Radian Group Inc. (RDN) Earnings

Management highlights

### Strategic Transformation Milestones - Completed all key divestitures of non-core businesses: closed the sale of the real estate services business, entered a definitive agreement to sell the title business, and exited the mortgage conduit business earlier in 2026. - Successfully closed the Integro acquisition and completed integration, transforming Radian from a U.S. mortgage insurer to a diversified global multi-line specialty insurer with two complementary, uncorrelated core business lines. - Completed a seamless leadership transition: outgoing CEO Rick Thornberry has completed all strategic transformation commitments, and CEO-elect Mike Weinbach has joined to lead the company's next growth chapter. ### Enterprise Financial Performance - Total consolidated revenues grew 93% year-over-year to $575 million, while net earned premiums increased 116% year-over-year to $504 million. - GAAP net income from continuing operations was $0.87 per share, with a 10% return on equity; adjusted diluted net operating earnings per share grew to $1.14, with an adjusted net operating return on equity of 13%. - Book value per share grew 8.5% year-over-year to $36, with annual dividends equivalent to an additional 3% of book value returned to shareholders. - Total investment portfolio reached $7.1 billion (diversified, highly rated), with quarterly net investment income of $75 million, up 21% year-over-year driven by portfolio growth from the Integro acquisition. ### Capital Management and Shareholder Returns - Capital position remains a core strength: Radian Guarantee holds a $1.5 billion PMIRES capital buffer, far above regulatory requirements, and both segments are well capitalized relative to regulatory requirements. - Returned $176 million to shareholders via share repurchases year-to-date (through early Q3 2026), including $76 million in Q2 and $50 million in early Q3. Paid $37 million in quarterly dividends in Q2. - Repaid $75 million of revolving credit facility debt, reducing holding company leverage to 19%, with the remaining $75 million outstanding expected to be repaid by the end of 2026. Holding company liquidity increased to $412 million at quarter end. ### Underwriting Discipline - For the specialty segment, management prioritizes profitability over revenue growth targets, maintaining disciplined underwriting and focusing on rate adequacy even as market conditions soften, consistent with the cyclical dynamics anticipated when the acquisition was underwritten.

Guidance

- Specialty segment second half 2026 net earned premiums are expected to be approximately 20% higher than first half 2026 levels, consistent with normal seasonality for the business, and this guidance includes all Integro results for the full first half baseline. - A combined ratio in the low 90s is the expected baseline for the specialty segment in the current softening market environment, reflecting gradually lower underwriting margins that will earn into results over time, with normal quarterly volatility from unforeseen market events. - Radian Group now expects at least $650 million in total dividends from Radian Guarantee in 2026, an upward revision from the prior guidance of at least $600 million, reflecting stronger than expected performance from the mortgage insurance business. - Full year 2026 share repurchases are tracking toward the upper end of the previously guided $200 million to $250 million range, subject to market conditions. - The remaining $75 million outstanding on the revolving credit facility is expected to be fully repaid by the end of 2026. - The $750 million debt maturing in Q1 2027 is expected to be refinanced at a similar size to the existing obligation.

Segment performance

1. **Mortgage Insurance Segment**: New insurance written grew 14% year-over-year to $16.3 billion. In-force primary insurance reached an all-time high of $284 billion, up 3% year-over-year, with persistency increasing to 82%. Operating expenses declined 7% year-over-year, and the segment expense ratio improved to 23% from 25% a year prior. Credit performance remained strong: new defaults fell 9% quarter-over-quarter, cures exceeded new defaults, pushing the portfolio default rate to 2.47%, with $20 million in favorable reserve development from prior period defaults. This segment contributed 47% of total Q2 2026 net premiums earned. 2. **Specialty Insurance Segment (Integro)**: This was Radian's first full quarter with Integro, contributing 53% of Q2 2026 net premiums earned and 50% of total revenues. Net premiums earned grew 9% year-over-year to $267 million. Operating expenses were flat quarter-over-quarter at $39 million. Total loss provision was $169 million, including $24 million in favorable prior period reserve development (primarily in property lines) and a $30 million reserve for Middle East conflict-related claims and inflation impacts. The segment net combined ratio was 98% for Q2 2026, and 93% for the first half of 2026; excluding the Middle East reserve, the first half combined ratio would be in the high 80s. First half 2026 net combined ratio is 93%, and management expects a low 90s combined ratio to reflect the current soft market environment.

Risks & headwinds

- The specialty insurance market is experiencing broad softening, with pricing competition spreading beyond property lines to other lines including casualty, which is expected to push underwriting margins lower over time. - The ongoing Middle East conflict creates uncertainty around potential claims and broader inflationary pressures that could increase loss costs across the entire specialty insurance portfolio. - Mortgage insurance policies with rates of 5.5% or lower account for half of the in-force portfolio, but if mortgage rates remain elevated, future new business growth could be constrained even as persistency improves for existing policies. - Actual results may differ materially from forward-looking statements due to inherent market and underwriting risks, as detailed in Radian's SEC filings.

Analyst Q&A

• Q: Roland Mayer (RBC) asks for details on the $30 million Middle East loss reserve: is it from large or small claims, and should investors expect continued additional reserve builds in coming quarters? /

  A: Management confirms the $30 million Q2 reserve includes both expected and potential claims from the conflict, plus updated inflation assumptions for the full portfolio driven by conflict-related macro uncertainty. Management states the reserve is fully loaded as of quarter end, and the team feels sufficiently reserved given current information, while continuing to monitor the situation.

• Q: Terry Ma (Barclays) asks whether the low 90s current expected combined ratio for specialty is permanent, or if it will return to the high 80s long-term. /

  A: Management explains the low 90s combined ratio reflects the current phase of the market cycle, after several years of stronger performance, and is consistent with the softening dynamics expected when the Integro acquisition was completed. Over the full long-term cycle, through multiple market phases, the business has historically trended to the mid to high 80s, and the team's disciplined underwriting approach is designed to navigate cycle volatility effectively.

• Q: Mahir Bhatia (Bank of America) asks CEO-elect Mike Weinbach what key learnings he has had in his first two months that differ from his prior outside perception of Radian. /

  A: Weinbach confirms his prior view that Radian has great people, culture and platforms has been fully validated internally. He notes the biggest takeaway is the strength of the shared underwriting and data analytics focus across both uncorrelated core businesses, and that the transformed company (with doubled revenue, non-core businesses divested) has ample excess capital to deploy and clear opportunities to improve further with emerging AI tools. He reaffirms the strategy of prioritizing return on capital over growth, pulling back in soft market conditions where returns are not adequate.

• Q: Graham Bundy (KBW) asks what share repurchase levels investors should model for the second half of 2026. /

  A: Management confirms full year 2026 repurchases are on track to hit the upper end of the previously guided $200-$250 million range, after restarting repurchases quickly following the Integro acquisition. The strong capital position and higher than expected dividend capacity from the mortgage business supports this faster repurchase pace.