Q4 2024 Radian Group Inc Earnings Call
Okay.
Good day, and thank you for standing by welcome to the fourth quarter 'twenty 'twenty for Radian Group earnings Conference call.
This time, all participants are in a listen only mode.
After the Speakers' presentation, there will be a question and answer session to ask a question. During the session you will need to press star one one on your telephone you will then hear an automated message at fighting your hand, just raised to withdraw your question. Please press star one again, please be advised that today's conference is being worked.
I would now like to hand, the conference over to your Speaker today, Dan Koch Bell head of Investor Relations and capital management. Please go ahead.
Thank you and welcome to Radians fourth quarter and year end 2024 conference call. Our press release, which contains radians financial results for the quarter and full year was issued yesterday evening and is posted to the investors section of our website at Radian Dot com.
This press release includes certain non-GAAP measures that may be discussed during today's call, including adjusted pretax operating income.
Adjusted diluted net operating income per share and adjusted net operating return on equity.
A complete description of all of our non-GAAP measures maybe found in press release exhibit F.
Reconciliations of these measures to the most comparable GAAP measures maybe found in press release exhibit G D.
These exhibits are on the investors section of our website.
Today, you'll hear from Rick Thornberry, Radians, Chief Executive Officer, and submit a pandemic Chief financial Officer.
Also on hand for the Q&A portion of the call is Derek Brummer President of Radian mortgage insurance.
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 2023 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.
Good morning, and thank you all for joining us today.
Pleased to report another excellent quarter and year Caribbean.
Our results continue to reflect the economic value of our high quality mortgage insurance portfolio, the strength and quality of our investment portfolio, our strong capital and liquidity positions and our ongoing strategic focus on managing expenses.
Turning to a few highlights for 2024, we increased book value per share by 9% year over year generating net income of $604 million and delivering a return on equity of 13, 4%.
During the year, we returned $376 million of capital to stockholders through share repurchases and dividends.
Our primary mortgage insurance in force, which is the main driver of future earnings for our company reached an all time high of 275 billion.
We continued our focus on managing the operational efficiency and significantly reducing our recurring expense structure.
For 2025, we are positioned to achieve our targeted reduction in run rate operating expenses.
<unk> will provide more details on our expense management progress.
Radian Guaranty paid a total of $675 million in ordinary dividends to Radian group during the year meaningfully exceeding our initial guidance of 400 or $500 million at the start of the year.
Our overall capital and liquidity positions remain strong with the Pmiers cushion for radian guarantee of $2 2 billion in available holding company liquidity of $885 million at the end of 2024.
We are pleased that our strong financial position and capital flexibility allow us to deliver excellent financial results focus on growing our business and help our customers transform risk and the opportunity while also returning value to our stockholders.
In terms of the housing and mortgage market the supply of existing homes remains constrained, which we expect will continue to provide support for home values from an HPA perspective.
While the private mortgage insurance market has been relatively flat over the past two years at approximately $300 million.
Based on industry forecast, we expect a slightly larger market in 2025.
I believe it's also worth noting the continuing positive impact that we are experiencing from the current interest rate environment in terms of increasing our investment portfolio income and supporting strong persistency benefiting our insurance in force.
Overall, our outlook for the housing market and our mortgage insurance business remains positive.
Finally, as we work with the New administration, we continue to be encouraged by the bipartisan support on Capitol Hill for our industry as the only source of permanent private capital in front of us taxpayers.
<unk> underwriting mortgage credit risk through the market cycles.
The private mortgage insurance industry is well positioned to continue promoting affordable sustainable homeownership through economic cycles, which we believe is well understood and highly regarded by the FHFA the GSC user legislators.
As you've heard me say before our mortgage insurance business model has been significantly strengthened by the P. Myers capital framework dynamic risk based pricing and the distribution of risk, allowing our industry to continuously serve an important role in the housing finance system.
Submit that will now cover the details of our financial and capital positions.
Thank you Rick and good morning to you all I'm pleased to provide additional details about our fourth quarter results, which reflect another strong quarter of performance producing net income of $148 million or 98 cents per diluted share.
For the full year, we earned net income of $604 million or $3.92 diluted earnings per share.
Adjusted diluted net operating income per share was higher than the GAAP metric at $1 nine for the fourth quarter and $4 11 for the full year.
We generated a return on equity of 13, 4% and book value per share at 9% year over $31 33.
