Good day, and thank you for standing by. Welcome to the Fourth 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, Bob Lally, VP Finance. Please go ahead.

Thank you, and welcome to Radian's Fourth 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 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 Dan Kobell, Senior Executive Vice President and Interim Chief Financial Officer. Before we begin, I'd 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 more information regarding these risks and uncertainties as well as certain additional risks that Radian faces, you should refer to the risk factors included in our 2024 Form 10-K and our third quarter 2025 Form 10-Q as well as the subsequent reports filed with the SEC. Now I would like to turn the call over to Rick.

Good morning, and thank you for joining us. I am pleased to report another strong quarter for Radian, rounding out an outstanding year, both in terms of our financial performance and the beginning of an exciting strategic transformation of our company with the acquisition of Inigo. Our performance in 2025 demonstrates the strength of our core business and the disciplined execution of our strategy. We grew our mortgage insurance in force portfolio to an all-time high. We maintained strong credit performance and operational discipline. We continue to generate substantial capital, distributing $795 million from Radian Guaranty to our holding company and returned $576 million to stockholders through dividends and share repurchases. And we used risk distribution strategies to effectively manage our capital and proactively mitigate risk. Most notably, earlier this month, we completed our strategic acquisition of Inigo, a highly respected specialty insurer underwriting through Lloyd's of London. Importantly, we funded this transaction entirely with available liquidity and excess capital with no new equity raised. This marks a defining milestone in Radian's history and the beginning of an exciting new chapter. We believe this is truly transformative for Radian's future. Building on a strong foundation as a leading U.S. mortgage insurer, we are now poised to expand and diversify into a global multiline specialty insurer. We have the unique opportunity to leverage our high-performing Mortgage Insurance business, which is expected to continue generating excess capital alongside a growing and global specialty insurance business. The acquisition significantly expands our expertise, capabilities and geographic reach, greatly increasing our total addressable market and position us to deploy capital strategically for attractive returns. We expect this transaction to double our annual revenues, be accretive to EPS and returns and provide greater strategic flexibility to deploy capital across multiple insurance lines through various business cycles.…

Thank you, Rick, for the warm welcome. I'm honored to step into this role and lead the finance function at Radian in close partnership with Rob Quigley. This is an exciting chapter in Radian's nearly 50-year history, and I look forward to engaging with all of you as we move forward together. I'm pleased to report additional details about our fourth quarter results, which reflect another quarter of strong performance. For the quarter, we generated net income from continuing operations of $159 million or $1.15 per share. For the full year, net income from continuing operations was $618 million or $4.39 per share. We were pleased to grow our net income from continuing operations per share in 2025, driven by a combination of strong earnings as well as an 8% reduction in our share count. Additionally, in our Mortgage Insurance business, we saw growth in both insurance in force and new insurance written with NIW growing 6% year-over-year. We generated a return on equity of 13.5% in the fourth quarter and 13.1% for the full year. We grew book value per share 13% year-over-year to $35.29. We also returned dividends to our stockholders in 2025 that accounted for an additional 3% of book value. Turning now to the key drivers of our results. Our total revenues continued to be strong at $301 million in the fourth quarter and $1.2 billion for the full year. Slides 14 through 16 in our presentation include details on our Mortgage Insurance portfolio as well as other key factors impacting our net premiums earned. We generated $237 million in net premiums earned in the quarter, which represents the highest level in over 3 years. Our large, high-quality primary Mortgage Insurance portfolio grew 3% year-over-year to another all-time high of $283 billion. Contributing to this growth…

Thank you, Dan. Our results for the quarter and the year once again reflect the balance and agility of our company as well as the strength and flexibility of our capital and liquidity positions. Our Mortgage Insurance business remains a cornerstone of our success and of our commitment to supporting homeownership. We appreciate the focus of the administration, FHFA and GSEs on making homeownership more affordable and sustainable. Our products enable qualified borrowers to access homeownership and begin building equity years earlier than if they had to save for a large down payment. For nearly 50 years, we have helped millions of families purchase their homes or refinance their mortgages. We are proud to play this important role in the housing finance system and in building strong communities. Finally, I want to express my gratitude to all Radian employees across every part of our company for their dedication and outstanding work throughout this pivotal year. Their commitment to excellence and our values has been the foundation of our success. Operator, we would be happy to take questions.

