Segment Reporting

12 Months Ended

Dec. 31, 2024

Segment Reporting [Abstract]

Segment Reporting

4. Segment Reporting

In 2024, our Chief Executive Officer (Radian’s chief operating decision maker) made certain changes to the way that he organizes and assesses the performance of our operating segments, which resulted in updates to our quantitative and aggregation analyses in accordance with the accounting standard regarding segment reporting. Whereas in prior years we aggregated our Title, Real Estate Services and Real Estate Technology businesses and reported them as a single reportable segment named homegenius, effective for 2024 we are reporting the results of operations for these individual businesses and our Mortgage Conduit business, none of which meet the reportable quantitative thresholds, in the All Other category, along with certain corporate and other activities. This reflects the way our Chief Executive Officer is currently evaluating these businesses individually, given that these businesses offer distinct products and services and are managed separately. This approach is also aligned with materiality considerations consistent with current accounting guidance.

As a result of the change described above, we now have one reportable segment, Mortgage Insurance, which 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.

In addition to this reportable segment, in All Other we report 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 segment; and (iii) the operating results from certain other immaterial activities and operating segments, including our Mortgage Conduit, Title, Real Estate Services and Real Estate Technology businesses. We have reflected this change in our segment operating results for all periods presented, as shown below.

We allocate corporate operating expenses to our Mortgage Insurance business and our immaterial operating businesses included in All Other based primarily on their respective forecasted annual percentage of total revenue, which approximates the estimated percentage of management time spent on each business. In addition, we allocate all corporate interest expense to our Mortgage Insurance segment, due to the capital-intensive nature of our Mortgage Insurance business. We do not manage assets by operating segments.

See Note 1 for additional details about our Mortgage Insurance business.

Adjusted Pretax Operating Income (Loss)

Our senior management, including our Chief Executive Officer, uses adjusted pretax operating income (loss) as our primary measure to evaluate the fundamental financial performance of each of Radian’s businesses and to allocate resources to them, including during the annual budget and forecasting process. Our Chief Executive Officer then reviews budget-to-actual variances on a monthly basis using this primary measure of segment profit or loss to assess performance and allocate capital and personnel to each business.

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 those investments and other financial instruments attributable to our Mortgage Conduit business; (ii) amortization and impairment of goodwill and other acquired intangible assets; and (iii) impairment of other long-lived assets and other non-operating items, if any, such as gains (losses) from the sale of lines of business, acquisition-related income (expenses) and gains (losses) on extinguishment of debt.

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 and other financial instruments attributable to specific operating segments, we do not view them to be indicative of our fundamental operating activities.

(2)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.

(3)Impairment of other long-lived assets and other non-operating items, if any. 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; (iii) acquisition-related income and expenses; and (iv) gains (losses) on extinguishment of debt.

The reconciliation of adjusted pretax operating income (loss) for our reportable segment to consolidated pretax income is as follows.

Reconciliation of adjusted pretax operating income (loss) to consolidated pretax income
	December 31,
(In thousands)	2024			2023			2022
Mortgage Insurance adjusted pretax operating income	$	827,363		$	829,824		$	1,131,943
Reconciling items
All Other adjusted pretax operating income (loss)		(24,358	)		(43,397	)		(79,226	)
Net gains (losses) on investments and other financial instruments (1)		(4,316	)		9,427			(80,780	)
Amortization and impairment of goodwill and other acquired intangible assets		—			(15,285	)		(4,308	)
Impairment of other long-lived assets and other non-operating items (2)		(27,399	)		(13,082	)		(14,850	)
Consolidated pretax income	$	771,290		$	767,487		$	952,779

(1)Excludes net gains (losses) on investments and other financial instruments that are attributable to our Mortgage Conduit business, which are included in adjusted pretax operating income (loss).

(2)For 2024, amount includes: (i) $19 million from impairments of internal-use software, due to strategic decisions made in 2024 to discontinue certain products; (ii) $4 million related to loss on extinguishment of debt; and (iii) $4 million from impairments of lease-related assets. For 2023, amount includes $9 million and $5 million related to impairments of our lease-related assets and internal use software, respectively. For 2022, amount is primarily related to impairments of our lease-related assets. See Note 13 for more information on our operating leases.

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 segment as follows.

