Participants

Dan Kobell; Head-Investor Relations & Capital Management; Radian

Rick Thornberry; Chief Executive Officer; Radian

Sumita Pandit; Senior Executive Vice President, Chief Financial Officer; Radian

Derek Brummer; President, Mortgage Insurance; Radian

Bose George; Analyst; KBW

Scott Hanold; Analyst; RBC Capital Markets.

Presentation

Operator

Welcome to the Third Quarter 2020 for Radian Group earnings conference call. (operator instructions) I would now like to hand the conference over to your speaker today, Dan Kobell, Head of Investor Relations and Capital Management. Please go ahead.

Dan Kobell

Thank you, and welcome to Radian's Third Quarter 2024 conference call. Our press release, which contains Radian's financial results for the quarter was issued yesterday evening and 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 pre-tax 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 reconciliation seasons of these measures to the most comparable GAAP measures may be found in press release Exhibit and G., these exhibits or on the Investors section of our website.
Today, you will hear from Rick Thornberry, Radian's Chief Executive Officer, and some independent Chief Financial Officer. Also on hand for the Q&A portion of the call is Derek Brummer, President of Radian Mortgage Insurance.
Before we begin, I would like to remind you that comments made during this call will include forward-looking statements. These states and 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 in 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.

Rick Thornberry

Thanks, Dan, and thank you all for joining us today. Last evening, we reported another quarter of excellent financial results for Radian. Our results continue to reflect the economic value of our high-quality mortgage insurance portfolio, the strength and quality of our investment portfolio, our strong capital and liquidity positions and our ongoing strategic focus on managing expenses.
For the quarter, we increased book value per share by 18% year over year to $31.37 . We grew revenues to $334 million during the quarter, generating net income of $152 million. Our annualized return on equity in the third quarter was 13.2%, and our adjusted net operating return on equity was 13.7%, which reflects our strong financial results, including positive credit performance.
We continue to leverage our proprietary analytics and RADAR Rates platform to identify and capture economic value in the mortgage insurance market, which resulted in $13.5 billion of high-quality new insurance written in the third quarter. Our primary mortgage insurance in force, which is the main driver of future earnings for our company, grew to $275 billion.
We continue to focus on managing operational efficiency and expenses, which resulted in a decrease in other operating expenses. In the third quarter, our primary operating subsidiary, Radian Guaranty fee, paid a quarterly dividend and the Radian Group and the amount of $185 million in the third quarter for a total of $485 million paid year to date.
At the end of the quarter, we paid off $450 million of our senior debt, reducing our leverage ratio to 18.5% of our overall capital and liquidity positions remain strong, with PMIERs cushion for Radian Guaranty fee of $2.1 billion and are available. Holding company liquidity was $844 million at the end of the third quarter.
After paying off the debt. We are pleased that our strong financial position and capital flexibility allows us to deliver excellent financial results, grow our business and help our customers transform risk and opportunity while also returning value to our stockholders.
Terms of the housing and mortgage market, the supply of existing homes remains constrained, which we expect will continue to provide support for home values from an HPA. perspective and based on the originations thus far in the forecast for the remainder of 2024, we continue to estimate that the private mortgage insurance market will be approximately $300billion this year, consistent with 2023.
Looking ahead, based on current market projections for 2025, we expect the MI market to be approximately 10% larger in 2025 than in 2024. I believe it's also worth noting that continuing a positive impact that we are experiencing from the current interest rate environment in terms of increasing our investment portfolio returns and maintaining strong persistency benefiting our insurance in force.
Overall, our outlook for the housing market and our mortgage insurance business remains positive. I also wanted to highlight the Radian continues to be a catalyst for homeownership in the market, leveraging decades of experience and relationships.
Most recently, our mortgage conduit business, Radian Mortgage Capital is focused on private lender customers as sponsoring mortgage credit to investors. We believe this business is a natural extension of our business model and a bit encouraged by the customer interest in the business. Sumit will now cover the details of our financial and capital positions.