This book value per share growth is in addition to our regular quarterly dividend, which totaled $152 million during 2024, reflecting a quarterly dividend of <unk> 24, and half cents per share.
Also repurchased $75 million of share during the fourth quarter for a total of $224 million in share repurchases for the full year.
Turning now to the detailed drivers of how does that are there.
Revenues continued to be strong in the fourth quarter, we generated $316 million of total revenues during the quarter and $1 3 billion of total revenues for the full year, a 4% increase compared to our full year revenue in 2023.
Slides 11 through 13 in our presentation include details in our mortgage insurance in force portfolio as well as other key factors impacting our net premium side.
Primary mortgage insurance in force grew 2% year over year to an all time high of $275 billion as of the end of 2024.
We generated $235 million and net premiums earned in the quarter and $959 million for the full year, a 3% increase from prior year.
Contributing to the growth of our insurance in force was $52 billion of new insurance written for 2024, including $13 $2 billion of it.
<unk> in the fourth quarter, an increase of 24% compared to the fourth quarter of 2023.
The persistent TV or are the existing insurance in force also remained high at 82, 6% in the fourth quarter based on the trailing 12 months compared to 84% a year ago.
As of the end of the fourth quarter more than two thirds of our insurance in force had a mortgage rate of 6% or less.
Given current mortgage interest rates. These policies are less likely to cancel due to refinancing in the near term and we therefore continue to expect that persistency rate to remain strong.
As shown on slide 13, the imports premium yield for our mortgage insurance portfolio remained stable throughout 2024 as expected ending at 38 basis points and we expect the in force premium yield to remain generally stable for the upcoming year as well as.
As shown on slide 14, our investment portfolio of $6 5 billion.
Consists of well diversified highly rated securities and other high quality assets.
We generated net investment income of $71 million in the fourth quarter.
Decrease in net investment income from prior quarter was driven by the use of $150 million in cash at the end of Q3 to redeem our senior notes and reduce our financial leverage as a result, both investment income and interest expense declined by approximately $7 million quarter over quarter.
Net investment income of $71 million includes $8 million of income in the fourth quarter related to mortgage loans held for sale within region markets catheter.
Excluding mortgage loans held for sale net investment income grew 6% year over year to $270 million in 2024.
We have continued to reinvest cash flows in the current rate environment benefiting our investment portfolio yield, which was three 9% in the fourth quarter.
Our annualized net loss on investments reflected in stockholders equity was $350 million at the end of 2024 compared to $331 million at the end of 2023, we continue to expect that our strong liquidity and cash flow position will provide us with the ability to hold these securities to recovery of the remaining.
Unrealized losses, which would equate to $2 37.
That is expected to accrete back into our book value per share over time.
I will now move on to our provision for losses and related credit trends, which continue to be positive with continued strong cure activity and very low claim levels.
Throughout 2024, our defaults continue to cure at rates greater than our previous expectations, resulting in releases of prior period reserve that have offset reserves established for new defaults.
As shown on slide 17, our ending beef pork and memory for 2020 full increase from prior year to approximately 24000 loans, resulting in a portfolio default rate of two 4% compared to 220% ETR in 2023.
The number of new defaults reported to us by services increased slightly in the fourth quarter to approximately 14000 compared to 13700 reported in the third quarter.
This increase in new defaults reflects normal seasonal trends and the expected continued seasoning of a large insurance in force portfolio. In addition, David approximately 1700, new defaults reported in areas associated with Hurricane Helene and melted in the fourth quarter, an increase of approximately 600 <unk>.
Back to the number of new defaults reported in the third quarter for the same it is.
Those hurricane impacted Adl's, new default declined by 3% in the fourth quarter compared to prior quarter. In addition, the total number of killers in the fourth quarter grew 5% compared to the third quarter.
Historically defaults associated with storms and other natural disasters have killed at higher rates. This past performance is also recognized with N P Myers, which provides for lower capital requirement for defaulted loans in FEMA designated areas.
Although the primary mortgage insurance, we die to protect their insured parties from a portion of losses, resulting from related mortgage insurance claims is generally it does not provide protection against property loss, all physical damage, including damage caused by hurricanes or other severe weather events or natural disasters.
New defaults continue to contain significant embedded equity, which has been a key driver of decent favorable credit trends.
