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Note 4 - Segment Reporting (Note)
 9 Months Ended
Sep. 30, 2021
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
We have two strategic business units that we manage separately—Mortgage and homegenius. Our Mortgage segment derives its revenue from mortgage insurance and other mortgage and risk services, including contract underwriting and fulfillment solutions provided to mortgage lending institutions and mortgage credit investors. Our homegenius segment offers a broad array of title, valuation, asset management, SaaS and other real estate services to mortgage lenders, mortgage and real estate investors, GSEs, real estate brokers and agents.
In addition, we report as All Other activities that include: (i) income (losses) from assets held by our holding company; (ii) related general corporate operating expenses not attributable or allocated to our reportable segments; (iii) for all periods through its sale in January 2020, income and expenses related to Clayton; (iv) for all periods presented, the income and expenses related to our traditional appraisal services, which we wound down beginning in the fourth quarter of 2020; and (v) certain other immaterial revenue and expense items.
As described in Note 4 of Notes to Consolidated Financial Statements in our 2020 Form 10-K, we implemented several changes to our segment reporting in 2020, including related to the wind down of our traditional appraisal business announced in the fourth quarter of 2020. All changes to the composition of our segment reporting have been reflected in our segment operating results for all periods presented.
During the second quarter of 2021, our Real Estate segment was renamed “homegenius” to align with updates to our branding strategy for the segment’s products and services. The homegenius segment name change had no impact on the composition of our segments or on our previously reported historical financial position, results of operations, cash flow or segment level results.
We allocate corporate operating expenses to both reportable segments based on each segment’s forecasted annual percentage of total revenue, which approximates the estimated percentage of management time spent on each segment. In addition, we allocate all corporate interest expense to our Mortgage segment, due to the capital-intensive nature of our mortgage insurance business.
With the exception of goodwill and other acquired intangible assets that relate to our homegenius segment, which are reviewed as part of our annual goodwill impairment assessment, we do not manage assets by segment.
See Note 1 for additional details about our Mortgage and homegenius businesses.
Adjusted Pretax Operating Income (Loss)
Our senior management, including our Chief Executive Officer (Radian’s chief operating decision maker), uses adjusted pretax operating income (loss) as our primary measure to evaluate the fundamental financial performance of each of Radian’s business segments and to allocate resources to the segments.
Adjusted pretax operating income (loss) is defined as pretax income (loss) excluding the effects of: (i) net gains (losses) on investments and other financial instruments; (ii) loss on extinguishment of debt; (iii) amortization and impairment of goodwill and other acquired intangible assets; and (iv) impairment of other long-lived assets and other non-operating items, such as impairment of internal-use software, gains (losses) from the sale of lines of business and acquisition-related income and expenses. See Note 4 of Notes to Consolidated Financial Statements in our 2020 Form 10-K for detailed information regarding items excluded from adjusted pretax operating income (loss), including the reasons for their treatment.
Although adjusted pretax operating income (loss) excludes certain items that have occurred in the past and are expected to occur in the future, the excluded items represent those that are: (i) not viewed as part of the operating performance of our primary activities or (ii) not expected to result in an economic impact equal to the amount reflected in pretax income (loss).
The reconciliation of adjusted pretax operating income (loss) for our reportable segments to consolidated pretax income (loss) is as follows.
Reconciliation of adjusted pretax operating income (loss) by segment
Three Months Ended
September 30,		Nine Months Ended
September 30,
(In thousands)2021202020212020
Adjusted pretax operating income (loss)
Mortgage$163,124 $147,336 $528,873 $267,182 
homegenius(5,557)(5,046)(25,208)(12,108)
Total adjusted pretax operating income (loss) for reportable segments (1)
157,567 142,290 503,665 255,074 
All Other adjusted pretax operating income (loss)3,082 2,690 9,019 6,006 
Net gains (losses) on investments and other financial instruments2,098 17,652 12,578 42,901 
Amortization and impairment of other acquired intangible assets(862)(961)(2,587)(2,919)
Impairment of other long-lived assets and other non-operating items (244)(466)(4,349)(788)
Consolidated pretax income$161,641 $161,205 $518,326 $300,274 
(1)Includes allocated corporate operating expenses and depreciation expense as follows.
Three Months Ended
September 30,		Nine Months Ended
September 30,
(In thousands)2021202020212020
Mortgage
Allocated corporate operating expenses (a)
$34,341 $29,127 $95,225 $83,700 
Direct depreciation expense2,240 2,895 7,342 9,719 
homegenius
Allocated corporate operating expenses (b)
$4,918 $3,248 $13,635 $9,438 
Direct depreciation expense639 679 1,828 2,113 
(a)Includes allocated depreciation expense of $0.8 million and $2.5 million for the three and nine months ended September 30, 2021, respectively, and $0.8 million and $1.7 million for the three and nine months ended September 30, 2020, respectively.
(b)Includes allocated depreciation expense of $0.1 million and $0.4 million for the three and nine months ended September 30, 2021, respectively, and $0.1 million and $0.2 million for the three and nine months ended September 30, 2020, respectively.
Revenue
The reconciliation of revenue for our reportable segments to consolidated revenues is as follows.
Reconciliation of revenues by segment
Three Months Ended
September 30,		Nine Months Ended
September 30,
(In thousands)2021202020212020
Revenues
Mortgage (1)
$274,659 $320,013 $862,757 $922,040 
homegenius (2)
45,091 29,793 104,337 78,866 
Total revenues for reportable segments319,750 349,806 967,094 1,000,906 
All Other revenues (1)
3,996 8,641 12,100 25,869 
Net gains (losses) on investments and other financial instruments2,098 17,652 12,578 42,901 
Other non-operating revenue— — — 247 
Elimination of inter-segment revenues(86)(865)(207)(1,167)
Total revenues$325,758 $375,234 $991,565 $1,068,756 
(1)Includes immaterial inter-segment revenues for the nine months ended September 30, 2020.
(2)Includes immaterial inter-segment revenues for the three and nine months ended September 30, 2021 and 2020.
The table below, which represents total services revenue on our condensed consolidated statements of operations for the periods indicated, represents the disaggregation of services revenues from external customers, by type.
Services revenue
Three Months Ended
September 30,		Nine Months Ended
September 30,
(In thousands)2021202020212020
homegenius services
Title services$12,926 $5,085 $30,382 $17,671 
Asset management services9,538 7,379 20,976 22,275 
Valuation services 9,418 7,177 22,798 17,195 
SaaS and other real estate services837 2,120 2,742 5,340 
Mortgage services 5,027 3,914 13,110 10,965 
All Other services (1)
27 8,268 124 20,499 
Total services revenue $37,773 $33,943 $90,132 $93,945 
(1)Includes services revenue from Clayton prior to its sale in January 2020 and amounts related to our traditional appraisal business, which we wound down beginning in the fourth quarter of 2020.
Revenue recognized related to services made available to customers and billed is reflected in accounts and notes receivable. Accounts and notes receivable includes $17.7 million and $18.8 million as of September 30, 2021 and December 31, 2020, respectively, related to services revenue contracts. Revenue recognized related to services performed and not yet billed is recorded in unbilled receivables and reflected in other assets. See Note 2 of Notes to Consolidated Financial Statements in our 2020 Form 10-K for information regarding our accounting policies and the services we offer.