we saw.

Good uptick in persistency this quarter quarterly annualized 76, 9%.

That could certainly trend into the low to mid eighties.

If these trends continue so definitely positive in that regard persistency is a very powerful driver of revenue and earnings for the organization. So.

So thats very good investment portfolio.

Earnings as well we.

We expect to see.

The yield on the investment portfolio increase we have now just over a four year duration on the portfolio and there is a tremendous amount of cash flow that we're reinvesting.

Each and every year, so that will be invested at higher rates.

So very very positive.

On both of those.

Both of these attributes and I think the important thing to remember too for both of those.

Incremental revenue to the business without incremental costs.

And Thats.

Again very powerful driver for earnings for the company.

Thank you.

Yes.

Our next question comes from Bose, George with <unk>.

Hey, guys good morning.

I just wanted to go back to your guidance on the homogeneous operating income what's the level of corporate allocation of Opex that we should think about for the year. I was just wondering if that changes as well as with the lower revenue guidance.

Sure Bose.

If you look at exhibit E.

In the prepared materials, we've outlined.

The corporate allocation is for homogeneous.

Trend at around 5%.

$5 million or so each quarter.

That may moderate.

Excuse me may fluctuate.

During the period just based on things like what we saw this quarter with.

Sure.

With.

Compensation accruals things of that nature, but generally that's the level, where we are saying.

Okay, great. Thanks, and then actually just going back to the pricing.

Just like spreads have widened on the islands.

We're seeing in the market rates, obviously, you increase which is pushing up the effective pricing on that I mean, do you think that.

We will translate into some impact on pricing potentially pushed pricing a little higher.

It's difficult to say like I said, we kind of expressed our view in terms of making a pricing adjustment. The other thing to keep in mind, we've never taken into account in terms of our pricing and our return calculation risk distribution.

It is obviously an outlet to decrease payless to efficiently.

Our capital and two it does provide an enhancement to returns we just arent baked that in.

But it's a little difficult to tell where people go from a competitive perspective, I think you have anything to keep in mind. If you just look at the fundamentals.

While there is some increase recession risk if you look at the fundamentals in the housing market again, I think that there is solid equity cushions, we still expect home price appreciation.

<unk> market labor market remains extremely strong.

So what are our competitors and how they factor that all in and whether that's a price increase or decrease.

And time will tell.

Okay, great. Thanks.

Our next question comes from Mihir Bhatia with Bank of America.

Hi, this is going to pay you one from me here.

Just going back to on munis real quickly your long term targets I fully get our target of 14% margin in the long term does that still stand with this higher rate environment.

Yes, I am sorry could you repeat that I didnt hear the first part of your question.

Yeah.

Sure so on homogeneous.

I think you said in your.

Our long term targets that Youre youre trying to get to a 14% operating margin is at vessels, Dan It is higher rate environment.

Yes, absolutely I mean, the long term I'll call. It the economics of the business at scale.

Our unchanged and what we had contemplated as I said in my prepared remarks was that.

Refinance activity, we expected to slow anyway. It just occurred.

It occurred faster than we had originally anticipated in 2022, so yes, the economics at scale margins at scale all of those still hold.

We remain.

We remain confident in our 2025 estimates.

Awesome, Okay and then.

Just curious what the higher interest rate environment, I mean, obviously, there's going be some reduction on the refi side, but curious if you saw any demand change for purchase volumes in April .

That.

I mean I didn't.

Following the rates I mean, we've seen purchase volume increase as a percentage of production and we've seen that increase in April as well.

So it's really following the rates much more of a purchase market which is.

Positive looking at non IW, having in that shift.

It's a good environment for us and so part of that increase persistent theme, we have a growing and we expect a continuing growing purchase market and that's really feeding into just an increase in the size of our insurance in force until we expect to see that and I think as Frank had mentioned.

10% in 2022, and we see the demographic tailwind as being very strong over the next several years, so and that's really what's embedding our future and.

And so we continue to see that as a real positive.

Got it thanks for taking my questions.

Okay.

As a reminder that is star then one if you'd like to ask a question.

Our next question comes from Ryan Gilbert with BTG.

Hi, Thanks, Good morning, guys.

First question's on <unk>.

Purchase that IW up by.

40, plus percent year over year, a pretty sharp increase anything in particular, you want to call out there or is it just within the normal range of fluctuations for the quarter.

Hi, Bryan This is Rick I think nothing nothing new to call out I think it's really just a function of the overall market environment and I think.

This is this is evolving to a much stronger.

Just driven market where.

No mortgage insurance is really literally 12 times more likely to be used for.

For for a purchase transaction or refinance transaction. So I think thats if I understood. Your question I think thats, what that what we're seeing.

Other than that.

Okay got it yeah. That's what I was asking second question is on capital return the share repurchase volume was a bit lower than I expected and 122 is there. Although it's obviously has picked back up in April and any changes to how you're thinking about.

About share repurchases here I mean, the stock is trading well below book value at this point.

Sure Ryan This is Frank Yes, I think youll see historically, we've always had a very disciplined value oriented approach to our share repurchase and if youll recall, we have $400 million.