Our loss ratio was zero percent this quarter and remained low through our credit rating for <unk>.
We recorded a net benefit of $2 2 million and our mortgage insurance provision for losses for the full year.
The incurred loss for new default this quarter was $56 million, which was fully offset by positive reserve development on prior period defaults of the same amount as shown on slide 19.
As shown on slide 18, our cure trends have been very consistent and positive in recent periods with approximately 90% of defaults coating within four quarters, and 96% occurring within eight quarters meaningfully exceeding our initial expectations.
<unk> in the fourth quarter exhibited typical seasonal trends and compared favorably to similar Peter from prior years.
We reduced the initial default to claim roll rate assumption for new defaults in the fourth quarter to 7% a half percent compared to the 8% assumption that we maintained in prior quarters.
The default to claim rate reduction reflects continued strong cure trends as well as on historical experience with defaults related to hurricanes and other natural disasters, which accounted for a portion of the new default reported in the fourth quarter and have historically yard at higher rates, we will continue to evaluate us.
<unk> for initial default to claim roll rates in future quarters as circumstances evolve.
Moving to our other business lines.
Total revenues in our all other category by $34 million in the fourth quarter and $148 million for the full year, 23% increase compared to the prior year.
Our adjusted pre tax operating loss was $6 million in the fourth quarter in line with the same period in 2023.
Turning to our other expenses.
For the fourth quarter, our other operating expenses totaled $88 million, an increase compared to $86 million.
In the third quarter.
Fourth quarter operating expenses included $13 million related to impairments to our internal use software of which $9 million was primarily related to our <unk> business as we've continued to restructure that business and $4 million of lease.
Lease related assets related to the right sizing of our overall office footprint for the post Covid work environment.
Other than these impairments the remaining operating expenses totaled $75 million for the quarter in line with our prior guidance and an 8% reduction year over year.
For the full year other operating expenses totaled $348 million in.
In line with 2023.
Not including impairments, we have reduced our full year 2024, combined cost of services and other operating expenses by approximately $85 million or 19% from our 2022 levels.
For 2025 as previously communicated we are positioned to achieve the reduction in run rate operating expenses that we began to implement last year.
As compared to 2023 expenses. These reductions are expected to reduce operating expenses in 2025 by $20 million to $25 million.
Moving to our capital available liquidity and related strategic action.
Canadian guarantees financial position remained strong at the beginning of 2024, we provided guidance that we expected to be $400 million to $500 million from radian guaranty to our holding company.
We are pleased that for 2024, we exceeded that guidance and paid $675 million in ordinary dividends to date and growth, including $190 million in the fourth quarter, while maintaining a stable be pushing up to $2 billion.
As highlighted on slide 22 dividends paid from Radian Guaranty to Radian group will continue to be driven by unassigned funds and the ongoing statutory earnings within Radian Guaranty.
Moving to our holding company Radian group.
For the year, we repurchased 7 million shares of our common stock at a total cost of $224 million for an average price paid of $31 80.
In the fourth quarter, we repurchased $75 million of our common stock and paid a quarterly dividend of <unk> $36 million for a total of $111 million of capital returned in the quarter.
In 2024, we have returned $376 million in the form of share repurchases and dividends to shareholders.
As of year end 2024, we had $543 million remaining on our current share repurchase authorization, which expires June 30 at 2026.
As demonstrated by this past quarter's repurchase activity and our track record in recent years, we believe that share repurchase provides an attractive option to deploy our excess capital.
Our available holding company liquidity was $885 million at the end of 2024.
We also have an undrawn credit facility that borrowing capacity of $275 million, providing us with significant financial flexibility.
And finally, reflecting on our outstanding financial performance and strong capital position. We received a ratings upgrade from Fitch in January to <unk> financial strength rating for Radian, Guaranty and Triple B credit rating for Radian group, both with a stable outlook.
I will now turn the call back over to Rick.
Thank you semester before we open the call to your questions I wanted to take a moment to address our recent leadership announcement Arabia.
After 23 years of distinguished leadership, Arabian Derek Brummer, President of our mortgage insurance business, who will be retiring in July of this year Derek.
Eric has been a key member of our executive team and we are extremely grateful for his countless contributions over the years.
Submit to pair that who you all knows our chief financial Officer will assume the expanded role of President and Chief Financial Officer for Radian.
