Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The disclosures in this quarterly report are complementary to those made in our 2025 Form 10-K and should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in this report, as well as our audited financial statements, notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations included in our 2025 Form 10-K.

The following analysis of our financial condition and results of operations for the three months ended March 31, 2026, provides information that evaluates our financial condition as of March 31, 2026, compared with December 31, 2025, and our results of operations for the three months ended March 31, 2026, compared to the same period in 2025.

Investors should review the "Cautionary Note Regarding Forward-Looking Statements-Safe Harbor Provisions" and "Item 1A. Risk Factors" herein and in our 2025 Form 10-K for a discussion of those risks and uncertainties that have the potential to adversely affect our business, financial condition, results of operations, cash flows or prospects. Our results of operations for interim periods are not necessarily indicative of results to be expected for the full year or for any other period. See "Overview" below and Note 1 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information.

Overview

For nearly 50 years, we have served as a leading private mortgage insurer, expanding access to affordable, responsible and sustainable homeownership. We believe we are differentiated from our peers by our proprietary risk analysis and risk management capabilities, informed by decades of mortgage data and intelligence. In recent years, our mortgage insurance business has generated positive results, including strong earnings and cash flow.

A pivotal milestone in our strategic evolution was our recent acquisition of Inigo, a highly respected Lloyd's specialty insurer, which closed on February 2, 2026. We believe that combining the embedded value of our mortgage insurance business with the growth potential of a disciplined specialty insurance and reinsurance business through this acquisition positions us to create a capital-efficient diversified insurance business. Effective as of the first quarter of 2026, we manage our business in two reportable business segments, Mortgage and Specialty. Together, Radian's Mortgage and Specialty businesses create a global multi-line specialty insurer.

Our financial performance was strong in the first quarter of 2026. Our consolidated results for the first quarter of 2026 reflect the addition of our Specialty segment following the acquisition of Inigo, with net income from continuing operations of $129 million, a 10.8% return on equity from continuing operations and pretax income from continuing operations of $174 million. Adjusted pretax operating income was $232 million, with a 14.7% adjusted net operating return on equity. The expansion of our business mix drove higher revenues, partially offset by higher provision for losses and expenses. With the closing of the Inigo acquisition, we believe we have taken a significant step to diversify our earnings and position the Company for long-term growth.

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Mortgage

Our Mortgage segment continued to serve as a solid foundation for our financial results, generating strong earnings and cash flow in the first quarter of 2026. Our Mortgage segment contributed $221 million of adjusted pretax operating income, with net premiums earned of $238 million. Our mortgage insurance in force portfolio was $281.7 billion as of March 31, 2026, inclusive of $13.5 billion of NIW. We continued to observe low default and claim rates and steady cure activity, supporting favorable loss performance.

Consistent with the trends observed in recent periods, the economic and market conditions impacting our Mortgage results for the first quarter of 2026 remained generally favorable. These trends include: (i) a strong credit environment; (ii) a strong Persistency Rate due to the interest rates of mortgages in our insured portfolio generally remaining below prevailing interest rates, although refinance activity increased in the first quarter of 2026; and (iii) strong mortgage insurance fundamentals, including stringent underwriting and product standards, higher-quality borrowers with strong credit profiles and strengthened servicing standards and government support to help borrowers stay in their homes.

Specialty

On February 2, 2026, we closed the acquisition of Inigo, making the first quarter of 2026 the first period in which the Specialty segment is included in our financial results. Our Specialty segment writes insurance and reinsurance coverage through multiple lines of business including property, casualty, financial lines and other specialty lines focusing on core classes of insurance and reinsurance where we believe we possess technical expertise.

For the two months of activity ended March 31, 2026, our Specialty segment contributed $40 million of pretax operating income, with net premiums earned of $164 million, and achieved a Combined Ratio of 85.3%. We believe this performance reflects strong underlying profitability, effective risk selection and disciplined underwriting and portfolio management.

