Radian Group Inc.

Good morning and welcome to Radian's fourth quarter 2021 earnings call. My name is Brandon and I'll be your operator for today. At this time all participants are in a listen only mode. Later we will conduct a question and answer session during which you may dial star one if you have a question. Please note this conference is being recorded. I will now turn it over to John Damien and John you may begin.

Thank you and welcome to Radian's fourth quarter and year end 2021 conference call. Our press release which contains Radian's financial results for the quarter and year end, was issued yesterday evening and is posted to the investor section of our website at www.radian.com. This press release includes certain non-GAAT measures that will be discussed during today's call, including adjusted pre-tax operating income, adjusted diluted net operating income per share, and adjusted net operating return on equity. In addition, specifically for our Home Genius segment, Other non-GATT measures that will be discussed today include adjusted gross profit, adjusted pre-tax operating income or loss before allocated corporate operating expenses, and the related home genius profit margins. A complete description of all of our non-GATT measures may be found in Press Release Exhibit F, and reconciliations of these measures to the most comparable GATT measures may be found in Press Release Exhibit G. These exhibits are on the investor section of our website. This morning, you will hear from Rick Thornberry, Radiant's Chief Executive Officer, and Frank Hall, Chief Financial Officer. Also on hand for the Q&A portion of the call is Derek Brummer, President of Radiant Mortgage. As all of our speakers are remote today, please excuse any sound quality or technical issues that may arise during the call. Before we begin, I would like to remind you that comments made during this call will include forward-looking statements. These statements are based on current expectations, estimates, projections, and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially. For discussion of these risks, please review the cautionary statements regarding forward-looking statements included in our earnings release and the risk factors included in our 2020 Form 10-K and subsequent reports filed with the SEC. These are also available on our website. Now, I would like to turn the call over to Rick.

