Good day, and thank you for standing by. Welcome to the Third Quarter 2025 Radian Group Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dan Kobell, EVP Finance. Please go ahead.

Thank you, and welcome to Radian's Third Quarter 2025 Conference Call. Our press release, which contains Radian's financial results for the quarter, was issued yesterday evening and is posted to the Investors section of our website at radian.com. This press release includes certain non-GAAP measures that may be discussed during today's call, including adjusted pretax operating income, adjusted diluted net operating income per share and adjusted net operating return on equity. A complete description of all of our non-GAAP measures may be found in press release Exhibit F and reconciliations of these measures to the most comparable GAAP measures may be found in press release Exhibit G. These exhibits are on the Investors section of our website. Today, you will hear from Rick Thornberry, Radian's Chief Executive Officer; and Sumita Pandit, President and Chief Financial Officer. Before we begin, I would like to remind you that comments made during this call will include forward-looking statements. These statements are based on current expectations, estimates, projections and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially. For a discussion of these risks, please review the cautionary statements regarding forward-looking statements included in our earnings release and the risk factors included in our 2024 Form 10-K and subsequent reports filed with the SEC. These are also available on our website. Now I would like to turn the call over to Rick.

Good morning, and thank you all for joining us today. I am pleased to report another quarter of strong performance for Radian. Our mortgage insurance business continues to deliver excellent results, fueled by our large, high-quality in-force portfolio with strong persistency and credit performance. The performance of our portfolio reflects the excellent credit characteristics of the new business we are writing, leveraging our proprietary RADAR Rates platform. In addition to the strong performance of our Mortgage Insurance business, we continue to deploy capital with discipline and strategic focus. We have a long track record of consistently maintaining strong holding company liquidity, efficiently distributing capital from Radian Guaranty to Radian Group, and delivering value back to stockholders, including the highest yielding dividend in the industry. Since 2017, we have returned nearly $3 billion of capital to stockholders through dividends and share repurchases, while continuing to explore opportunities for long-term growth that meet our return objectives, including our planned acquisition of Inigo. Sumita will cover the highlights of our financial results, including the impact of our September announcement regarding the divestiture plan for our mortgage conduit, title and real estate services businesses. The process is well underway, and has attracted interest from numerous potential buyers for each of the 3 businesses. We have engaged Citizens JMP to lead the sale of the title and real estate services businesses and Piper Sandler to lead the sale of the mortgage conduit. As we noted in September, we expect to complete the divestiture process by the third quarter of next year. During this time, we have strengthened our capital and liquidity position, grown our high-quality mortgage insurance portfolio, invested in our proprietary data and analytics platforms and leveraged the deep experience of our exceptional team. As part of our ongoing commitment to long-term growth and…

Thanks, Rick, and good morning to you all. As Rick mentioned in his opening remarks, Radian is committed to long-term growth and value creation, and we have spent considerable time evaluating different strategic paths. Our objective is to build on our foundation and core strengths. With this objective in mind, we determined that the right strategic path was to build Radian into the future as a global multiline specialty insurer by acquiring Inigo. As a result of the strategic change in the third quarter of 2025, we've also announced a divestiture plan for our mortgage conduit, title and real estate service businesses. We've reclassified these businesses as held for sale on our balance sheet and now reflect their results as discontinued operations in our income statement. All prior periods have been revised for these changes and the impact of the accounting changes are presented on Slide 38 of our earnings presentation. Now let's discuss results of our continuing operations, which demonstrate another strong quarter of performance. In the third quarter, we achieved net income from continuing operations of $153 million or $1.11 per diluted share, the same as the second quarter. Net income inclusive of discontinued operations was $141 million in the third quarter. We generated a return on equity of 12.4%, including discontinued operations. The ROE for our continuing operations is 100 basis points higher at 13.4%. We grew book value per share 9% year-over-year to $34.34. This book value per share growth is in addition to our regular stockholder dividends, which were $35 million during the quarter. Turning now to the key drivers of our results, which highlight the consistency, balance and resiliency of our Mortgage Insurance business model. Our total revenues continued to be strong in the third quarter at $303 million. Slides 15 through 17 in…

Thank you, Sumita. Our results in the quarter continue to reflect the balance and resiliency of our company as well as the strength and flexibility of our capital and liquidity positions. They also reflect the resilience of our Mortgage Insurance business model. Over the years, our industry has helped millions of families purchase their home or refinance their mortgage and is well positioned to continue promoting affordable, sustainable homeownership through various economic cycles. We are proud of the important role we play in the housing finance system and in building strong communities. We look forward to updating you on our progress as we transform from a leading U.S. mortgage insurer to a global multiline specialty insurer. And finally, I want to recognize and thank our team for the outstanding work they do every day. And now operator, we would be happy to take questions.