The property, casualty and other specialty insurance markets in which the Specialty segment operates are influenced by market cycles, competitive pressures and evolving risk landscapes. This market demands a disciplined approach to underwriting, effective risk selection and robust data and analytics to navigate increasing competition, particularly in short-tail property lines. Factors such as claims inflation, geopolitical risks and climate change further shape the specialty insurance environment.

During the first quarter of 2026, the specialty insurance and reinsurance markets experienced continued softening pricing conditions, particularly across property and reinsurance classes, following several years of strong underwriting profitability and a relatively benign catastrophe environment in 2025, which has continued in early 2026. Increased availability of capacity from both traditional markets and alternative capital, including catastrophe bonds, intensified competitive pressures and resulted in risk-adjusted rate reductions. Market conditions and the premium rate environment remain differentiated by line of business, and the softening pricing conditions have been most pronounced in U.S. property insurance and property catastrophe reinsurance.

We expect competitive and pricing pressures to persist through the remainder of 2026, particularly in catastrophe-exposed classes. In response to market conditions, Inigo remains focused on underwriting profitability through the cycle and we expect to continue to emphasize margin-focused underwriting, including selective reductions in lines, non-renewal of inadequately priced risks, portfolio re-shaping initiatives and targeted growth in classes and segments where pricing and structural protections remain acceptable.

Geopolitical developments also influenced market conditions during the first quarter of 2026. The escalation of hostilities in the Middle East introduced heightened uncertainty across political violence, aviation war, cyber, energy and related specialty insurance markets. While reported loss activity to date has been limited, the evolving situation presents a heightened risk of loss with respect to insured risks in the region, reinforcing the importance of disciplined risk selection, exposure management and reinsurance protection. The Company continues to monitor geopolitical developments and evolving market conditions, including potential increased volatility in financial markets.

Outlook

Looking ahead to the remainder of 2026, our priorities include continuing to deliver strong, consistent performance in our Mortgage segment, executing on the strategic development and selective growth of our Specialty segment and maintaining a

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

disciplined approach to capital management. We believe our ability to consistently generate excess capital through cycles and redeploy it with discipline is a core competitive advantage. Our capital management philosophy prioritizes maintaining financial strength, investing in growth and responsibly returning excess capital to stockholders. Despite risks and uncertainties related to the current economic and market conditions, we continue to have a favorable outlook for our businesses based on the fundamentals in both our Mortgage and Specialty segments.

Legislative and Regulatory Developments

We are subject to comprehensive regulation and supervision in the jurisdictions in which our subsidiaries operate. For a description of significant U.S. state and federal regulations and other requirements of the GSEs that are applicable to our mortgage insurance business, as well as legislative and regulatory developments affecting the housing finance industry, see "Item 1. Business-Regulation-State Regulation" and "Item 1. Business-Regulation-Federal Regulation" in our 2025 Form 10-K. For a description of the U.K. regulatory requirements and framework and other requirements and regulations of Lloyd's that are applicable to our specialty insurance business, see "Item 1. Business-Regulation-Regulation of Inigo" in our 2025 Form 10-K. There were no significant regulatory developments impacting our businesses from those discussed in our 2025 Form 10-K, other than the following.

Credit Score Models. In October 2022, the FHFA announced that as part of a multi-year effort, the GSEs intend to replace their use of Classic FICO credit scores with FICO 10T and VantageScore 4.0 credit scores, which are intended to improve accuracy by capturing additional payment histories for borrowers when available, such as rent, utilities and telecom payments. In July 2025, FHFA announced that the GSEs would allow lenders to use a credit score generated by either the Classic FICO model or the VantageScore 4.0 model. Most recently, in April 2026, FHFA announced that the GSEs will immediately accept loans with the VantageScore 4.0 model for certain approved lenders and will begin moving forward with FICO 10T. The U.S. Department of Housing and Urban Development also announced that FHA will permit the use of VantageScore 4.0 and FICO 10T as eligible credit score models for FHA-insured loans. As a mortgage insurer, Radian Guaranty uses credit scores in several areas of its operations and the adoption and implementation of the new credit scores requires planning and analysis to, among other things, understand how these scores calibrate to Radian Guaranty's credit risk models. The Company continues to evaluate the impact of this most recent announcement, and while we expect there to be operational impacts, we do not expect it to have a material impact on our results of operations or financial condition.