Then Derek retires. After two years of Radian submitted has proven to be a passionate and experienced leader with a strong understanding of.
Of our business.
Together with our highly experienced and talented mortgage insurance team there are consumers, who will work on a seamless transition over the coming months.
Our results for 2024 continue to reflect the balance and resiliency of our company as well as the strength and flexibility of our capital and liquidity positions. We expect the earnings and cash flows generated from our large enforce mortgage insurance and investment portfolios to allow us to continue.
Operating from a position of strength and delivering value to our customers policyholders of stockholders.
Finally, I want to recognize and thank our dedicated and experienced team at radian for the outstanding work. They do every day.
And now operator, we would be happy to take your questions.
Thank you as a reminder to ask a question.
Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Please standby, while we compile the Q&A roster.
And our first question comes from Terry MA of Barclays. Your line is open.
Hey, Thank you good morning.
Maybe just starting with credit default rate ex estimated hurricane impact in the fourth quarter was actually quite quite good pretty much flat Q over Q and just up modestly year over year I'm, just curious what your outlook for kind of credit and the default rate is in.
In 2025, do you kind of still expect.
Some of the larger vintages season that would kind of more bias to default rate kind of meaningfully higher going forward.
Hi, This is Derek I think in terms of default rate in terms of those vintages moving through what you'd expect to see as kind of a typical I think seasonal impacts that we expect to see kind of a positive seasonal impact in Q1 and Q2, we're probably I think getting perhaps near the peak in terms of those vintages moving through and so I would.
Expect that default rate unless something changes in the macroeconomic environment to see that sub 3%. So you could see that move up but I wouldn't see a significant move up barring some dislocation in the economy.
And I would just also highlight that excluding the hurricane areas.
<unk> declined by about 3% quarter over quarter.
And I think we mentioned that in our prepared remarks.
Got it Thats helpful.
I may have missed it but any more color or detail you can give on kind of the cure activity within the quarter kind of what vintages that came from thank you.
In terms of the cure activity.
Sure.
Terms of whether youre looking at accident, our origination vintages I think it's probably kind of recent.
Accident vintages, where we've probably seen the most carriers, but really whether you look at it in terms of the different missed payment buckets pending claims all of their care rates have been pretty strong across the board.
Thank you.
Speaker Change: And our next question comes from Doug Harter of UBS. Your line is open.
Thanks.
I was hoping to get a little more detail on the assumed claim rate in the quarter.
Is it did I hear you correctly that kind of ex the impact of the Hurricanes that you still that you took down the assumed claim rate a little bit.
Speaker Change: Yes. Thanks for the question, Doug I think the 7% or half a cent that we applied was the roll rates to two all new defaults.
Did not actually split our reserving process. This quarter just given the fact that we did not see the new defaults in the hurricane areas to really have a material impact on our results. So the 75% roll rate that you'll see is applied to all our defaults.
And as we go forward, we will continue to monitor that but thats, a blended amount and is not separated.
I appreciate the clarification there.
Wondering if youre seeing any kind of change in the vintage or the characteristics of the loans that enter default.
Anything.
Speaker Change: That we can read into that.
And Mr. Eric No, we're not seeing any material changes the other thing, which has held up well as just the embedded equity in terms of new defaults and when I mean, that's something we track closely. So when you look at the embedded equity in terms of new defaults coming in the default portfolio pretty similar to the embedded equity in the default portfolio and then when we look at credit characteristic.
No significant changes.
And when you look at the cure rate analysis that we provide on slide 11.
Slide 18, slide 18, sorry.
You see that consistency it actually continues to be very very strong in terms of kind of each vintage and migrating through from a pure point of view so to derek's point things.
Things are remaining fairly consistent but looking very positive.
Speaker Change: Great. Thank you all for the answer.
Thank you.
Our.
Question comes from Bose George of Kb W. Your line is open.
Hey, everyone. Good morning.
Congratulations on the new role and Derek Good luck in your retirement.
The first question I have is just on leverage or leverage obviously came down quite a bit with the debt redemption. When you think about uses of capital do you think leverage stays here or do you feel like it needs to turn down further or do you want to take it down further.
Thanks, Paul and thank you for your kind remarks develop kosmos delek unlocked and we are working towards that transition.
Your question on leverage I think that what we have stated in the past is that our decision to bring down leverage was really to use some of our excess liquidity at our holding company.
