Radian Group Inc.

Good day and thank you for standing by. Welcome to the first quarter 2024 Radian Group Earnings Conference Call. 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 the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, John Damian, Senior Vice President, Investor Relations and Corporate Development. Please go ahead.

Thank you, and welcome to Radian's first quarter 2024 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-GATT measures that may 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. 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. Today, you will hear from Rick Thornberry, Radian's Chief Executive Officer, and Sumita Pandit, 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 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 223.410 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.

Good afternoon and thank you all for joining us today. I am pleased to share that we had a strong start to the year, which resulted in excellent operating results for Radian in the first quarter. These results demonstrate the embedded economic value of our high quality and growing mortgage insurance portfolio, the strength and quality of our investment portfolio, continued effective management of our capital position, and our ongoing strategic focus on managing operating expenses. I will start by sharing a few financial and business highlights. We increased book value per share by 12% year over year, generating net income of $152 million and delivering a return on equity of approximately 14%. We grew revenues by 3% year over year to $319 million during the quarter. Our primary mortgage insurance in force, which is the main driver of future earnings for our company, grew 4% year-over-year and reached an all-time high of $271 billion. We continue to leverage our proprietary analytics and radar rates platform to identify and capture economic value in the market, which resulted in $11.5 billion of high-quality new insurance written in the first quarter. We continue to see very positive credit performance in our mortgage insurance portfolio with a 2.1% default rate at March 31st, a decline from a default rate of 2.2% in the prior quarter. Rating Guarantee, our primary operating subsidiary, paid its fifth consecutive quarterly ordinary dividend of $100 million to Rating Group, our holding company, during the first quarter. Our overall capital and liquidity positions remain strong, with our available holding company liquidity increasing to approximately $1.1 billion, and our PMIRES cushion for rating guarantee was $2.3 billion. As previously announced, 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. Sumitra will walk through this in a few minutes. I also want to highlight that our mortgage conduit business is building momentum in the market with a growing list of customers selling us loans. As a strategic extension of our successful model for aggregating, managing, and distributing mortgage credit risk, We are distributing loans to a growing number of institutional investors and evaluating the opportunity to develop a mortgage-backed securitization program in the near future. Submitta will cover the rationale for the changes to our segment reporting with respect to our title, real estate services, and real estate technology businesses that were previously aggregated and reported as our home genius segment. These businesses continue to be impacted by the headwinds in the mortgage and real estate market environment, and we have been highly focused on aligning the expenses to reflect the market opportunity we see for each business. As I've mentioned on previous calls, we do think about and assess these three businesses separately. Our real estate services business, including single-family rental due diligence, REO management, and valuations, has remained profitable and maintains a leading market position. Our title business, which has undergone meaningful expense reductions to align to the current environment, maintains a solid market position and continues to add new customers. We believe this business is well positioned to benefit from an improved mortgage market. Our real estate technology business, Brand at Home Genius, is a real estate platform as a service model. The platform utilizes our proprietary home genius IQ, which combines data and analytics with computer vision and AI powered tools to help consumers make smarter home buying, owning and selling decisions. This technology business has been most impacted by the mortgage and real estate market conditions. And as such, we're taking actions in the second quarter to significantly restructure our expense run rate related to this business. We expect to provide an update on the actions we're taking and the impact on our expenses during our second quarter call. Turning now to 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. This is lower than the outlook at the start of the year. based on the updates related to the expected decline in mortgage interest rates this year, which is now projected to be less and come later than originally forecasted. 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 and force. Additionally, despite higher interest rates and impacts on affordability, the housing market remains supply constrained, which we expect will keep overall home values stable to slightly positive from an HPA perspective. It is also important to note here that most borrowers in our insured portfolio have significant embedded equity in their homes, which helps to mitigate the risk of loss by decreasing both the frequency and severity of paid claims, which positively impact our default and cure trends. In fact, we estimate that as of the first quarter, 89% of our insurance-enforced policies had at least 10% embedded equity and 80% of our defaulted loans had at least 20% embedded equity. Overall, our outlook for the mortgage insurance business remains positive. As you've heard me say before, our business model is proven and our company is built to withstand economic cycles. This has been significantly strengthened by the PMIRES capital framework, dynamic risk-based pricing, and the distribution of risk into the capital and reinsurance markets. We believe this is recognized on Capitol Hill on both sides of the aisle, and that we are well positioned to fulfill our important role in the housing finance system. Sumitha will now cover the details of our financial and capital positions.