Basel III. Over the past several decades, the Basel Committee on Banking Supervision has established international benchmarks for assessing banks' capital adequacy requirements ("Basel III"). Included within those benchmarks are capital standards related to residential lending and securitization activity and, importantly for private mortgage insurers, the capital treatment of mortgage insurance on those loans. In July 2023, the U.S. federal banking agencies published a notice of proposed rulemaking to implement the final components of Basel III that was heavily criticized and debated. In March 2026, the U.S. federal bank regulators released new proposals to update the regulatory capital framework for banks that include more granular risk weights for the capital treatment of residential real estate and maintain the existing treatment of mortgage insurance as a prudent underwriting standard. The proposals also include several questions on the treatment of mortgage insurance as part of the proposed risk weight calculations. The Company will continue to monitor developments with respect to this rulemaking and its potential impact on our mortgage insurance business.

Key Factors Affecting Our Results

Our condensed consolidated financial results for the first quarter of 2026 reflect the continued performance of our Mortgage segment and, beginning February 2, 2026, the inclusion of Inigo's specialty insurance and reinsurance operations within our Specialty segment. Except as set forth below, there have been no material changes to the key factors affecting our results discussed in our 2025 Form 10-K. In addition to those key factors, the following key factors have affected and are expected to affect, our financial results:

Acquisition of Inigo and Specialty Insurance Operations. On February 2, 2026, we completed the acquisition of Inigo, a Lloyd's specialty insurer, and its results are included in our condensed consolidated financial statements from the acquisition date forward. The acquisition of Inigo has expanded our business mix and future growth opportunities while also increasing our exposure to global specialty insurance and reinsurance markets. Our financial results may be affected by the execution of integration activities, the alignment of systems and controls and our ability to effectively manage underwriting, operational and financial risks associated with these operations.

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The discussion below summarizes the key factors affecting the results for our Specialty segment.

Specialty Insurance and Reinsurance Market Conditions. Our Specialty segment operating results are influenced by market conditions across the specialty insurance and reinsurance classes and geographies in which we participate. These conditions include pricing levels, underwriting terms, available capacity and competitive dynamics, all of which are subject to cyclical trends and may vary by line of business. Changes in market conditions can affect premium volumes, expected loss ratios and underwriting profitability.

Premium Volume and Business Mix. Our Specialty segment results are affected by the volume, timing and mix of gross and net premiums written. Premium volumes may vary by period based on renewal activity, new business opportunities, pricing conditions, underwriting appetite, exposure levels and the availability and cost of reinsurance. Changes in business mix across insurance and reinsurance, or across lines of business with different risk, acquisition cost and earning patterns, may affect earned premiums, underwriting margins and comparability between periods.

Underwriting and Reserve Risk. Underwriting risk arises from the inherent uncertainty in the occurrence, timing and severity of insured events. Our Specialty segment underwriting results are affected by risk selection, pricing adequacy, exposure concentrations, policy terms and claims experience, including large losses and catastrophe events. Reserve estimates are inherently uncertain and depend on assumptions regarding claims development, severity, inflation and settlement patterns. Adverse changes in loss experience or assumptions may result in increased reserves, which could materially affect results in the period recognized.

Reinsurance and Risk Distribution. We purchase reinsurance in our Specialty segment as a core risk management tool to limit exposure to large individual losses, catastrophe events and aggregation risk, and to support capital efficiency. Our reinsurance programs include excess of loss, quota share and catastrophe bond arrangements. The availability, cost and terms of reinsurance are influenced by market conditions and loss experience, and changes to reinsurance structures, retentions or counterparty performance may affect net results and earnings volatility.

