Radian Announces Updated Pricing for MI Business

Business Wire

-- Pricing provides increased risk-based granularity –

PHILADELPHIA--(BUSINESS WIRE)-- Radian Group Inc. announced today that its principal mortgage insurance (MI) subsidiary, Radian Guaranty Inc., will be updating its MI premium rates. The updated rates will provide increased risk-based granularity to the company’s pricing across most products and better align with industry trends. The pricing updates will be effective for all MI applications received on, or after, Monday, June 4, 2018.

“We are well positioned to compete for the MI business that meets our portfolio management targets and expect to generate strong through-the-cycle economic value and returns for our stockholders,” said Chief Executive Officer Rick Thornberry. “At Radian, our financial flexibility, capital strength, high-quality insured portfolio and diversified set of products provide us with a strong foundation to grow revenue, serve our customers, and support affordable, sustainable homeownership for many years to come.”

OVERVIEW OF PRICING ACTIONS

Consistent with the company’s strategy to optimize the risk-adjusted returns of its MI portfolio and compete for the high-quality MI business being originated today, Radian has decreased its monthly premium rates and increased its single premium rates for mortgage insurance. This includes the introduction of rate adjustors related to multi-borrower loans and loans with a debt-to-income (DTI) ratio greater than 45 percent, which provides increased risk-based granularity across most products.

For Radian’s most recent new business production, applying these combined actions would result in an overall premium rate decrease of approximately 6 percent, which includes the impact of the new rate adjustors on approximately 50 percent of new business. Radian expects this new pricing to generate a highly attractive, blended return on required capital in the mid-teens. This projected return incorporates the company’s understanding of the proposed changes to the Private Mortgage Insurer Eligibility Requirements (PMIERs), which are expected to be effective no earlier than the end of this year.

Thornberry added, “We believe these pricing changes, which are more risk-based in nature and better align with industry trends, will offer transparency and consistency for our customers and help them to provide affordable options for their borrowers. For Radian, we will continue to compete where we stand out most – our exceptional service, strong customer relationships and broad set of products and services across the mortgage spectrum.”

ABOUT RADIAN

Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia, provides private mortgage insurance, risk management products and real estate services to financial institutions. Radian offers products and services through two business segments:

Mortgage Insurance, through its principal mortgage insurance subsidiary Radian Guaranty Inc. This private mortgage insurance helps protect lenders from default-related losses, facilitates the sale of low-downpayment mortgages in the secondary market and enables homebuyers to purchase homes more quickly with downpayments less than 20%.

Mortgage and Real Estate Services, through its principal services subsidiary Clayton, as well as Entitle Direct, Green River Capital, Red Bell Real Estate and ValuAmerica. These solutions include information and services that financial institutions, investors and government entities use to evaluate, acquire, securitize, service and monitor loans and asset-backed securities.

Additional information may be found at www.radian.biz.

FORWARD-LOOKING STATEMENTS

All statements in this press release that address events, developments or results that we expect or anticipate may occur in the future are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Exchange Act and the U.S. Private Securities Litigation Reform Act of 1995. In most cases, forward-looking statements may be identified by words such as “anticipate,” “may,” “will,” “could,” “should,” “would,” “expect,” “intend,” “plan,” “goal,” “contemplate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “seek,” “strategy,” “future,” “likely” or the negative or other variations on these words and other similar expressions. These statements, which may include, without limitation, projections regarding our future performance and financial condition, are made on the basis of management’s current views and assumptions with respect to future events. Any forward-looking statement is not a guarantee of future performance and actual results could differ materially from those contained in the forward-looking statement. These statements speak only as of the date they were made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We operate in a changing environment where new risks emerge from time to time and it is not possible for us to predict all risks that may affect us. The forward-looking statements, as well as our prospects as a whole, are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. These risks and uncertainties include, without limitation:

changes in economic and political conditions that impact the size of the insurable market, the credit performance of our insured portfolio, and our business prospects;
our ability to successfully execute and implement our business plans and strategies, including plans and strategies to reposition our Services segment as well as plans and strategies that require GSE and/or regulatory approvals and licenses;
changes in the charters or business practices of, or rules or regulations imposed by or applicable to, the GSEs, including: changes imposed by the FHFA that impact the GSEs’ business prospects; the GSEs’ interpretation and application of the PMIERs and the proposed changes to the PMIERs; and the GSEs’ use of alternative forms of credit enhancement;
changes in the current housing finance system in the U.S., including the role of the FHA, the GSEs and private mortgage insurers in this system;
a significant decrease in the persistency rates of our mortgage insurance on monthly premium products;
competition in our mortgage insurance business, including price competition, competition from the FHA and VA, as well as competition from alternative forms of credit enhancement; and
the possibility that we may fail to estimate accurately the likelihood, magnitude and timing of losses in establishing loss reserves for our mortgage insurance business or to accurately assess our ability to comply with the proposed PMIERs when implemented.

For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to the Risk Factors detailed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2017, and subsequent reports filed from time to time with the U.S. Securities and Exchange Commission. We caution you not to place undue reliance on these forward-looking statements, which are current only as of the date on which we issued this press release. We do not intend to, and we disclaim any duty or obligation to, update or revise any forward-looking statements to reflect new information or future events or for any other reason.