Radian Group Inc.

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 advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dan Cobell, head of investor relations and capital management. Please go ahead.

Thank you, and welcome to Radian's second 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 radian.com. This press release includes certain non-GAAP 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 equities. 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, Radium's Chief Executive Officer, and Sumida Pendant, 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 2024 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.

Thanks, Dan, and thank you all for joining us today. Last evening, we reported another quarter of excellent financial results for Radian. Our results continue to reflect the economic value of our high-quality and growing mortgage insurance portfolio the resiliency of our company in varied interest rate environments, the strength and quality of our investment portfolio, our strong capital and liquidity positions, and our ongoing strategic focus on managing operating expenses. I will begin today by sharing a few financial and business highlights. We increased book value per share by 12% year over year to $29.66. We grew revenues to $321 million during the quarter, generating net income of $152 million. Our primary mortgage insurance and force, which is the main driver of future earnings for our company, continued to grow to $273 billion. We continue to leverage our proprietary analytics and radar rates platform to identify and capture economic value in the mortgage insurance market which resulted in $13.9 billion of high-quality new insurance written in the second quarter. We benefited again this quarter from positive credit performance in our mortgage insurance portfolio, resulting in a decline in our default rate to 2% at June 30. In terms of operating expenses, as we discussed last quarter, we've been taking broad and significant actions to improve the operating efficiency and operating leverage across Radiant. SUMITTA will provide an update on how our expense savings efforts are expected to benefit our other operating expenses going forward. Our primary operating subsidiary rating guarantee paid at six consecutive quarterly ordinary dividend to rating group in the amount of $200 million, which was double the amount paid in each of the previous five quarters. Our overall capital and liquidity positions remain strong. We maintained a PMIRES cushion for rating guarantee of $2.2 billion, and we increased our available holding company liquidity to $1.2 billion. Consistent with our use of risk distribution strategies to effectively manage capital and proactively mitigate risk, we entered into a new quota share reinsurance agreement in June for new business written between July 1, 2024 through June 30, 2025, and that's attractive cost of capital. Our return on equity in the second quarter was 13.6%, which reflects our strong financial results, including continuing positive credit performance offset in part by our current excess capital position. As previously announced, in May 2024, our board of directors authorized an increase to our existing share repurchase program to $900 million and extended the time period to June 30, 2026. We are pleased that our strong financial position and capital flexibility allow us to deliver excellent financial results, grow our businesses, and serve our customers while opportunistically returning value to our stockholders. I am also delighted to share that our mortgage conduit business, Radium Mortgage Capital, brought to market its inaugural private label prime jumbo mortgage securitization transaction of approximately $350 million. As I've discussed previously, we view this business as a natural extension of our successful model for aggregating, managing, and distributing mortgage credit risk, and a strategic opportunity to leverage our brand known for quality underwriting for the benefit of capital markets investors. Strategically, we also believe this business provides a growth opportunity by expanding and deepening our relationships with our mortgage lender customers, which has been demonstrated by the strong response from large and small originators. Looking ahead, we expect to become a regular issuer in the non-agency mortgage securitization market. Turning now to the housing market, recent industry forecasts project a total mortgage origination market for 2024 of approximately $1.7 trillion, which would represent an increase of 12% compared to 2023. Based on the origination forecast, we continue to 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, the housing market remains supply constrained, which we expect will keep overall home value stable from an HPA perspective. It's 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 are expected to continue to positively impact our default and cure trends. Overall, our outlook for the mortgage insurance business remains positive. Finally, 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 PMIR's capital framework, dynamic risk-based pricing, and the distribution of risk into the capital and reinsurance markets. We believe this is recognized on both sides of the political 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.