Macroeconomic, Geopolitical and Catastrophe Risk. Our Specialty segment is exposed to macroeconomic conditions, geopolitical developments and natural catastrophe events, which may impact claims frequency and severity, underwriting demand and pricing, investment performance and capital requirements. Catastrophe losses can vary significantly between periods, and material events or adverse geopolitical developments could have a material impact on our results.

Investment Performance, Credit Risk, Liquidity Demands and Operating Expenses. Our Specialty segment operating results are also affected by investment performance, credit risk arising from reinsurers, brokers, intermediaries and investment counterparties, and liquidity demands associated with claims payments. In addition, personnel, technology and professional service costs influence our expense base, while transaction-related or other non-recurring costs may affect comparability between periods.

Insured Portfolio Metrics

Mortgage

New Insurance Written

We wrote $13.5 billion of primary NIW in the three months ended March 31, 2026, compared to $9.5 billion of NIW in the three months ended March 31, 2025, representing an increase of 42% for the three months ended March 31, 2026, as compared to the same period in 2025.

According to industry estimates, mortgage origination volume for home purchases increased moderately in the first quarter of 2026, while a decrease in interest rates led to an increase in refinance volume for the three months ended March 31, 2026, as compared to the same period in 2025, contributing to the increase in NIW in the first quarter of 2026.

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following table provides selected information for the periods indicated related to our Mortgage NIW. For direct Single Premium Policies, NIW includes policies written on an individual basis (as each loan is originated) and on an aggregated basis (in which each individual loan in a group of loans is insured in a single transaction, typically after the loans have been originated).

Insurance and Risk in Force

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The primary driver of the future premiums that we expect to earn over time is our IIF, which increases as a result of our NIW and decreases as a result of policy cancellations and amortization.

Historically, there is a close correlation between interest rates and Persistency Rates. Higher interest rate environments generally decrease refinancings, which decrease the cancellation rate of our insurance and positively affect our Persistency Rates. As shown in the table below: (i) our 12-month Persistency Rate at March 31, 2026, decreased as compared to the same period in 2025 and (ii) our quarterly, annualized Persistency Rate decreased at March 31, 2026, as compared to the same period in 2025. We believe the decrease in both the 12-month Persistency Rate and the quarterly, annualized Persistency Rate was primarily attributable to an increase in refinance activity in the first quarter of 2026, as further described below, resulting from the decline in mortgage interest rates in recent periods.

As of March 31, 2026, approximately half of our IIF had a mortgage note interest rate of 5.5% or less, which remains below the current prevailing mortgage interest rates based on reported industry averages. If mortgage rates were to decrease further, however, refinance volumes could increase, similar to the effect observed in the first quarter of 2026, which could negatively impact our Persistency Rate and the size of our IIF portfolio. See "If the length of time that our mortgage insurance policies remain in force declines, it could result in a decrease in our future revenues" under "Item 1A. Risk Factors" in our 2025 Form 10-K for more information.

The following table provides selected information as of and for the periods indicated related to Mortgage IIF and RIF. Throughout this report, unless otherwise noted, RIF is presented on a gross basis and includes the amount ceded under reinsurance. RIF and IIF for direct Single Premium Policies include policies written on an individual basis (as each loan is originated) and on an aggregated basis (in which each individual loan in a group of loans is insured in a single transaction, typically after the loans have been originated).

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Risk Distribution

We use third-party reinsurance in our Mortgage segment as part of our risk distribution strategy, including to manage our capital position and risk profile.

The impact of these programs on our financial results will vary depending on the level of ceded RIF, as well as the levels of prepayments and incurred losses on the reinsured portfolios, among other factors. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations-Key Factors Affecting Our Results-Mortgage Insurance-Risk Distribution" in our 2025 Form 10-K and Note 8 of Notes to Unaudited Condensed Consolidated Financial Statements in this report for more information about our reinsurance transactions.