We did not do it with a ratings trigger so it was not a condition precedent to maintain our improved ratings at this stage. We think we are good at where we are from a leverage perspective and as you know our business does organically delever. So if you look at our projections that number does come down over the next few quarters.
Yes.
But again, we have not set that as a.
That's a comfortable spot for us today and again it goes back to the fact that this year, we paid down net debt by about $350 million. We also returned about $376 million in share repurchases and dividends to our shareholders. So it was really a broader capital.
Speaker Change: Plan that leader walking towards.
Okay, great. Thanks, and then actually just to follow up on that in terms of capital return Rick commented about looking at the.
Did you see reserve releases that kind of a good way to think about it I guess you guys have 466 million being released here should that roughly tied to the total capital return to be plus buybacks.
Again, I don't think we have we have given an indication of how much we would really return of capital to shareholders.
Correct percentage of what's coming out of our GI If you look at our trajectory in terms. So Paul we have managed capital we have been very disciplined.
Last year, we paid back $2 76 billion and if you look at the amount that came from our Gi to accrue. It was again, a really really healthy number of $675 million.
Going forward, we expect that.
Speaker Change: We will continue to take out dividend from our GI on slide 22, we gave you the workings of how we think about that dividend capacity. It is really driven by the unassigned funds balance number which as of Q4 was $223 million.
We also highlight on that slide if you look at how much we can be as maximum amount of dividend from our Gi to grow without Pennsylvania approval, it could be as high as $795 million.
Again like a very very strong position, we will continue to manage that capital effectively from our Gi to group and then of course, returning that capital back to our shareholders.
<unk> stayed away from a percentage amount out a clear target of how much of that are Gi capital that we are dividend ing up we will give back to shareholders. You can see it from our track our track record and the consistency with which we've continued to do that every quarter.
Okay, Great. That's helpful. Thank you.
Thank you.
Our next question comes from Scott <unk> of RBC capital markets. Your line is open.
Yes, good morning, Rick you touched on this a little bit just the.
The new administration, how it seemed like there they're going to appreciate.
The private industry, which I think we saw that last time, but any updated thoughts there and then just.
Speaker Change: Same thing goes for GSE reform, how do you think.
Speaker Change: So any of those.
Might impact just the private M&A market.
Yes, Scott Thanks for the question certainly.
The active dialogue all around this particular topic.
So I appreciate the question I think as we as we kind of look at the path forward. We've existed in this market through multiple administrations actually even before and after the financial crisis through a number of different <unk>.
Cycles, I think as we look today, and we think about kind of the our relationship and importance in the housing finance system that really hasn't that really hasnt changed from the role we play in the importance that we play towards creating responsible sustainable affordable housing solutions.
As it relates to GSC reform I do.
You think it's going to continue.
Speaker Change: Dialog I think.
Given all the other issues that Congress has to deal with.
Specifically related to the tax law change or <unk> exploration. This year, so unlikely the Congress was going to advanced comprehensive.
Housing finance legislation that would be our view I think certainly not in the near term. There is a tremendous amount of complexity involved and there is potential financial and housing impacts. So they will have to be thought through it is possible.
And then maybe a more likely path at FHFA kind of like the previous Trump administration kind of works towards.
Some form of administrative recap of release.
Speaker Change: From conservatorship without legislation, which would not change the charter requirements from our I think that's an important thing to remember but.
Both pads have impediments, right and significant hurdles to overcome in complexity.
So I think I think the dialogue is going to be out there in <unk>.
We look forward to working with the new administration of the secure.
The future of housing finance in a responsible and sustainable way I think we're well positioned to continue to be a central partner.
The GSC is we support low down payment financing, which aligns well with Fhfa's overall core mission, ensuring safety and soundness of the GSC. So I think as I said in my prepared remarks, I think the private industry.
It was really well supported by both sides. When you think about the Republicans private capital and further taxpayers is a really important issue where the only source of.
Of permanent private capital that sits in front of the taxpayers of lower mortgage credit taken on by <unk>, but by the U S.
From a Democrat side, providing access and affordability opportunities for people a low down payment loans and housing is a key issue I happen to think it's one of the great catalyst of our economy that we need to address.
I think we are.
We're focused on helping address the key challenge for first time homebuyers are low to moderate income borrowers.
Helping them think through how to.
Attain the dream of homeownership.