Sumita Pandit

Thank you, Rick, and good morning to you all. I'm pleased to provide additional details about that third-quarter results, which reflect another strong quarter, but comments producing net income of $152 million, or $0.99 per diluted share, in line with the prior quarter.
Adjusted diluted net operating income per share was slightly higher than the GAAP metric at $1.90 at the third quarter compared to $0.99 for the previous quarter. Annualized return on equity in the third quarter was 13.2%. Adjusted net operating return on equity was 13.7%, an increase from the second quarter. Book value per share grew to $31.37, an increase of 18% year-over-year.
This book value per share growth is in addition to that, let's start off with a dividend, which we had $37 million during the quarter, reflecting our quarterly dividend of $0.245 per share. We also repurchased $49 million of shares during the third quarter.
Turning now to the detailed drivers I find is that our revenues continue to be strong. In the third quarter. We generated $334 million of total revenues during the quarter, an increase compared to $321 million in the second quarter and $313 million in the third quarter of last year.
Slide 10 for two, and then our presentation include details on our mortgage insurance in force portfolio as well as other key factors impacting our net premium side, our primary mortgage insurance in force continued to grow, reaching $275 billion as of the end of the third quarter and generating $235 million in net premiums earned in the quarter, contributing to the growth of our insurance in force with $13.5 billion of new insurance written in the third quarter of 24 compared to 13.9 billion in the prior quarter. The persistency rate of our existing insurance in force has also remained high at 84.4% in the third quarter.
Based on the trailing 12 months compared to 83.6% a year ago. As of the end of the third quarter, 70% of our insurance in force had a mortgage rate of 6% on that given current market interest rates, these policies are less likely to cancel due to refinancing in the near term, and we therefore continue to expect our persistency rate to remain strong.
As shown on slide 12, the in-force premium is for our mortgage insurance portfolio remained stable in the quarter at 38.2 basis points. With strong persistency rates and the current industry pricing environment. We expect our in-force portfolio premium yield to continue to remain stable. As shown on slide 13, our investment portfolio of $6.6 billion consists of well-diversified highly rated securities.
Our portfolio has continued to increase over the past year in both size and average yield, generating a net investment income of $78 million in the third quarter. The same close to $8 million of income in the third quarter related to mortgage loans held for sale within Radian Mortgage Capital.
Excluding that impact, net investment income grew 7% year over year. We've continued to reinvest cash flows in the current rate environment, benefiting our investment portfolio yield, which was 4.3% in the third quarter. Our unrealized net loss on investments are reflected in stockholders' equity was $233 million at quarter end, an improvement of $144 million from the prior quarter, driven primarily by a decline in market interest rates.
We continue to expect that our strong liquidity and cash flow position will provide us the ability to hold these securities to recovery of the remaining unrealized losses, which would equate to $1.56 that is expected to accrete back into our book value per share over time.
I will now move on to our provision for losses and related credit trends, which continue to be positive with continued strong cure activity and very low claim levels. On slide 16, we provide trends for our primary default inventory. Total defaults increase to approximately 22,000 loans at quarter end, resulting in a portfolio default rate of 2.25% compared to 2.04% in the previous quarter. As expected, the number of new defaults reported to us by services increased in the third quarter to approximately 13,700 from 11,100 reported in the second quarter.
This increase in new defaults, which impacts our mortgage insurance reserves reflects normal seasonal trends and the expected continued seasoning of a large insurance in force portfolio. Our new defaults also continue to contain significant embedded home equity with approximately 76% of new default this quarter, having at least 20% equity using an index based approach.
This equity profile, which has been a key driver of recent favourable credit trends is largely unchanged from prior quarters. Looking ahead, we expect the impact of hurricanes Mountain annually to impact the number of new defaults reported in the fourth quarter.
Within the third quarter, we estimate approximately 200 incremental new defaults reported and femur designated areas impacted by Hurricane better. Historically deposit growth rated with storms and other natural disasters that occurred at higher rates.
This past performance is also recognized within PMIERs, which provides for a lower capital requirement for defaulted loans and team are designated areas. Our loss ratio remained low this quarter with a net expense of $6 million in our market and children's provision for losses in the third quarter compared to a net benefit of $2 million reported in the second quarter.