[Operator Instructions] And our first question comes from Bose George with KBW.

Actually, first, I just wanted to ask, when you talk about the mid-teens accretion for 2026, should we add that 200 basis points to your current run rate ROE, which is a little over 13%. So I guess that would be a little over 15% in terms of the ROE and then your book value going into 2026, it looks like it will be about $35. So does that seem reasonable 15% on that $35?

Thanks for the question, Bose. So I think if you look at our ROE this quarter, on an operating basis, our ROE was 13.9%. That excludes the impact of some onetime items related to the Inigo transaction where we paid and will be paying advisory fees. I think from an accretion perspective, I think assuming a 200 basis points increase on top of that would be fair. I mean, I think the 13.9% is comparable to also what we had last year and is a good run rate for us to think about for our stand-alone MI business. Keep in mind also that because we are currently -- we paused our share repurchases. So our denominator is a little bit more bloated as we accrue capital to pay for Inigo. I think the 13.9% ROE is probably a little lower than where we may be once that excess capital gets paid out to purchase Inigo. And so the 200 basis points increase can be added to the 13.9% on operating ROE that we have presented in this quarter.

Okay. Great. That's very helpful. And then can you walk through the potential capital benefit from using the unearned premiums at Radian as capital at Inigo? Is that something that eventually could be a source of incremental accretion over the 200 basis points that you've discussed?

So I think in the future, we will be giving you more details, Bose, on exactly what are those opportunities that we see present to ourselves between the MI business as well as Inigo. I think as we mentioned in our presentation, at this stage, I think what we have discussed is that we do see potential synergies between the MI business and Inigo going forward, including some reinsurance that we could do between the 2 businesses. I think post close of Inigo, we plan to do an Investor Day early next year. And I think we'll be sharing more details about potential reinsurance opportunities that could potentially improve the accretion numbers further. I think the numbers that we have presented to you last month and now again in this earnings presentation assumes base case run rate assumptions and really is an addition of Inigo as it is operated today to Radian's numbers. We've not assumed these additional capital and operating efficiencies that we will discuss further with all of you as we close the transaction next year.

And our next question comes from Doug Harter of UBS.

As you look at divesting the noncore businesses, is there -- how should we think about capital that could be freed up from those businesses in addition to kind of the cost saves that you've already kind of highlighted in discontinued operations?

Yes. So I think as I mentioned, as of now, as of Q3, what we have done is we've reclassified discontinued operations as held for sale. If you look at our balance sheet and the carrying values for these 3 businesses, we carry these businesses at about $170 million or so as of the third quarter. We do not expect to have either like a huge gain or a huge loss versus those levels. I think the held for sale number is based on our best accounting estimate today of the true value of those businesses. I think we have given some indications to you in terms of what could be additional expenses that we incur in selling the businesses. I think Rick mentioned we've hired 2 banks. We've estimated a $7 million expense in selling the businesses today. There could be more or less going forward. But we think that the carrying value of $170 million is our best estimate as of today of the true value of those 3 businesses.

Great. I appreciate that. And then how are you thinking about the key steps that need to happen in order to kind of return -- start returning buyback -- or return to the buyback program? What are the key steps that we should be looking for in that?

Yes. So I think that's a good question. I think maybe just like walking you through our liquidity position and how to think through that math. So if you think about our Q3 ending liquidity, we ended the quarter with $995 million this quarter. We are expecting to pay another $195 million in the fourth quarter as dividends from Guaranty to Group. And our best estimate as of today is an additional $100 million of dividends in Q1 of next year. When you add all of that, that gets you to $1.29 billion liquidity number for holdco. We also will be drawing down on the intercompany note of $600 million at close -- when we close Inigo. For next year, the estimate and guidance that we've given is that we expect at least a $600 million minimum dividend from RGI to Group. So I think the best way to maybe think about our share repurchase and our liquidity overall is that within a few quarters of the Inigo purchase, we will again be in an excess liquidity position in group. As and when that happens, I think we'll revisit our share repurchase strategy. But I think, assuming that it will happen pretty quickly, given that we will be paying at least $600 million of dividends next year, that is a good run rate for you to assume as you think about when next year would we be in that excess capital position in holdco for us to revisit our share repurchase strategy, which, as you know, we have paused right now because we are paying for the full $1.7 billion purchase price through internal resources and are not raising any new equity.

And our next question comes from Mihir Bhatia of Bank of America.