Authorization debt.

Expires in two years from the time of issuance.

No.

We're comfortable with the amount of share repurchase activity that we've had we will continue to be value oriented in that regard and think it's a very important part of our overall capital management.

By returning returning capital to shareholders certainly these value levels.

And we continue to pay our dividend, which increased last quarter by 43%. So I think.

Net net our return of capital to shareholders is.

Is very strong over time and continues to be so.

Okay, great. Thanks very much.

Okay.

I'm showing no further questions in queue at this time I'd like to turn the call back to Rick Thornberry for closing remarks.

Thank you.

Thanks to everybody for their questions and participating in the call today and as always thank our team for the great work that they're doing.

Half of our customers with our shareholders. So I wish all of you all.

Wonderful.

Wednesday, and we look forward to seeing you soon take care. Thank you again for your interest in <unk>.

This concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

Yes.

[music].

Okay.

[music].

Yes.

[music].

Good day and thank you for standing by welcome to the first quarter 2020 to Radian Group earnings Conference call.

At this time, all participants are in listen only mode.

After the presentation, there will be a question and answer session.

To ask a question during the session you'll need to press Star then one on your telephone keypad.

Please be advised today's conference maybe recorded.

If you require operator assistance during the call. Please press Star then zero.

I'd now like to hand, the conference over to John Damian Senior Vice President Investor Relations and corporate development. Thank you and welcome to Radians first quarter 2022 conference call. Our press release, which contains radians financial results for the quarter.

Issued yesterday evening and is posted to the investors section of our website at Www Dot Radian Dot com.

This press release includes certain non-GAAP measures that will be discussed during today's call.

<unk> adjusted pretax operating income adjusted diluted net operating income per share and adjusted net operating return on equity. In addition, specifically for homogeneous segment. Other non-GAAP measures that will be discussed today include adjusted gross profit.

Adjusted pretax operating income or loss before allocating corporate operating expenses and their related homogeneous profit margins.

The complete description of all of our non-GAAP measures maybe found in press release exhibit F and reconciliations of these measures to the most comparable GAAP measures maybe found in press release exhibit G. These exhibits are on the investors section of our website.

These are also available on our website.

Now I would like to turn the call over to Rick.

Thank you John and good morning. Thank you all for joining us today and for your interest in Radian. This morning, I'm pleased to report a strong start to the year. Our team remains focused across our three areas of strategic value creation growing the economic value in the future earnings of our mortgage insurance portfolio.

Growing our homogeneous business and managing our capital resources.

Before we start I want to highlight that 2022 marks our 45th year end business and our 30 <unk> year as a publicly traded company. We are proud of our history of ensuring affordable sustainable and equitable homeownership for so many years and are even more excited about the province of our future.

Frank will discuss the details of our financial position shortly but let me share a few highlights from the quarter.

We reported net income of $181 million or $1 one per share.

Diluted net operating income was $1.17 per diluted share return on equity was 17, 2% an increase from 11, 8% reported a year ago.

Frank will discuss the favorable prior period reserve development, which was which was largely driven by better than expected cure activity.

We grew our book value per share by more than 7% year over year or 14% after adjusting for the impact of accumulated other comprehensive income, which Frank will discuss in more detail shortly.

We also returned $116 million in dividends to stockholders over the past year.

In our mortgage segment, we wrote $18 7 billion.

<unk> in the first quarter, we are continuing to see a higher mix of purchased business with a 43% increase in purchase volume year over year and as I mentioned last quarter, we typically deploy more capital and a purchase driven market and expect the environment in 2022 to continue to provide strong opportunities to put our cash.

The work at attractive risk adjusted returns, we believe our ability to leverage the strength of our proprietary analytics and radar rates platform utilizing artificial intelligence and machine learning has been and continues to be a differentiator for radian in terms of optimizing economic value across a competitive marketplace.

Our primary insurance in force, which is the main driver of future earnings for our company grew more than 4% year over year to nearly 249 billion.

At March 31 2022.

Our monthly premiums enforced portfolio grew more than 10% year over year, while our single premium enforce portfolio declined 19%.

Additionally, nearly 70% of our mortgage insurance portfolio is comprised of business written since 2020 at historically low interest rates. We are pleased with the positive credit trends that we're seeing that our defaulted loan portfolio. The total number of loans in default declined by 49% year over year, we've seen a sharp.

Increasing curious over the past year for loans in forbearance programs, particularly among the population is this 12 payments or more.

As we've noted previously curious have outpaced new defaults each period, beginning in the third quarter of 2020.

For those borrowers who remain in default, we are actively monitoring and communicating with servicers and supporting the efforts by the GSE is to effectively navigate a successful resolution.

For a whole genius segment total revenues for the quarter were $33 9 million or <unk>.

31% increase compared to the first quarter of 2021.

<unk> refinance activity from the fourth quarter of 2021, although we had other mortgage industry participants expected to decline in refinances to occur the horizon rates. During the first quarter LOE was more rapid than expected in industry forecast now anticipate a more significant slowdown in total refinance activity for the year.