We continue to maintain our default to claim roll rate assumption for new defaults at 8%, which resulted in $57 million of loss provision for new defaults reported during the quarter. Positive reserve development on prior Peter defaults of $51 million, mostly offset this provision for new defaults are defaults continue to cure at rates greater than our previous expectations, resulting in releases of prior period reserves that in recent years have significantly offset reserves established for new defaults.
As shown on slide 17, our Cure trends have been very consistent and positive in recent periods that approximately 90% of the past gearing within four quarters and 96% gearing within eight quarters meaningfully exceeding our initial expectations. Cure rates in the third quarter exhibited typical seasonal trends and compare favourably to similar periods from past years.
As noted above, our favourable loss experience continues to be driven primarily by the significant embedded homeowner equity resulting from the strong home price appreciation experienced in recent years using an index based approach.
Approximately 78% of our total default inventory has estimated embedded home equity of 20% or more. Moving to our other business line, total revenues in our All Other category, which include investments held at Radian Group, as well as revenues from other lines of business than $40 million in the third quarter. In line with the second quarter.
The adjusted pretax operating loss for all other was $5 million in the third quarter compared to a $6 million operating loss in the second quarter. Within our All Other category, Radian Mortgage Capital close their books acquisition transaction during the third quarter. This securitization involves the issuance of $349 million of certificates collateralized by residential mortgage loans, of which we retain that third topic, it's valued at $6 million.
These certificates issued by a newly created securitization trust, which is considered to be a variable interest entity on our VIE. As a result of the economic exposure that we retained and the corresponding rights that are rated interest, have you considered that primary beneficiary of the VIE and in accordance with accounting guidance, Radian will consolidate the VIE and our financial statements .
Therefore, you will see new line items this quarter, reflecting the VIE's assets, liabilities and results on our financial statements. It is important to note that radiance's economic exposure is limited to our retail certificates with a net impact from this exposure, including changes in fair value reflected in the line item income loss on consolidated VIEs and our income statement. Each period. Now turning to our other expenses.
For the third quarter, our other operating expenses totalled $86 million, a decrease compared to $92 million recognized in the second quarter. The lower expenses in this quarter were consistent with our expectations and reflects the benefit from our expense savings actions to date.
This decrease was partially offset by a $10 million non-operating impairment on internal use software recognized in the quarter. As noted previously, we expect a significant reduction in our other operating expenses on a full-year basis in comparison to 2023 with an estimated run rate reduction of $20 million to $25 million beginning in 2025.
Moving to our capital available liquidity and related stripping quick action. Radian Guaranty's financial position remains strong, paid $185 million ordinary dividends to Radian Group in the third quarter, while maintaining a stable PMIERs cushion of $2.1 billion.
As highlighted on slide 21, Radian Guaranty and $191 million of unassigned funds at the end of the third quarter, providing the capacity to distribute it approximately $190 billion of additional funds to Radian Group in the fourth quarter.
As a reminder, we had provided guidance at the beginning of the that we expect Radian Guaranty to be $400million to $500 million of dividends for the full year 2025. We are pleased that we are in a position to meaningfully exceed that guidance.
That $485 million of dividends already paid year to date, another $190 million expected to be paid in the fourth quarter. Moving to our holding company debt in group in September, we executed on the planned redemption of our 2024 senior notes in the amount of $450 million, which reduced our holding company debt to capital ratio to 18.5%.
This action is expected to reduce our ongoing interest expense . It's by approximately $20 million annually, and Radian has no senior debt maturities due until 2027. Within the quarter, we repurchased $1.5 million shares of our common stock at a total cost of $49 million for an average price of $33.61 per share and return $37 million in shareholder dividends.
For a total of $86 million of capital return in the quarter. We have $618 million remaining on our current share repurchase authorization, which expires on June 30, 2026. Over the past four quarters, we've returned approximately $360 million in the form of share repurchases and dividends to shareholders.
As demonstrated by this past quarter's repurchase activity and our track record in recent years, we believe that share repurchase provides an attractive option to deploy our excess capital following the redemption of our 2024 senior notes are available.
Holding company liquidity was $844 million at the end of the third quarter. We also have an undrawn credit facility with borrowing capacity of $275 million, providing us with significant financial flexibility. I will now turn the call back over to Rick.