Thank you, John, and good morning. Thank you all for joining us today and for your interest in radio. In 2021, we remain focused across our three areas of strategic value creation. First, growing the economic value and future earnings of our mortgage insurance portfolio. In 2021, we wrote the second highest level of mortgage insurance business in our nearly 45-year history Second, growing our home genius business. In 2021, we greatly increased home genius revenues, consistent with our investor day guidance. And third, managing our capital resources. In 2021, we returned significant capital to our stockholders through a combination of an increased dividend and share repurchases. These results and our continued strong momentum demonstrate the strength and resiliency of our business model. I believe we are well positioned to capitalize on the opportunities ahead through our mortgage and home genius businesses combined with the strength of our capital resources. As we've all developed a renewed appreciation for the meaning of home over the past two years, our mortgage and real estate products and services have become even more valuable to our customers and the homeowners, and our mission to ensure affordable, sustainable, and equitable homeownership has become even more critical. We are proud to serve such an important role in the housing industry. I'd like to take a moment to recognize our talented team who continue to support our customers, launch new products, and create new technologies to make doing business faster and easier. And to thank our customers, business partners, investors, and board for their support in helping us deliver such excellent results in 2021. Frank will discuss the details of our financial position shortly, but let me first share a few highlights for the quarter and the year. In our mortgage segment, we wrote $92 billion of NIW in 2021, which, as I previously mentioned, represents one of the highest years of annual volume in our company's history, second only to the all-time record we hit in 2020. And it's worth noting that with the higher mix of purchase business in 2021, we actually deployed more capital than we did in 2020, and based on a growing purchase market, we expect the environment to continue to provide strong opportunities to put our capital to work and attractive returns. Over the past couple years, we believe our ability to leverage the strength of our proprietary analytics and radar rates platform and utilize artificial intelligence and machine learning in order to optimize economic value. has been and continues to be a differentiator for Radian. We assess more than 10 million unique loan types as we look at all combinations of loan and borrower characteristics, as well as geographic housing market trends to identify those loans that will create the most economic value and generate the most attractive returns. Our primary insurance and force, which is the main driver of future earnings for our company, was $246 billion at year end. While our portfolio was relatively flat year over year, it is important to note that Insurance Enforced grew at an annualized rate of 7% during the second half of 2021. This growth was driven by continued high levels of new mortgage insurance business as well as an increase in persistency. It's also important to note that our mortgage insurance portfolio is well positioned for a rising rate environment. our monthly premium enforced portfolio grew nearly 6% year over year, while our single premium enforced portfolio declined 21%. Of note during the quarter was the favorable reserve development based on better than expected cure activity. In fact, despite the seasonal increase in new defaults that we typically experience in the fourth quarter, we saw another positive cure to new default ratio. we have been pleased with how the credit performance of our portfolio continues to improve. In terms of those borrowers in default, we are actively monitoring and communicating with servicers and supporting efforts by the GSEs to effectively navigate a successful resolution. For our home genius segment, total revenues for the full year were $149 million, a 45% increase compared to 2020, and as I mentioned, consistent with our 2021 investor data guide. During 2021, we saw strong growth in our title business, which represented a 73% increase year over year. Also in 2021, we saw very strong performance across our real estate services, our asset management and valuation products and services, despite minimal foreclosure and REL activity. As we have discussed, during 2021, we invested in the development of our home genius software as a service platforms, for real estate agents, and we are positioned to launch these innovative platforms in 2022. First up is Genius Price, which is an innovative property intelligence technology platform offered by our Red Bell Real Estate Brokerage. And we are attracting a strong sales pipeline of interested real estate brokers. We have also invested in and launched our innovative digital purchase title platform, titled Genius, leveraging patent pending blockchain technology. This platform is focused on transforming the purchase title process for real estate agents, home buyers, and lenders. As we enter 2022, we are focused on growing our penetration of the purchase title market, leveraging this digital platform. Frank will provide additional details on our HomeGenius financial results and expectations for this business. We are pleased with the progress, the traction we're gaining in the market, and the new customers we're attracting with our innovative products and services. During 2021, we continue to strengthen our capital and liquidity profile while enhancing financial flexibility and returning value to stockholders. We grew our book value per share by 9% year-over-year in 2021. We achieved this growth even after accounting for the $104 million of dividends paid in 2021. We repurchased 17.8 million shares of Radian Group common stock representing 9.3% of shares outstanding at year end 2020 at a total cost of $399 million. Our return on equity for 2021 was 14.1%. At December 31st, Radian Group maintained a strong capital position with $880 million of total holding company liquidity And rating guarantees PMIRES excess available assets grew 19% from the third quarter of 2021 to more than $2 billion during the fourth quarter of 2021. Earlier this month, we announced plans to continue returning capital to our stockholders by increasing our quarterly dividend by 43%, the second increase in the past year, and by authorizing a new $400 million share repurchase program. We were able to do this based on our strong capital position and financial flexibility. Moving now to the broader mortgage and real estate market, we continue to see this market performing well with strong purchase volume and continuing home price appreciation. Based on December data from our own rating home price index, continued strong housing demand and relatively limited supply in the market led to a 14.2% year-over-year increase in home prices across the country. We do expect home price appreciation to moderate in 2022. Looking ahead, total mortgage originations for 2022 are estimated to be approximately $3 trillion, reflecting an 8% increase in purchase originations and a 58% decrease in refinance activity. This growth in the purchase market is positive for the mortgage insurance industry and is expected to result in another large private MI market in 2022 of 500 to $550 billion. We will continue to monitor our operating environment, including the impact from inflation and a rise in interest rates on our business. It is important to note that although affordability declines as rates go up, mortgage rates remain relatively low on historical terms, and we believe the strong demand and low supply dynamic in the housing market will balance any decline in affordability. It's also important to highlight that the expected increase in interest rates in 2022 is likely to result in improved persistency in our mortgage insurance-enforced portfolio, as well as support higher yields in our investment portfolio. Overall, we believe the macroeconomic conditions and strong home purchase market provide strong tailwinds for long-term growth in the economic value of projected future earnings of our mortgage insurance portfolio. Turning to the regulatory and legislative landscape, housing policy efforts in Washington continue to focus on equitable access to sustainable home ownership, particularly for underserved markets. We remain committed to working with the FHFA, the GSEs, our trade associations, and other partners on solutions to support increased access to affordable home ownership for low and moderate income borrowers. We delivered on our core mission in 2021, helping to ensure that borrowers ready to own a home could afford to do so. During the year, we helped nearly 300,000 families buy a home or lower their monthly mortgage payment through refinance. With subject matter expertise across various areas of housing finance, we believe we are well positioned to play an important role in expanding affordable, sustainable, and equitable home ownership. Now I would like to turn the call over to Frank for details of our financial position.