<unk> versus the original 2022 projections. Despite this decrease in overall volume, we remain well positioned with our current customers to continue growing our share in this market, while also attracting new centralized lender customers.

We continue to develop our innovative direct purchase title business, leveraging our award winning title genius technology platform.

And although volumes are small we are encouraged by the traction we're gaining with homebuyers real estate agents lenders and investors.

In terms of our technology products. We are pleased with the customer response to our software as a service solutions for real estate agents, specifically genius price and innovative property intelligence technology platform offered by our Red Bell real estate brokerage over.

Additionally, I am proud to highlight that in March from genius was named the 2022 Tech 100 real estate, whether by housing wire. The award recognizes the most innovative technology companies in our industries and we were honored to be chosen for our genius price technology at our digital purchase titled platform title genius.

Which leverages patent pending blockchain technology.

Frank will provide additional details on our homogeneous financial results and an update on our expectations for this business turning now to our capital and liquidity at March 31, Radian group maintained a strong capital position with $1 3 billion of total holding company liquidity.

At March 31, Radian guaranty's available assets under Pmiers total approximately $5 1 billion.

Resulting in a cushion of $1 6 billion or 44%.

Frank will update on our capital actions during the quarter moving now to the broader mortgage and real estate market. We are closely monitoring the impact from inflation and a rise in interest rates on the mortgage and housing markets as well as our businesses.

Despite current inflationary pressure rising interest rates and steady home price appreciation. The strong demand for housing continues this is fueled largely by the constrained supply of homes available for sale and demand from first time homebuyers, who are most likely to use private EMI.

In terms of the overall housing market, we saw positive loan momentum continuing in the first quarter with purchase originations, increasing 11% year over year.

Based on the latest data from our own Radian home price index over the first three months of 2022 continued strong housing demand and relatively limited supply in the market led to an annualized 13% increase in home prices across the country.

We expect the rate of home price appreciation to moderate this year and we believe the combination of low unemployment.

And positive housing market dynamics in terms of low supply and strong demand will support a strong and sustainable national housing market in 2022.

The increase in mortgage interest rates is expected to drive higher persistency on our existing in force portfolio and in turn contribute to.

Growth in our large high quality insurance in force portfolio <unk>.

Additionally, the increase in interest rates is likely to result in higher reinvestment yields.

Our investment portfolio.

Based on the most recent origination projections for 2022, we expect the private mortgage insurance market to be approximately 500 to 525 billion.

Which would represent the third largest semi volume year in history.

And finally, while we are extremely proud of our success over the years and ensuring the American dream of homeownership.

We know we are in a unique position to do even more.

That's why we launched an affordable homeownership initiative within <unk> to further address access to affordable sustainable and equitable homeownership with a particular focus on closing the homeownership gap for underserved communities. Our initiative builds upon our industry and trade Association partnerships are re.

Search and analytics capability, our unique expertise across the mortgage and real estate ecosystem and our extensive training and education platforms. We believe we can play an important role in extending the homeownership opportunity to even more deserving families and look forward to reporting on our progress now I would like to turn the call over to Frank.

For details of our financial position.

Thank you Rick and good morning, everyone.

To recap our financial results issued last evening, we reported GAAP net income of $181 1 million or $1 <unk> per diluted share for the first quarter of 2022.

As compared to $1 seven per diluted share in the fourth quarter of 2021.

And 64 cents per diluted share in the first quarter of 2021.

Adjusted diluted net operating income was $1 17 per share in the first quarter of 2022 compared to $1 seven in the fourth quarter of 2021 and 68 in the first quarter of 2021.

I'll now turn to the key drivers of our revenue.

Our new insurance written was $18 $7 billion during the quarter compared to $23 7 billion in the fourth quarter of 2021 and.

$22 billion in the first quarter of 2021.

New insurance written for purchase transactions with $17 billion in.

An increase of 43% year over year.

Purchase volume accounted for 91% of our total new insurance written for the first quarter of 2022 compared to 59% in the first quarter of 2021.

Our reported quarterly annualized persistency rate increased to 76, 9% this quarter compared to 62, 5% a year ago.

Primary insurance in force increased $3 billion during the quarter to $249 billion.

Our outlook for 2022 insurance in force growth remains at approximately 10% given the expected higher persistency and strong <unk> volume.

Total net premiums earned were $254 $2 million in the first quarter of 2022 down compared to $261 4 million in the fourth quarter of 2021.

$271 9 million in the first quarter of 2021.

The decline in net premiums earned year over year was due primarily to lower single premium policy cancellations, along with lower monthly premiums.

Webcast slide 11 shows the mortgage insurance in force portfolio premium yields trend over the past five quarters.

Our direct in force premium yield was 39 six basis points this quarter compared to 41 basis points last quarter.

$42 seven basis points in the first quarter of 2021.

As noted in the prior quarter the enforced yields for the fourth quarter of 2021, what has been approximately 41 basis points absent $5 $5 million of adjustments noted earlier.