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Segment Reporting
 12 Months Ended
Dec. 31, 2022
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 solutions provided to mortgage lending institutions and mortgage credit investors. Our homegenius segment offers an array of title, real estate and technology products and services to consumers, 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 Radian Group, our holding company; (ii) related general corporate operating expenses not attributable or allocated to our reportable segments; and (iii) certain investments in new business opportunities, including activities and investments associated with Radian Mortgage Capital, and other immaterial activities.
We allocate corporate operating expenses to both reportable segments based primarily 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. 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, except for certain investments attributable to our reportable segments and All Other activities; (ii) gains (losses) 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.
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). These adjustments, along with the reasons for their treatment, are described below.
(1) Net gains (losses) on investments and other financial instruments. The recognition of realized investment gains or losses can vary significantly across periods as the activity is highly discretionary based on the timing of individual securities sales due to such factors as market opportunities, our tax and capital profile and overall market cycles. Unrealized gains and losses arise primarily from changes in the market value of our investments that are classified as trading or equity securities. These valuation adjustments may not necessarily result in realized economic gains or losses.
Trends in the profitability of our fundamental operating activities can be more clearly identified without the fluctuations of these realized and unrealized gains or losses and changes in fair value of other financial instruments. Except for certain investments attributable to our reportable segments and All Other activities, we do not view them to be indicative of our fundamental operating activities.
(2)Gains (losses) on extinguishment of debt. Gains or losses on early extinguishment of debt and losses incurred to purchase our debt prior to maturity are discretionary activities that are undertaken in order to take advantage of market opportunities to strengthen our financial and capital positions; therefore, we do not view these activities as part of our operating performance. Such transactions do not reflect expected future operations and do not provide meaningful insight regarding our current or past operating trends.
(3)Amortization and impairment of goodwill and other acquired intangible assets. Amortization of acquired intangible assets represents the periodic expense required to amortize the cost of acquired intangible assets over their estimated useful lives. Acquired intangible assets are also periodically reviewed for potential impairment, and impairment adjustments are made whenever appropriate. We do not view these charges as part of the operating performance of our primary activities.
(4)Impairment of other long-lived assets and other non-operating items. Includes activities that we do not view to be indicative of our fundamental operating activities, such as: (i) impairment of internal-use software and other long-lived assets; (ii) gains (losses) from the sale of lines of business; and (iii) acquisition-related income and expenses.
The reconciliation of adjusted pretax operating income (loss) for our reportable segments to consolidated pretax income is as follows.
Reconciliation of adjusted pretax operating income (loss) by segment
December 31,
(In thousands)202220212020
Adjusted pretax operating income (loss)
Mortgage$1,131,943 $781,546 $453,294 
homegenius(88,198)(27,324)(23,240)
Total adjusted pretax operating income for reportable segments1,043,745 754,222 430,054 
All Other adjusted pretax operating income8,972 3,527 2,013 
Net gains (losses) on investments and other financial instruments (1)
(80,780)14,094 60,277 
Amortization of other acquired intangible assets(4,308)(3,450)(5,144)
Impairment of other long-lived assets and other non-operating items (14,850)(3,561)(7,759)
Consolidated pretax income $952,779 $764,832 $479,441 
(1)For 2022 and 2021, excludes certain net gains (losses) on investments that are attributable to specific operating segments and therefore included in adjusted pretax operating income (loss).
Revenue and Other Segment Information
The following tables reconcile reportable segment revenues to consolidated revenues and summarize interest expense, depreciation expense, allocation of corporate operating expenses and adjusted pretax operating income for our reportable segments as follows.