[Operator Instructions] And our first question comes from Terry Ma of Barclays.

Maybe just to start off with Inigo, a question for Dan. Kind of -- like you guys just recently closed it, but any kind of updated thoughts on financial metrics or anything you kind of laid out initially a few months ago?

Yes. Thanks, Terry, for the question. So I'd say broadly no changes from what we laid out a few months ago. And I would say just generally, the simplest way to look at the financial accretion from the Inigo acquisition using round numbers, it's a $1.7 billion acquisition. The funds we used for that acquisition were part of our investment portfolio at Radian between Radian Group and Guaranty. And they were earning, call it, a 4% or a 5% yield. So we've now taken that $1.7 billion and deployed it into an operating business that we expect is going to earn a mid-teens return through the cycle. There's going to be some volatility. It's actually been higher of late. But if you say it's mid-teens through the cycle, that's a -- call it, a 10% step-up in yield on $1.7 billion. So you get to $170 million of incremental net income. And that's really the source of the financial accretion that we had in the transaction. We didn't have expense synergies or revenue synergies that we were relying on. So it's really fairly straightforward taking Inigo as it exists and putting it into Radian. So from an execution risk perspective, I'd characterize it as fairly low. We have some light integration to do in terms of financial systems and reporting to be able to report our results on a consolidated basis, and some areas that -- we'll kind of look at that makes sense at an enterprise level to kind of think about on a consolidated basis. But really no change to what we provided in terms of financial guidance and feel very confident that we'll be able to deliver on that.

Got it. That's helpful. And then maybe just turning to credit. You called out the strong cure trends on Slide 21 of your deck, 90% of defaults curing within 1 year. Like as we kind of look forward, how sticky can that 90% be as you have some of the more recent vintages kind of start to season and peak, which I imagine have probably less embedded equity as some of the earlier vintages.

Yes. So that's a good question, Terry, and that's certainly something we'll continue to monitor. As you noted, the vintages, if you go back, kind of that are seasoning now, had significant home price appreciation and embedded equity. We do continue to see in our new defaults, very significant embedded equity is still what's coming through. So the more recent vintages, we're starting to see that play through now, certainly going to be mindful of that. But the cure activity that we've seen has been very strong. As a reminder, we assume effectively 92.5% cumulative cure rate in terms of our reserving assumptions. So we take a fairly conservative view there relative to what we've seen over the last several years. It remains to be seen in terms of how those more recent vintages play out because we're just not seeing that enter the default inventory in a significant number yet. But we continue to see those cure trends play out very consistently, very favorable to what our original expectations were. And as far as credit trends overall, not really seeing any pockets of concern from a geography perspective across different credit segments or at a vintage level. Everything is playing out in line with or better than our expectations.

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

On the pricing environment, can you just compare returns on new business today versus a year ago?

I can start with that one, and then Rick can jump in for some color on pricing. So as far as -- our premium yield is probably the best way to look at it. Our yield on an in-force basis has been very consistent. It's been around 38 basis points now for really 3 years. That's a pretty good indication that what we're bringing into the portfolio and what's exiting, there's a pretty good balance from a pricing perspective. We're not really seeing that in-force yield move. And I noted in my prepared remarks that we expect that to be the case for 2026 as well. So fair amount of stability there in terms of the blended rate of what's coming into the portfolio and what's leaving. I'll leave it to Rick from a pricing competition perspective.

