Radian Group Inc. (RDN) Earnings Call Transcript & Summary

Mr. Chairman, I move that the appointment of PricewaterhouseCoopers LLP be ratified.

The online voting for each matter voted upon at this meeting is now closed. Will the inspector of election please tabulate the votes. Will the inspector of election, please report the results of the vote.

Mr. Chairman, having conducted the vote -- and the election and vote at the 2024 Annual Meeting of Stockholders of Radian Group, I can report based on my preliminary tally that the stockholders have voted for the election of the nominees for director, for the approval of the overall compensation of the company's named executive officers and for the ratification of the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the year ending December 31, 2024.

Based on the report of the inspector of election, I hereby declare that each of the nominees for director has been duly elected, and proposals 2 and 3 have been approved. The inspector of election will execute a certificate as to the final results of the voting. While this concludes the formal business of the meeting. At this time, I would like to introduce our CEO, Rick Thornberry, to give a brief report on the company. Following Rick's remarks, we will address any questions that relate to the business of the meeting that were submitted during the meeting.

Thank you, Howard, and thank you all for participating today. Before we close the meeting, I'd like to provide a few comments on our performance in 2023, our current environment and our future. For more than 45 years, Radian has successfully managed mortgage credit risk through economic cycles and interest rate fluctuations. We are proud of the role we play in the housing market by helping more mortgage ready borrowers, including historically underserved households obtained access to affordable mortgage credit. And I am pleased to share that since 2018, Radian has helped more than 1 million families achieve their dream of owning a home. Our mission of expanding access to affordable, responsible and sustainable homeownership as well as reducing the friction of home buying through technology drives our team to succeed each day, and 2023 was no exception. Let me share a few highlights from the year. We wrote $53 billion of new mortgage insurance and grew our insurance in force to an all-time high of $270 billion. Our revenues reached $1.2 billion, and at year-end 2023, our holding company available liquidity was approximately $1 billion. We increased book value per share by 15% year-over-year, generating net income of $603 million and delivering a return on equity of approximately 15%. Keeping with our strategic focus on operational efficiency, we reduced our combined consolidated cost of services and other operating expenses by 17% or $77 million in 2023 as compared to 2022, which was at the higher end of our targeted range for reductions. And we welcome 2 new board -- and we welcome 2 new members to our Board of Directors. In February, we added Fawad Ahmad, who's experienced leading innovative digital data and analytical organization adds an important perspective on the digital transformation occurring across the financial and consumer markets. In August, Anne Leyden joined our Board, bringing executive-level experience in human capital management that includes succession planning, integration of strategic acquisitions and the development of operating models. We were delighted to add these 2 exceptional leaders to our talented Board. Turning now to 2024. In January, S&P Global Ratings upgraded the insurance financial of Radian Guaranty and the senior unsecured debt rating of Radian Group. This action was based upon our strong financial performance and capital position, and we are now rated investment grade by all 3 primary rating agencies. In March, we successfully completed a $625 million senior notes offering and redeemed $525 million of our senior notes due March 2025 during the quarter. This is part of a series of transactions aimed at reducing our holding company leverage to below 20% by year-end. Also during the quarter, Radian Guaranty, our primary operating subsidiary paid its fifth consecutive quarterly ordinary dividend of $100 million to Rating Group, our holding company. We continue to see very positive credit performance in our mortgage insurance portfolio with a 2.1% default rate at March 31, a decline from a default rate of 2.2% in the prior quarter. Our title real estate services and real estate technology businesses continued to be impacted by the headwinds in the mortgage and real estate market environment, and we are taking actions to significantly restructure our expense run rate in the real estate technology business. Turning now to homebuyer demographics, where there continues to be high demand. More than 60% of customers benefiting from private mortgage insurance, our first-time homebuyers. Millennials are the largest generation in the U.S. today and are in their prime years for buying homes. In fact, it is estimated that 67% of the Millennials are likely to purchase a home in the next 2 years. The Millennials in combination with Gen Z represent 43% of the population with many either ready to own a home or will be soon. And in terms of the housing market, recent industry forecasts project a total mortgage origination market for 2024 of approximately $1.8 trillion, which would represent an increase of 15% compared to 2023. Based on the origination forecast, we estimate that the private mortgage insurance market will be approximately $300 billion in 2024, consistent with the prior year. I believe it's worth noting the positive impact that we expect from the continuing higher interest rate environment in terms of increasing our investment portfolio returns and maintaining strong persistency benefiting our insurance in force. Additionally, despite higher interest rates and impacts on affordability, the housing market remains supply constrained, which we expect will keep overall home value stable to slightly positive from a home price appreciation perspective. Overall, our outlook for the mortgage insurance business remains positive. I am pleased with our success in 2023 into 2024. Our results continue to reflect the resiliency of our company and varied interest rate environments as well as the strength and flexibility of our capital liquidity positions. We expect the consistent earnings and cash flows generated from our large in-force mortgage insurance and investment portfolios to allow us to continue operating from a position of strength and delivering value to our customers, policyholders and stockholders. I would like to recognize and thank our dedicated and experienced team for the outstanding work they do every day, and thank you all for your continued support and confidence.

Thank you, Rick. Now we will respond to questions that may have been submitted by stockholders during the meeting. If you are a stockholder of record and wish to ask a question, you may click on the message icon to submit your question. You have asked a question that was not answered during the meeting, we will follow up with you separately after the meeting. I'll turn it back over to Rick now.

Howard, at this time, there are no questions.

There being no further business to come before this meeting. The meeting is adjourned. I would like to express my appreciation to the stockholders who attended the meeting as well as those who submitted their proxies but were not able to attend.

This concludes the meeting. You may now disconnect.