We're done on payments. So I think we're well positioned I think we have great relationships.
Throughout the whole kind of decision framework that we look forward to working with the new administration to kind of help pursue continuing to find ways to make this kind of a better housing market.
Speaker Change: Great. That's really helpful detail and then just switching gears just on home genius, you talked about <unk>.
Restructuring that there was an impairment there in the quarter do you feel like most of the restructuring is done and you kind of feel like you are you happy with where it is now and.
Speaker Change: The other is just related to the Tom giving us another but do you expect to see any.
The improvement in margins for 2025, I'm, assuming some of the expense reductions were probably helped that segment, but.
Anything on either one of those yes.
Yes, Scott Thanks for that question I think.
I think.
Your your the answer to your question is exactly as you kind of discuss which is we've been working this year really with the team to kind of get it positioned as we described I think back in.
Earlier this year I think probably in may.
The businesses that comprise all other are really four different things one is our conduit business, which we have continued to grow.
To expand as you know we did two securitizations last year and expect to be a regular assure the sure.
Our real estate services business remained a profitable contributor throughout the cycle, including last year in our title business.
Really kind of got reset.
Back to a point, where we look for that business.
To kind of maintain this path towards profitability, but significantly significant reduction in terms of any kind of financial impact that are homogeneous platform, which is our real estate tech and brokerage platform as I mentioned earlier this year earlier last year I should say sorry.
We've been having.
Having discussions kind of evaluating strategic options and partnerships for that business and we continue to.
Work towards that goal after having really significantly reduce the expenses. So I think as we roll into 2025, we do expect to see those.
All other continue to improve and make progress as we go into the year.
Yes, maybe if I can just add a couple of others are quick thoughts on that so if you just think about the amount of I would say of changes that we've made.
Just to give you some context in 2023, our head count is to be 1400, Ftes today, we're closer to about 1000, ftes or a 30% reduction, but we've had to make some pretty I would say difficult and hard decisions over the last few quarters.
I think.
On an enterprise wide basis, I think I did mentioned in my prepared remarks that we've taken out about 19% of our expenses down from the 2022 levels. If you look at Opex plus cost us.
Cost of sales and I think that we will continue to be on that path and I think that on an enterprise wide basis, we are very focused on making sure that we.
We continue to take out expenses as needed I think from an FTE perspective, we feel we are right sized at this point I think they are looking for expense savings in our vendors they not outside services and very focused on making sure that we continue to work towards our expense targets.
For next year.
In Q4, I think are the Opex number was about $75 million I think what we have guided excluding the including the impairment that's right. Excluding the impairment that we walked you through.
That you know for the next few quarters and $80 million run rate number because I think there is some variation between the quarters I think an $80 million run rate number for opex as a good estimate but again like we are very focused on making sure that we're taking expenses out of our overall enterprise.
Yeah.
Alright, perfect I appreciate all the answers.
Okay. Thank you.
Thank you.
Our next question comes from Mihir Bhatia of Bank of America. Your line is now open.
Good afternoon. Thank you good morning, and thank you for taking my questions.
Speaker Change: Firstly.
Wanted to just echo the congratulations on the new roles for Yosemite and wishing you well in retirement Derrick.
For all the help over the years.
But in terms of my questions. My first question I wanted to clarify did you say the portfolio yield was three 9% is that the new money yield or just the total portfolio.
Yeah first of all controller media for your kind remarks, yes that was three 9% for our overall portfolio yield.
Our new money rate is somewhere in that $4 75 to five 5% level.
Relatively at that level for the last few quarters.
That makes sense.
Speaker Change: And then b.
Okay.
I think you mentioned for the <unk> outlook, a little higher in 2025, you also enjoying high persistency. So maybe putting those together what are you planning for from a children's enforced growth perspective, we're looking at mid single could it get to high single digits in 2021.
I think we have historically.
As much as I'd like to give you that answer historically, we've not provided that forward guidance mihir, but I think.
The one great thing about this business the combination of a solid purchase market going into next year and I wouldn't say we expect.
A large increase this year over year and I think they are fairly.
Speaker Change: Modest or moderate increases in the mortgage market in.
<unk> rates, a little bit, but the purchase market I think is fairly predictable I think for us the <unk>.
A combination of continuing.
