Radian Group Inc.

At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during that session, you will need to press star 1-1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to John Damian, Senior Vice President, Corporate Development and Investor Relations. Please go ahead.

Thank you and welcome to Radian's second quarter 2022 conference call. Our press release, which contains Radian's financial results for the quarter, was issued yesterday evening and is posted to the investor section of our website at www.radian.com. This press release includes certain non-GAAP 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-GAAP 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-GAAP measures may be found in Press Release Exhibit F, and reconciliations of these measures to most comparable GAAP 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, Radian'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 Radian Mortgage. 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 2021 Form 10-K and subsequent reports filed with the SEC. These are also available on our website. Now, I'd 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 Radium. Our team remains focused across our three areas of strategic value creation, growing the economic value and the future earnings of our mortgage insurance portfolio, growing our home genius business, and managing our capital resources. I'm pleased to report another excellent quarter for Radium. Frank will discuss the details of our financial position shortly, Let me first share a few highlights. We reported net income of $201 million, or $1.15 for diluted share. Adjusted diluted net operating income was $1.36 per diluted share. Return on equity was 19.9%. For our mortgage segment, we wrote $18.9 billion of NIW in the second quarter. For the new business we're writing today, we continue to see an overall strong credit risk profile supported by high-quality underwriting standards. Our second quarter NIW has a very high mix of purchase business, approximately 97%. And as I've said before, we typically deploy more capital in a purchase-driven market. We expect the environment in 2022 to continue to provide opportunities to put our capital to work and attractive risk-adjusted returns. Our proprietary analytics and radar rates platform, which utilizes artificial intelligence and machine learning, allows us to carefully select the risks we're taking based on sound analytical data, including the granular attributes of each loan and its relative value in the market. We believe this is an important differentiator for Radian in terms of optimizing economic value across a competitive marketplace. Our primary insurance and force, which is the main driver of future earnings for our company, grew 7% year-over-year to more than $254 billion at June 30, 2022. Our monthly premium and force portfolio grew more than 12% year-over-year, while our single premium and force portfolio declined 15%. This large and valuable portfolio consists primarily of well-underwritten, high-quality business from recent years with strong embedded home price appreciation. It is also worth noting that the increase in mortgage interest rates is driving higher persistency in our existing in-force portfolio, which we expect to fuel continued portfolio growth. And as a further note, the increase in interest rates has also resulted in higher yields in our $5.9 billion investment portfolio. In the second quarter, we continued to experience favorable prior period reserve development, which was largely driven by better than expected cure activity, and new notices of default in the quarter were the lowest we've seen in more than 20 years. We were excited to announce in July the launch of our new mortgage conduit, Radium Mortgage Capital, or RMC, which was formed to provide residential mortgage lenders with an additional secondary market option for high-quality loans and to provide mortgage investors with a trusted, high-quality sponsor. We believe RMC is a natural extension of our strategy products that leverages our deep mortgage expertise, helping to broaden our market reach as an aggregator, manager, and distributor of residential mortgage credit risk. For our Home Genius segment, total revenues for the quarter were $32.3 million. Although lower than the second quarter of 2021, Home Genius revenues year-to-date for 2022 are 12% higher than the same period last year. Frank will provide further details on our Home Genius financial results I want to take a moment to share a few home genius business updates. In the second quarter, we continue to see increased revenue and strong performance from our real estate services, specifically our single-family rental business and our valuation products and services. As expected, our centralized lender refinanced title revenues compared to the first quarter of this year and the prior year were down due to the rapid decline in industry-wide refinance volumes. Although we continue to add new customers based on our excellent service and strong value proposition, we expect overall market refinance volumes to remain low. Despite the slowdown in our refinance title volumes, we are seeing growing interest in our home equity title products and services from some of the largest financial institutions as they ramp up their home equity lending business. We are also attracting new interest across our purchase title programs that leverage