Maybe just one quick one. Just any update on the timing of the divestitures and where you are with that process? I think you had said Q3 2026 earlier?

Yes. Mihir, this is Rick. Yes, we're -- I think we're still sticking to the -- to be completed by third quarter of next year. But just to give you an update on the process, as we mentioned, we've hired the 2 banks to kind of facilitate the process. I actually had a tremendous amount of inbound interest expressed across all 3 businesses, and that process is initiating as we speak, both in kind of sharing information with a broad group of potential interested parties. So we expect the process to move quickly over the coming months and look forward to keeping you up to date as we go through this process. As we get into early next year, I think we'll have more of an update. But one of the things that I -- as we watch this process go, the one thing I'm proud of is our teams have stayed laser-focused on running the business and continuing to serve our customers. And I think that positions each of those businesses well for the outcome that we're working towards. So -- but yes, we'll keep you posted as we go quarter-to-quarter. But right now, it's a fully engaged process with the bankers and the teams, and I think working very well.

Got it. And then maybe just staying -- maybe turning to the business itself. I guess one question I was curious on was what would it take for you to move that claim rate below the 7.5% you're at? And the reason I ask is, I mean, I think you have the slide with the claim triangles, the cure triangles, if you will. And as you note on the slide, 90% get cure within a year and like your cure rates are running in the high 90s. So just curious on like what you actually need to see happen to change that claim rate?

Yes. I think Mihir, as you're aware, we made a change to that assumption in maybe 2 or 3 quarters back when we were at 8% default to claim rate and now are at 7.5%. I think when we look at that assumption, we do want to make sure that we are making that assumption through the cycle. You're right that when you look at our cure trends and the cure triangles that we show you on Slide 22, we do have almost 97% to 98% of our defaults curing within 12 quarters. But when we think about our through-the-cycle assumption, we think that these are more favorable than where we would expect this to play out in the long run. And therefore, the 7.5% is our best estimate of that through-the-cycle performance. As of now, we feel really good about that assumption given the fact that we just updated this a few quarters back, and we don't expect to make changes to it in the near future. But again, it's a through-the-cycle assumption. And we think it's the right way for us to run the business is prudent and has a view that's through the cycle.

Sure. Maybe just one question on that though. Has something changed post-COVID? I don't know if it's like the policies and people just being more willing to do forbearance than before? Or are these claim rate trends pretty similar to what you were seeing in, let's say, 2018, 2019? I guess what I'm trying to understand is, is -- has something changed in the housing -- the mortgage servicing backdrop, which has enabled these cure rates to be so strong?

Yes. Mihir, that's a great question. And Sumita and I can tag team that one because that's something we ask ourselves each quarter, too. Are we seeing something fundamentally different than what has occurred in the past? I think since COVID, obviously, we've had a tremendous amount of home equity growth, which provides borrowers with a variety of different avenues to solve some sort of financial hardship, right? And I think it also helps servicers counsel borrowers how to navigate that hardship. Combined with the fact that we -- through COVID, there's muscle memory in terms of assisting the borrower through that hardship through forbearance programs and other things. So I do think, to your point, pre-COVID, post-COVID, the combination of home value increases and also kind of the muscle memory from some of the forbearance programs has proven to be positive. I would say as we go further away from that home equity kind of accelerated growth rate we saw in '20 and '21, we get the more normalized kind of home appreciation maybe with different regional downturns. That part will normalize. But I do think as an industry, the GSEs, servicers fundamentally have altered processes that are working to kind of get borrowers back on their feet. And from a reserving point of view, we spend time each quarter kind of assessing how we think that will impact the go forward. And what Sumita said is how we think about it, which is we really -- on day 1, we have to take a multiyear view through the cycle. And I would just add to Sumita's comments that today, we also continue to evaluate some of the uncertainty in the marketplace that's playing out currently to kind of influence that through-the-cycle view. So I think definitely seeing positives over the last 4 or 5 years. Some of that is probably sustainable. Some of it will normalize over time, and that's what we're really trying to evaluate.

Thank you. I'm showing no further questions at this time. I'd like to turn it back to Rick Thornberry for closing remarks.

Thank you. I appreciate everybody joining us today and for the questions. And as you can tell, we're excited about the path going forward with the acquisition of Inigo in the -- hopefully, in the new year. And we look forward to seeing as many of you and talking to as many of you as we can over the coming weeks. But we appreciate your time and your support. Take care. Enjoy the holidays, if we don't get a chance to see you before then, and we'll talk soon. Take care.

This concludes today's conference call. Thank you for participating, and you may now disconnect.