Yes. First off, I'd just say we're very happy with the volume and the quality of what we saw in the fourth quarter and throughout 2025 from an economic value point of view. I would say industry pricing has been relatively stable, and it's a normal competitive environment. So nothing really noteworthy there. As we've stated for us, we don't focus on market share. We focus on economic value and being disciplined and consistent in our approach. And we continue to see really attractive opportunities to leverage our data and analytics to source NIW that has attractive economic value and risk-adjusted returns, which we believe gives us the opportunity to construct a really high-value portfolio, as Dan mentioned in his earlier comments. I think we used that -- those analytics this year to grow our insurance in force and find value to grow that portfolio to an all-time high to $283 billion. And I think we would expect fluctuations quarter-to-quarter, but I think we've been relatively consistent over time because we focus on really trying to find the most attractive EV segments of the market. One thing I would just highlight because I think it's important to note that maybe compared to other MI companies that maybe are more heavily weighted to bid-card structures that we deem to be low-value structures and can effectively limit the ability for us to leverage our proprietary data and analytics platforms to select risk where we see economic value. For us, today, over 80% of our current NIW is being sourced through our proprietary RADAR Rates platform, which is our black box pricing. And it really plays to our strength where we're able to leverage our analytics to price and select the loans we believe have the highest economic value based on loan and borrower attributes, based on our long-term view of geographic trends and differences across the industry. So I believe the combination -- as we've looked at this market the past year, we've seen very attractive opportunities from an economic value point of view. The combination of our industry-leading data and analytics and our view of customer from a quality of origination and servicing perspective, combined with our unwavering commitment to underwriting, I think really provides us with an advantage in terms of long-term portfolio construction. So we like this market. I think our team has done a really good job of leveraging our tools to find value in the marketplace, working closely with our customers.

Okay. Awesome. And then maybe just a quick one on Inigo. Is the mid- to high 80% combined ratio a good run rate to think about for that business?

Yes. So we haven't provided any kind of forward guidance from an Inigo perspective. I think as we report our results starting with the first quarter on a combined basis, we'll have all the key drivers for both Inigo and our MI business and probably a segment reporting structure, we'll be able to provide more detail at that time. So nothing forward. I think the combined ratio range that you referenced, I think, is kind of where they've been certainly over kind of their 5 years of operation. So I understand if you want to kind of think about that as a good trend to use, but we'll provide updated guidance as we move forward.

And our next question comes from Bose George of KBW.

Actually, I just wanted to first follow up on the question on the accretion. The $170 million is -- I think it's a pretax number, but can you just confirm that?

Yes. The way that I would explain that, Bose, I think of that as a pretax number. And...

Okay. Great. And -- sorry, go ahead.

No, I was going to say, I think if you take that $170 million and you apply that to our equity base using, call it, a 25% statutory tax rate in the U.K. for Inigo, you get to north of 200 basis points of ROE accretion. So I think that's the right math to use.

Okay. Perfect. And then in terms of the premium to book value, is there going to be intangibles that need to be amortized? So do you know the split yet between goodwill and intangibles?

Yes. So there will be intangibles and some of them will most likely be amortizing. We are in the process of doing all the purchase accounting related to the transaction. So that we don't have those numbers available and complete yet. But as I mentioned earlier, when we report our results for the first quarter, we will certainly have that and be able to kind of specify what the intangibles are and kind of what the amortization periods are going to look like for those.

Okay. Great. And then just one on the buybacks. You mentioned that we could see a resumption back half of the year. So if you look out to 2027, could we see buybacks back at the pre-Inigo levels by next year?

I think given our -- by the way, Bose, thank you for that question. I think given kind of our strategic path forward with MI -- our MI business, Inigo combination and the divestiture process underway and the attractive financial metrics that we expect from the Inigo acquisition, I would just state that we think our shares are undervalued, probably not the first time you've ever heard a public company CEO say that. But I think that's the position we take today. And given the strength of our financial position heading into 2026, Dan walked through some of that in terms of our current capital position and the transparency of future capital availability, we would expect to resume opportunistic share repurchases. And I think that's all based on the visibility of our MI business' embedded earnings from our insurance in force portfolio and the visibility to capital return we have from Radian Guaranty to group. And truthfully, we believe the combination with Inigo makes the value of our shares even more attractive. So we look forward to demonstrating the value of the strategic transformation as we go forward to all of our stakeholders. But I think we see value in our shares.

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

Thank you for joining us and for your interest in Radian. We look forward to reporting on our first combined results with Inigo next quarter, kind of exciting and demonstrating how our transformation into a global multiline specialty insurer can create additional value for our customers, partners and stockholders. And we're excited to speak with many of you in the coming months and share more of our story as it continues to unfold. And again, look forward to that first quarter reporting cycle. So thank you and appreciate your interest and be well.

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