The following table provides information about the amounts by which Radian Guaranty's reinsurance programs reduced its Minimum Required Assets as of the dates indicated.

See "Results of Operations-Mortgage Segment-Revenues-Net Premiums Earned" for information about the impact on premiums earned from each of Radian Guaranty's reinsurance programs.

Specialty

Premiums Earned

The following table provides information about net premiums earned by line of business.

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Insurance comprises specialty insurance business written across a range of structures, including primary and excess layers which are grouped into the following lines of business.

Within Reinsurance, net premiums earned arise from assumed reinsurance business, under which Inigo acts as reinsurer to third-party cedants. This business includes proportional arrangements, where Inigo assumes a share of the underlying premiums and losses and non-proportional arrangements that provide protection against large individual losses, catastrophe events or aggregate loss experience.

The following table provides information about gross premiums earned by geographic area.

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Risk Distribution

The following table provides information on ceded premiums earned as a percentage of gross premiums earned by line of business.

Results of Operations-Consolidated

Radian Group serves as the holding company for our operating subsidiaries and does not have any operations of its own. Our consolidated operating results for the three months ended March 31, 2026, primarily reflect the financial results and performance of our Mortgage and Specialty segments, while our consolidated operating results for the three months ended March 31, 2025, primarily reflect the financial results and performance of our Mortgage segment.

As further described in Note 18 of Notes to Unaudited Condensed Consolidated Financial Statements, in the quarter ended September 30, 2025, Radian Group's board of directors approved a plan to divest our Mortgage Conduit, Title and Real Estate Services businesses. As a result, we have reclassified the results related to these businesses to discontinued operations for all periods presented in our condensed consolidated statements of operations.

All amounts included in this "Results of Operations--Consolidated" section relate to continuing operations unless otherwise noted.

In addition to the results of our reportable segments, pretax income (loss) from continuing operations is also affected by those factors described in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations-Key Factors Affecting Our Results" in our 2025 Form 10-K as well as "Key Factors Affecting Our Results" herein, above. See also "Use of Non-GAAP Financial Measures" below for more information regarding items that are excluded from the operating results of our operating segments.

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following table summarizes our consolidated results of operations for the periods indicated.

Revenues

Net Premiums Earned. The increase in net premiums earned for the three months ended March 31, 2026, as compared to the same period in 2025, is primarily due to the acquisition of Inigo. See "Results of Operations-Mortgage Segment-Revenues-Net Premiums Earned" and "Results of Operations-Specialty Segment-Revenues-Net Premiums Earned" for more information.

Net Investment Income. The increase in net investment income for the three months ended March 31, 2026, as compared to the same period in 2025, is primarily due to the acquisition of Inigo. See Note 7 of Notes to Unaudited Condensed Consolidated Financial Statements for comparative detail about net investment income. See "Results of Operations-Mortgage Segment-Revenues-Net Investment Income" and "Results of Operations-Specialty Segment-Revenues-Net Investment Income" for more information.

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Net Gains (Losses) on Financial Instruments and Foreign Exchange. See Note 7 of Notes to Unaudited Condensed Consolidated Financial Statements for comparative detail about net gains (losses) on financial instruments and foreign exchange by investment category.

Expenses

Provision for Losses. The increase in the provision for losses for the three months ended March 31, 2026, as compared to the same period in 2025, is primarily due to the acquisition of Inigo. See "Results of Operations-Mortgage Segment-Expenses-Provision for Losses" and "Results of Operations-Specialty Segment-Expenses-Provision for Losses" for more information.