Rick Thornberry

Thank you, Sumita. Before we open the call to your questions, I want to highlight our results through third quarter continued to reflect the balance and resiliency of our company as well as strength and flexibility of our capital and liquidity positions.
We expect the earnings and cash flows generated from our large in-force mortgage insurance and investment portfolios to allow us to continue operating from a position of strength and delivering value to our customers, policyholders and stockholders.
We increased book value per share by 18% year over year. We returned to the $86 million of capital to stockholders during the third quarter and approximately $360 million over the past 12 months in the form of share repurchases and dividends.
As you've heard me say before, our business model is well established and proven significantly strengthened by the PMIERs capital framework, dynamic risk-based pricing and the distribution of risk into the capital and reinsurance markets. We believe this is recognized on Capitol Hill. We are well positioned to fulfil our important role in the housing finance system.
And finally, I want to recognize and thank our dedicated and experienced team and really for the outstanding work they do every day. And now, operator, we would be happy to take questions.

Question and Answer Session

Operator

Thank you.(operator instruction) Bose George from KBW.

Bose George

Hey, good morning, everyone. This is actually out fund on for both our maybe just starting with Radian Mortgage Capital.
Would you be able to give a little more colour there relating to our maybe what you expect Acadian the cadence of issuance will be there moving forward?

Rick Thornberry

Yes. Thanks for your question. This is Rick. So I think we will give any kind of forward guidance on that. But I think we've we did our first deal in the third quarter.
We actually did our second deal in the fourth quarter. Just recently, we expect to be a regular issue or in the market as the business scales. So we would expect next year to be a continuing issue, but haven't really given forward guidance.
But I think you'll continue to see that the frequency and beyond regularity of issuance into the market to be driven by as we scale the business going forward.

Bose George

Okay, great. Thanks for that. And then maybe just one more on two relating to the $10 million software impairment in the quarter. Was that related to the mortgage services or the other segment? And then maybe just drill the deeper there. Would you be able to give any colour on related to some of the strategic, the strategic actions you're taking on in that segment in terms of the footprint there?

Sumita Pandit

Yes. Thanks for the question. And I think, the $10 million impairment that we took was on some software that we felt we needed to impair given the current use of the software that not all other category.
And we think that it's a one-time item. I think in terms of like in our All Other Businesses giving some more disclosure on what our expected revenues are going to be. I think for the last two quarters we've been at about $40 million.
We do expect that, you know, some of our investment income and all other may come down as we have repaid our debt and therefore for $50 million of liquidity has gone out from our holding company. So we expect that all other number to come down a little bit by about $5 million, but $35 to$40 million of revenues is still a good estimate for all other. And that cup captures all of our businesses in all other business segment.

Rick Thornberry

This is Rick . Also, I think in the context of like a strategic update on those businesses, I think you also asked about we feel that that particular category includes our cardo business, our title business, our real estate services business and LRHC, tech platform, as well as the interest income kind of the investment portfolio, Radian Group. So it's got a number of things in there. The condo business, as I said, zero, we continue to kind of a focus on scaling our business.
The results are not really material today to the overall business, the title business as we navigate this difficult cycle over the last few years, I think the total businesses are well positioned with kind of a growing customer list and look forward to kind of continuing to see the prospects for that as we go forward and momentum.
Our real estate services business, which our US of our REO valuation business been profitable, little bit less profitable through the cycle, but continues to be a market leader across different categories of products and services, and we continue to expect to see a profitable contribution from that business.
And then the last one, which is our home Genius kind of our real estate. Third Platform, as I've mentioned in previous quarters, were continued focus on. We've significantly reduced the expense run rate of our business.
And the team is really continuing to make great progress around the data and analytics and computers, computer vision and AI tools that are embedded within our platform, and we're having that dialogue with partners across a variety of different interested parties. And as we have more to update, we'll update on that. But that's really kind of the updated across a particular all other category.

Bose George

Great. Thanks, and thanks for the colour there, and I appreciate you taking the questions.

Rick Thornberry

Our pleasure.

Operator

(inaudible) from Central bank America.

Hi. Thank you for taking my questions. I wanted to ask first about the pricing backdrop. Obviously appreciate that the in-force yield was steady and your comments about that's your expectation from here.
Should we take from that that the pricing environment remains quite stable? Or is that more a function of your individual pricing? Like I'm trying to understand what's going on in the market just from a competitive dynamic’s perspective, maybe even away from you. But just from any comments on that, just competitive environment and pricing in the market?

Derek Brummer

Hi, I’m Derek, coming to the pricing environment overall, I think it's been pretty consistent really for the last year-and-a-half to two years. And so as I would characterize, the pricing environment continues to be rational and disciplined.
You do see some material in their kind of around the edges in terms of pricing from quarter to quarter. And you'll see that reflected in kind of end market share movements when you look at kind of a top line.
But overall, I would say the price environment continues to be stable demand environment that we like because it allows us to leverage our analytics to really pick our spots and find value in the market. So we will only find value kind of across the risk spectrum, and that's been pretty consistent for quite some time.