our award-winning and patent-pending Title Genius technology platform. Although our purchase title volumes remain small, we are encouraged by the traction we are gaining with homebuyers, real estate agents, lenders, and investors. Specifically, we are attracting strategic interest from lenders in our unique centralized purchase title platform to better control the home purchase closing process. In terms of our real estate technology products, we are pleased with the customer response to our software as a service products for real estate agents, specifically Genius Price, our innovative property intelligence technology platform offered by our Red Bell real estate brokerage. Over the last several months, we have signed Genius Price contracts with real estate brokers, as well as marketing partnerships with large real estate franchise companies, including Berkshire Hathaway, leading real estate companies in the world, and most recently, REMAX. These relationships provide us with sponsored access to market and deliver our genius price SaaS solution to over 200,000 real estate agents across the country. Turning now to our capital liquidity, at June 30, Rating Group maintained a strong capital position with $1 billion of total holding company liquidity And rating guarantees available assets under PMIRES total approximately $5.2 billion, resulting in a cushion of $1.4 billion, or 38%. A recent and important external validation of our financial and capital strength is the recent upgrade of rating group and rating guarantee by Moody's Investors Service. The upgrade reflects our improved capital adequacy through risk distribution, our improving profitability metrics, our strong market position, and our financial flexibility with strong liquidity. Frank will provide the details of our capital management actions, including our share repurchase program. Turning to today's environment and housing market, clearly the macroeconomic environment has gone through a rapid change over the past two quarters with increased mortgage rates, a 40-year high rate of inflation, and an economic slowdown. despite a strong job market and record low unemployment rates across the country. As you've heard me say before, our company is built to withstand economic cycles. This was most recently demonstrated as we effectively navigated a very challenging economic environment during the COVID-19 pandemic. Since the Great Financial Crisis, our capital structure has been significantly strengthened through the implementation of the PMIRES Capital Framework, and the programmatic distribution of risk into the capital and reinsurance markets. And perhaps most important is that the quality of the mortgage industry's loan manufacturing servicing processes is as strong as ever. We also employ dynamic risk-based pricing focused on driving economic value, which enables us to calibrate our pricing to address the risks that we see in the macro environment. We have modestly increased our pricing to reflect today's environment, and have recently seen some evidence of price increases among our mortgage insurance peers as well. Most importantly, we believe our strong capital and financial flexibility positions us well for the current economic environment. In terms of the overall housing market, over the last couple of years during the COVID-19 pandemic, the real estate market experienced increased housing demand, driving a 40% gain in home prices. More recently, home affordability has been challenged as a result of higher home prices combined with the rapid increase in mortgage rates and high inflation levels. Although we're beginning to see indications of a cooling housing market from the boom over the last two years, we believe this is a healthy shift and that the foundation for the overall market remains strong. This is due to the positive dynamics in terms of high credit quality borrowers, low housing supply, and continuing demand coming from first-time homebuyers. Although we expect the rate of home price appreciation over the next few years to moderate, we believe the slowdown in HPA will lead to a more healthy and stable national housing market, which will continue to support purchase market growth in the years ahead. Based on the most recent origination projections for 2022, we now expect the private mortgage insurance market to be approximately $400 to $450 billion, which would represent a market that is smaller than originally expected, but still represents the third largest MI volume year in history. Finally, while we are extremely proud of the success over the years in 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 Radium to further address access to affordable, sustainable, and equitable homeownership with a particular focus on closing the homeownership gap for underserved communities by leveraging our expertise and local partnerships to help address homeownership barriers for people and communities of color. Given this focus, we worked closely with the MBA to help identify Radian's hometown of Philadelphia as the next site for the MBA's Convergence Initiative, which is designed to help narrow the racial homeownership gap. We are one of three cornerstone partners that are looking forward to partnering with the MBA on this important initiative to make a real difference in the Philadelphia community. Now I would like to turn the call over to Frank for details of our financial position.