Amortization of Deferred Policy Acquisition Costs and VOBA. The increase in the amortization of deferred policy acquisition costs and VOBA for the three months ended March 31, 2026, as compared to the same period in 2025, is primarily related to amortization of the VOBA intangible asset recognized in connection with the acquisition of Inigo. See Note 3 of Notes to Unaudited Condensed Consolidated Financial Statements for additional detail on the impact of the Inigo acquisition and see "Results of Operations-Specialty Segment-Expenses-Amortization of Deferred Policy Acquisition Costs" for more information on Specialty segment results, which exclude the impact of purchase accounting adjustments.

Other Operating Expenses. Other operating expenses increased for the three months ended March 31, 2026, as compared to the same period in 2025, primarily due to the acquisition of Inigo. For additional information, see "Results of Operations-Mortgage Segment-Expenses-Other Operating Expenses" and "Results of Operations-Specialty Segment-Expenses-Other Operating Expenses."

Interest Expense. The increase in interest expense for the three months ended March 31, 2026, as compared to the same period in 2025, is primarily due to interest expense on credit facilities for Inigo and Radian Group. See Note 12 of Notes to Unaudited Condensed Consolidated Financial Statements for additional detail about our interest expense.

Income Tax Provision

Our provision for income taxes for interim periods is established based on our estimated annual effective tax rate for a given year. This rate is impacted by the mix of income and loss and associated statutory tax rates by jurisdiction, and reflects the impact of discrete tax effects in the period in which they occur.

Our effective tax rate for continuing operations for the three months ended March 31, 2026, was 25.4%, as compared to 23.5% for the three months ended March 31, 2025. In addition to the effects of non-deductible executive compensation expense, the increase in the effective tax rate was primarily attributable to a higher statutory tax rate on foreign earnings from Inigo and higher state income taxes associated with a temporary period of elevated investment income generated from increased investments held at Radian Group in anticipation of funding the Inigo acquisition.

Our unrecognized tax benefits increased during the quarter primarily as a result of uncertain tax positions assumed in connection with the Inigo acquisition. See Note 10 of Notes to Unaudited Condensed Consolidated Financial Statements for additional detail.

Income (Loss) from Discontinued Operations, Net of Tax

Income (loss) from discontinued operations, net of tax, includes the results of our Mortgage Conduit, Title and Real Estate Services businesses, which have been reclassified to discontinued operations for all periods presented. See Note 18 of Notes to Unaudited Condensed Financial Statements for additional details.

Use of Non-GAAP Financial Measures

In addition to traditional GAAP financial measures, we have presented "adjusted pretax operating income (loss)," "adjusted diluted net operating income (loss) per share" and "adjusted net operating return on equity," which are non-GAAP financial measures for the consolidated company, among our key performance indicators to evaluate our fundamental financial performance. These non-GAAP financial measures align with the way our business performance is evaluated by both management and by our board of directors. These measures have been established in order to increase transparency for the

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

purposes of evaluating our operating trends and enabling more meaningful comparisons with our peers. Although on a consolidated basis adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity are non-GAAP financial measures, for the reasons discussed above we believe these measures aid in understanding the underlying performance of our operations.

Total adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity are not measures of overall profitability, and therefore should not be considered in isolation or viewed as substitutes for GAAP pretax income (loss) from continuing operations, diluted net income (loss) per share or return on equity. Our definitions of adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity, as discussed and reconciled below to the most comparable respective GAAP measures, may not be comparable to similarly named measures reported by other companies.

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 our businesses. For detailed information regarding items excluded from adjusted pretax operating income (loss) and the reasons for their treatment, see Note 5 of Notes to Unaudited Condensed Consolidated Financial Statements.

The results of our Mortgage Conduit, Title and Real Estate Services businesses are included in income (loss) from discontinued operations, net of tax, for all periods presented herein. The calculation of adjusted pretax operating income, as detailed below, excludes income (loss) from discontinued operations, net of tax, for all periods presented herein. As a result, the calculations of adjusted diluted net operating income per share and adjusted net operating return on equity also exclude income (loss) from discontinued operations, net of tax, for all periods presented herein.