Relatively high persistency, along with a strong purchase market is really good for us to build overall economic value of our portfolio and Derek and the team have done a really good job of being highly selective about the about the economic value, we originate through that portfolio, which we think kind of embeds value going forward.
From an earnings point of view.
So we feel very good way to the market is kind of evolving persistency is well balanced today.
That's where we're positioned.
Got it.
Maybe on that point about just the quality of originations one of the questions. We hear from investors a lot as well the mortgage origination standards weekend in 'twenty three versus what you had in 'twenty, one and I guess.
My question for you is like.
Understand there's some mix shift between you just had more purchase originations and things like that but if you were to compare like like for like policies or.
Speaker Change: Our like for like originations in 2023 versus call it 2021 or 2022.
Are you seeing any deterioration in credit standards in your data and an early portfolio performance. Thank you.
Yes. This is Eric now we Havent 19, you look at credit quality I think that 2023 book relative to 2022 was just higher quality. When you look at different credit can dimensions, whether it's credit score and LTV. The other thing is just from a performance perspective I think early on we've seen that 2023 origination vintage.
For 2022, you would expect some of that 2022.
I think a quarter or negative home price appreciation and then also there is just a little bit.
Riskier from our risk characteristic perspective, but I think that when you look at those vintages. When you look at the credit characteristics I think they've all played out pretty similarly, and very positive and really kind of exceeding expectations in terms of where we were in kind of pricing them.
Speaker Change: And is that just because of home price appreciation or is there something else. You think also driving like even if you did not even seeing delinquencies.
No I think the home price depreciation as part of it I think just generally solid employment picture quality underwriting right cell manufacturing quality is very good and then just the nature of their credit characteristics high quality borrowers. So I think it's a combination of things. So I think you put all of those together and those have been pretty steady for a number of years now.
So we've seen that really havent seen any deterioration with respect to any of those characteristics.
Alright, and then just switching to radian mortgage capital for a second any color on just the issuance guidance.
What you are looking to do the 25 is that is there like a lot of opportunity to scale that up how are you thinking about that business for 2025 Mihir.
Scott here Thanks for the question.
Mihir: So we've not provided any forward guidance on kind of our our issuance pace, but I will say that we continue to focus on growing that business. We've had great receptivity from our customers is one of the great.
Great.
<unk> that we've had in terms of the receptivity of our mortgage insurance customers to actually want to be part of our conduit customer base its actually worked very well.
Our focus this year is on growing our business and increasingly the irregularity of our issuance from AR securitization point of view, but we also so loans to private investors.
Mihir: The.
The GSC, so but from a securitization point of view, we would expect.
Kind of increase our pace, but more more to come on that as we kind of get into the year and continue to kind of grow that business, but overall I would say from a demand perspective, and a receptivity and feedback perspective been very positive and we're really just focused on scaling that business.
Uh huh.
So the safe and sound way from a risk perspective and.
Kind of addressing the needs we are hearing from customers.
And just one last follow up for me on that topic actually up when does that business become material right to radian overall like when do we start seeing a little bit more disclosure was around.
Mihir: That is.
It really really an excellent question.
That's a hard question for me to answer, but what are we talking three years five years.
Thank you Bill.
Sure.
Yeah, I would I would say this is a medium term kind of.
Answer is the way I would do it given the choices you gave me, but I would say, we'll go where to provide specific guidance on timing, but I do think it's kind of a medium term kind of opportunity for it to have measurable impact.
Okay. Thank you. Thank you for taking my questions.
Thank you. Thank you.
Speaker Change: I'm showing no further questions at this time I would like to turn it back to Rick Thornberry for closing remarks.
Well. Thank you all for joining US today 2024 was another excellent year for radio where we grew our insurance in force book value returned $376 million in capital stockholders and reduced our debt similar to set by 350, and the resulting lower leverage we look forward to the opera.
<unk> in 2025 in terms of the <unk>.
Market opportunities and the value of our portfolio and we continue to have a positive outlook on the housing market.
For our business as well as we continue to kind of help people responsibly achieved the dream of homeownership.
Thank you for your questions and we look forward to seeing everybody soon as we find opportunities to meet either virtually or in person take care. So all we got.
This concludes today's conference call. Thank you for participating and you may now disconnect.
Okay.
[music].
Okay.
Speaker Change: Okay.
Okay.
Yes.
Speaker Change: Okay.
Yes.
Yes.
Okay.
Okay.
Yes.