Reportable segment revenue and other segment information
December 31, 2022
(In thousands)MortgagehomegeniusReportable Segment TotalAll OtherInter-segmentAdjustmentsConsolidated Total
Net premiums earned$957,213 $23,918 $981,131 $— $— $— $981,131 
Services revenue7,390 85,158 92,548 — (332)— 92,216 
Net investment income 171,221 729 171,950 23,708 — — 195,658 
Net gains (losses) on investments and other financial instruments— — — 47 — (80,780)(80,733)
Other income2,376 170 2,546 78 (170)— 2,454 
Total revenues$1,138,200 $109,975 $1,248,175 $23,833 $(502)$(80,780)$1,190,726 
Other segment information:
Interest expense$84,440 $— $84,440 
Direct depreciation expense8,986 2,538 11,524 
Allocation of corporate operating expenses (1)
138,566 22,856 161,422 
(1)Includes allocated depreciation expense of $3.0 million, $0.5 million and $3.6 million allocated to Mortgage, homegenius and Reportable Segment Total, respectively.
December 31, 2021
(In thousands)MortgagehomegeniusReportable Segment TotalAll OtherInter-segmentAdjustmentsConsolidated Total
Net premiums earned$998,282 $38,901 $1,037,183 $— $— $— $1,037,183 
Services revenue17,670 108,282 125,952 154 (281)— 125,825 
Net investment income 132,929 358 133,287 14,622 — — 147,909 
Net gains (losses) on investments and other financial instruments— 1,509 1,509 — — 14,094 15,603 
Other income 2,678 — 2,678 734 — — 3,412 
Total revenues$1,151,559 $149,050 $1,300,609 $15,510 $(281)$14,094 $1,329,932 
Other segment information:
Interest expense$84,344 $— $84,344 
Direct depreciation expense9,580 2,452 12,032 
Allocation of corporate operating expenses (1)
127,482 18,482 145,964 
(1)Includes allocated depreciation expense of $3.2 million, $0.5 million and $3.7 million allocated to Mortgage, homegenius and Reportable Segment Total, respectively.
December 31, 2020
(In thousands)MortgagehomegeniusReportable Segment TotalAll OtherInter-segmentAdjustmentsConsolidated Total
Net premiums earned$1,092,767 $22,554 $1,115,321 $— $— $— $1,115,321 
Services revenue14,765 79,524 94,289 12,535 (1,439)— 105,385 
Net investment income 137,195 361 137,556 16,481 — — 154,037 
Net gains (losses) on investments and other financial instruments— — — — — 60,277 60,277 
Other income 2,816 — 2,816 534 — 247 3,597 
Total revenues$1,247,543 $102,439 $1,349,982 $29,550 $(1,439)$60,524 $1,438,617 
Other segment information:
Interest expense$71,150 $— $71,150 
Direct depreciation expense12,387 2,857 15,244 
Allocation of corporate operating expenses (1)
114,802 12,807 127,609 
(1)Includes allocated depreciation expense of $2.6 million, $0.3 million and $2.9 million allocated to Mortgage, homegenius and Reportable Segment Total, respectively.
There was no single customer that accounted for more than 10% of our consolidated revenues (excluding net gains (losses) on investments and other financial instruments) in 2022, 2021 or 2020. There was no customer that accounted for more than 10% of NIW in 2022, as compared to one in both 2021 and 2020.
The table below, which represents total services revenue on our consolidated statements of operations for the periods indicated, represents the disaggregation of services revenues by revenue type.
Services revenue
Years Ended December 31,
(In thousands)202220212020
homegenius
Title$18,687 $40,202 $23,265 
Real estate
Valuation30,002 28,590 17,986 
Single-family rental24,387 27,291 17,159 
REO asset management3,091 2,370 5,518 
Other real estate services115 144 2,479 
Technology
Asset management workflow platform4,814 5,535 7,998 
Other technology services3,730 3,869 3,763 
Mortgage7,390 17,670 14,682 
All Other (1)
— 154 12,535 
Total services revenue$92,216 $125,825 $105,385 
(1)Includes services revenue from Clayton Services LLC, a former indirect subsidiary of Radian Group, 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 include $11.8 million and $20.0 million as of December 31, 2022 and 2021, 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. Deferred revenue, which represents advance payments received from customers in advance of revenue recognition, is immaterial for all periods presented. We have no material bad-debt expense.