Reportable segment revenue and other segment information
	December 31, 2024
(In thousands)	Mortgage Insurance			All Other			Inter-segment			Adjustments (1)			Consolidated Total
Net premiums earned	$	939,237		$	12,046		$	—		$	—		$	951,283
Services revenue		1,025			49,646			(401	)		—			50,270
Net investment income		201,453			91,240			—			—			292,693
Net gains (losses) on investments and other financial instruments		—			(5,798	)		—			(4,316	)		(10,114	)
Income (loss) on consolidated VIEs		—			(2	)		—			—			(2	)
Other income		5,649			582			(78	)		—			6,153
Total revenues		1,147,364		$	147,714		$	(479	)	$	(4,316	)	$	1,290,283
Less:
Provision for losses		(2,248	)
Policy acquisition costs		27,316
Direct other operating expenses		66,417
Allocated corporate operating expenses (2)		144,251
Interest expense		83,731
Other segment items		534
Adjusted pretax operating income	$	827,363
Other segment information:
Direct depreciation expense	$	7,974
Loss Ratio (3)		(0.2	)%
Expense Ratio (4)		25.3	%

Reportable segment revenue and other segment information
	December 31, 2023
(In thousands)	Mortgage Insurance			All Other		Inter-segment			Adjustments (1)			Consolidated Total
Net premiums earned	$	909,363		$	10,215	$	—		$	—		$	919,578
Services revenue		1,088			45,394		(390	)		—			46,092
Net investment income		195,077			63,353		—			—			258,430
Net gains (losses) on investments and other financial instruments		—			814		—			9,427			10,241
Other income		5,372			27		(20	)		868			6,247
Total revenues		1,110,900		$	119,803	$	(410	)	$	10,295		$	1,240,588
Less:
Provision for losses		(42,136	)
Policy acquisition costs		24,578
Direct other operating expenses		71,150
Allocated corporate operating expenses (2)		140,583
Interest expense		86,188
Other segment items		713
Adjusted pretax operating income	$	829,824
Other segment information:
Direct depreciation expense	$	8,164
Loss Ratio (3)		(4.6	)%
Expense Ratio (4)		26.0	%
	December 31, 2022
(In thousands)	Mortgage Insurance			All Other		Inter-segment			Adjustments (1)			Consolidated Total
Net premiums earned	$	957,213		$	23,918	$	—		$	—		$	981,131
Services revenue		7,390			85,158		(332	)		—			92,216
Net investment income		171,221			24,437		—			—			195,658
Net gains (losses) on investments and other financial instruments		—			47		—			(80,780	)		(80,733	)
Other income		2,376			248		(170	)		—			2,454
Total revenues		1,138,200		$	133,808	$	(502	)	$	(80,780	)	$	1,190,726
Less:
Provision for losses		(339,374	)
Policy acquisition costs		23,918
Direct other operating expenses		92,756
Allocated corporate operating expenses (2)		138,566
Interest expense		84,440
Other segment items		5,951
Adjusted pretax operating income	$	1,131,943
Other segment information:
Direct depreciation expense	$	8,986
Loss Ratio (3)		(35.5	)%
Expense Ratio (4)		26.7	%

(1)Represents non-operating items not included in segment results. See “Adjusted Pretax Operating Income (Loss)” above for more information.

(2)Includes immaterial allocated depreciation expense.

(3)Calculated as provision for losses expressed as a percentage of net premiums earned.

(4)Calculated as operating expenses (which consist of policy acquisition costs and direct other operating expenses, as well as allocated corporate operating expenses) expressed as a percentage of net premiums earned.

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 2024, 2023 or 2022. There was no customer that accounted for more than 10% of NIW in 2024, 2023 or 2022.

The table below, which represents total services revenue in our consolidated statements of operations for the periods indicated, provides the disaggregation of services revenue by revenue type.

Services revenue
	Years Ended December 31,
(In thousands)	2024		2023		2022
Mortgage Insurance
Contract underwriting services	$	1,024	$	1,088	$	1,775
Loan fulfillment services		—		—		5,615
All Other
Real Estate Services
Valuation		15,768		14,555		30,002
Single family rental		8,412		7,743		24,387
Asset management technology platform		4,924		4,639		4,814
Real estate owned asset management		4,455		3,960		3,091
Other real estate services		20		30		115
Title		13,185		11,464		18,687
Real Estate Technology		2,482		2,613		3,730
Total services revenue	$	50,270	$	46,092	$	92,216