Adjusted pretax operating income (loss) is defined as GAAP pretax income (loss) from continuing operations excluding the effects of: (i) net gains (losses) on financial instruments and foreign exchange; (ii) amortization of other acquired intangible assets; (iii) other purchase accounting adjustments, net; and (iv) acquisition-related expenses and other non-operating items, such as impairment of internal-use software and other long-lived assets and gains (losses) on extinguishment of debt, among others.

The following table provides a reconciliation of pretax income from continuing operations to our non-GAAP financial measure of adjusted pretax operating income.

Adjusted diluted net operating income (loss) per share is calculated by dividing adjusted pretax operating income (loss), net of taxes computed using the Company's effective tax rate, by the sum of the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. For purposes of this non-GAAP financial measure, the income tax provision (benefit) on the reconciling income (expense) items is calculated using statutory tax rates that correspond to the jurisdiction and nature of each item, principally the U.S. federal income tax statutory rate or the U.K. Corporation Tax statutory rate. The following table provides a reconciliation of diluted net income (loss) from continuing operations per share to our non-GAAP financial measure of adjusted diluted net operating income (loss) per share.

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Adjusted net operating return on equity is calculated by dividing annualized adjusted pretax operating income (loss), net of taxes computed using the Company's effective tax rate, by average stockholders' equity, based on the average of the beginning and ending balances for each period presented. For purposes of this non-GAAP financial measure, the income tax provision (benefit) on the reconciling income (expense) items is calculated using statutory tax rates that correspond to the jurisdiction and nature of each item, principally the U.S. federal income tax statutory rate or the U.K. corporation tax statutory rate. The following table provides a reconciliation of return on equity from continuing operations to our non-GAAP financial measure of adjusted net operating return on equity.

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations-Mortgage Segment

The following table summarizes our Mortgage segment's results of operations for the periods indicated.

Revenues

Net Premiums Earned. The following table provides additional information about the components of our Mortgage segment's net premiums earned for the periods indicated, including the effects of reinsurance programs.

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The level of mortgage prepayments affects the revenue ultimately produced by our mortgage insurance business and is influenced by the mix of business we write. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations-Key Factors Affecting Our Results-Mortgage Insurance-IIF and Related Drivers" in our 2025 Form 10-K for more information.

The following table provides information related to the impact of our reinsurance transactions on premiums earned. See Note 8 of Notes to Unaudited Condensed Consolidated Financial Statements for more information about our reinsurance programs.

Net Investment Income. The following table provides information related to our Mortgage segment's investments for the periods indicated.

Net investment income increased for the three months ended March 31, 2026, as compared to the same period in 2025, primarily driven by $10 million of interest earned on the Intercompany Note issued by Radian Guaranty to Radian Group in connection with the Inigo acquisition. A corresponding amount is reported as interest expense for the Corporate category and both amounts are eliminated in consolidation. This benefit was partially offset by a decline in the average balance for the remainder of the investment portfolio.

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Expenses

Provision for Losses. The following table details the financial impact of the significant components of our Mortgage segment's provision for losses for the periods indicated.

The increase in the provision for losses for the three months ended March 31, 2026, as compared to the same period in 2025, is primarily driven by an increase in current quarter new defaults and a reduction in favorable development on prior period defaults, which impacted our mortgage insurance loss reserves.

As shown in the table below, current period new primary defaults increased for the three months ended March 31, 2026, compared to the same period in 2025. Our gross Default to Claim Rate assumption for new primary defaults was 7.5% at both March 31, 2026 and 2025. When establishing this assumed rate, we continue to closely monitor the trends in Cures and claims paid for our default inventory, while also weighing the risks and uncertainties associated with the current economic environment.

Our provision for losses during the three months ended March 31, 2026, and the same period in 2025, was positively impacted by favorable reserve development on prior period defaults, primarily as a result of more favorable trends in Cures than originally estimated. These Cures have been due primarily to favorable outcomes resulting from positive trends in home price appreciation, which has also contributed to a higher rate of claims that result in no ultimate loss and that are withdrawn by servicers as a result. These favorable observed trends have resulted in reductions in our Default to Claim Rate and other reserve adjustments for prior year default notices.

See Note 11 of Notes to Unaudited Condensed Consolidated Financial Statements herein for additional information, as well as Notes 1 and 11 of Notes to Consolidated Financial Statements and "Item 1A. Risk Factors" in our 2025 Form 10-K.

Our primary default rate as a percentage of total insured loans was 2.5% and 2.6% at March 31, 2026, and December 31, 2025, respectively. The following table shows a rollforward of our primary loans in default.

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following table shows additional information about our primary loans in default as of the dates indicated.

We develop our Default to Claim Rate estimates based primarily on models that use a variety of loan characteristics to determine the likelihood that a default will reach claim status. Our aggregate weighted average net Default to Claim Rate assumption for our primary loans used in estimating our reserve for losses, which is net of estimated Claim Denials and Rescissions, was 24% and 23% as of March 31, 2026, and December 31, 2025, respectively. See Note 11 of Notes to Consolidated Financial Statements in our 2025 Form 10-K for additional details about our Default to Claim Rate assumptions.

Although expected claims are included in our reserve for losses, the timing of claims paid is subject to fluctuation from quarter to quarter based on the rate that defaults cure and other factors (as described in "Item 1. Business-Mortgage Insurance-Rescissions, Defaults and Claims" in our 2025 Form 10-K) that make the timing of paid claims difficult to predict.

The following table shows net claims paid by product and the average claim paid by product for the periods indicated.

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Total claims paid increased for the three months ended March 31, 2026, compared to the same period in 2025, consistent with both the growth and seasoning of our IIF and our reserving expectations.

For additional information about our reserve for losses, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates" in our 2025 Form 10-K.

Other Operating Expenses. The following table provides information about our Mortgage segment's other operating expenses for the periods indicated.

The decrease in other operating expenses for the three months ended March 31, 2026, compared to the same period in 2025, is primarily due to favorable impacts from lower variable incentive compensation expense.

Results of Operations-Specialty Segment

The following table summarizes our Specialty segment's results of operations for the period indicated.

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Revenues

Net Premiums Earned. The following table provides additional information about the components of our Specialty segment's net premiums earned for the period indicated.

For the period from the Closing Date to March 31, 2026, net premiums earned for the Specialty segment were $164 million. Gross premiums earned before the impact of ceded reinsurance were $203 million, consisting of $109 million of direct premiums earned and $94 million of assumed premiums earned. Direct premiums earned relate to insurance policies written by the Specialty segment and assumed premiums earned relate to reinsurance business where the Specialty segment assumes risk from other insurers or reinsurers.

Net premiums earned were reduced by $39 million of ceded premiums earned, reflecting reinsurance purchased by the Specialty segment to manage underwriting exposures, catastrophe risk and earnings volatility. As Inigo's results are included only from the Closing Date, the period presented does not reflect a full quarter of Specialty segment activity.

Premium volumes were affected by market conditions across certain specialty insurance and reinsurance classes, including competitive pricing dynamics and disciplined risk selection. Our Specialty segment continues to prioritize underwriting profitability and rate adequacy, which may limit premium growth in certain classes where market conditions do not support acceptable risk-adjusted returns.

Net Investment Income. The following table provides information related to our Specialty segment's investments for the period indicated.

Net investment income for the quarter was $17 million, generated from average invested assets of $2.5 billion and an average investment yield of 4.0%, reflecting returns from a conservatively positioned fixed income portfolio and cash holdings maintained to support insurance liabilities and liquidity requirements.

Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Expenses

Provision for Losses. The following table details the financial impact of the significant components of our Specialty segment's provision for losses for the period indicated.