Thank you. And then turning to the phones really kills more than the phones for many quarters now you'll have heard various related cure rates and been releasing a significant number of reserves.
And I guess the question I have is when does that become part of your history where you start actually lowering the same rate and taking less reserves upfront? Or is the thought process that it's better to be conservative, take the reserves upfront and then just release will make steel?

Sumita Pandit

Yes, I think it's a good question. And then I would say that, you know, when we think about our reserve assumptions, we always tried to be prudent and we always tried to look at it through the cycle. So clearly like it on the claim rates we see today, they are very low.
And we are obviously focused on making sure that the accounting assumptions to make our longer that government through the cycle. So I think you know, that's the reason why we've kept our 8% default-to-claim rate unchanged, even though you know, as you rightly pointed out, you know, had actual claim experience is very, very benign. So we don't see that environment to necessarily change our accounting assumptions, and we would like to continue to be prudent.

Can I ask one last time you'll hit 8% claim rate, Like any vintage that has hit that ?

Sumita Pandit

No, none of the none of our current vintages. And I would say it's been a while.

Rick Thornberry

Yes, I think you probably the answer. There will be some time prior to COVID. I remember the exact timeline, but if you remember back, I got here in 2017, we were actually coming down off the great financial crisis from a default to claim assumption.
So I think, you know, to your point here is sort of the things we were. As Sumita said, we're really looking forward versus like you have a point in time. And then we monitor the default portfolio performance. And as you look at our schedule in the materials that we provide, we call the triangle schedule, you can see how consistent that cure rate has been for a period of time.
I would say pre-COVID, we were coming down off the great financial crisis. And so as we look at kind of modelled losses going forward, we tried to anticipate that in the reserve because remember, we reserve to loans go two times delinquency and default.
But the other thing I would just highlight, which was just more good news is when we price with Derek and the team price, we priced through an app and anticipated kind of loss assumption, you're kind of going forward.
So all of the business that we've been riding that is going through that default cycle is far outperforming our pricing, which is zero, resulting in greater than expected returns on the business we wrote in previous periods, you know, and so when that turns you go back to some of those Sumita's comments, you know, we tried to will trying to have a through-the-cycle view and will continue trying to think through, sustainable trends that could influence that.
We do, however, believe that the housing cycle today remains generally positive with the supply demand imbalance, and that's giving consumers more opportunities to solve their own default and retain their equity. So we're going to continue to monitor it closely, but it's below extremely favourable trend. But you know, all we can do is continue to evaluate monitor as we go forward from an accounting point of view.

Got it. And I appreciate that. And particularly the slide 17 disclosure. And really that's what we were looking at and assume as you mentioned that we are almost back to (inaudible). I know what he's saying. Thank you.

Rick Thornberry

You may hear if you look out four quarters or maybe 90%, silver is very consistent and you know, continues to improve. So we will and we appreciate the question because it's something we internally are highly focused on is a pretty robust discussions each quarter as we go through and think through it. But thank you for the question.

Operator

Thank you. Scott Hanold from RBC Capital Markets.

Scott Hanold

Yes, thanks. Good morning. I'm just wondering, can you expand on that comment, Rick, you made expected private insurance mortgage insurance market to grow 10%.
Can you talk about some of the drivers you expect there? It sounds like you're pretty positive on that for 2025. And how you expect radio and to participate in that in terms of NIW growth as that happens?

Rick Thornberry

Yes. Again, thank you for the question. But I think we are when you look at the current industry forecasts and we look across the GSEs and the MBA and other sources that we kind of look to you can see there's an implied growth in the purchase market, little bit of refinances, which may or may not materialize depending upon interest rates. But we continue to see growth in the purchase market.
MI going to have a strong participation in that growth is. So that's really what drives the comments I made in my prepared comments is really just looking at industry forecasts now those though the skin, you have some degree of volatility as we go through the year, either plus or minus, depending upon where interest rates. But I think we're largely fuelled by a purchase market growth.
And we know historically that market has been some kind of slowed by the lack of inventory and the lack of churn in the existing homes and turnover from a new home new home sales perspective, even we'd like to see faster growth there.
But I think as we look to next year, the purchase market continues to expand would be our view and mortgage insurance is going to participate in that growth as well. The other part of your question about how we participate or are they come into our mortgage insurance team there and the team that market is there to explain them whether the earlier questions we have, the opportunity to leverage our data and analytics, our proprietary tools, our RADAR Rates to really select the risk profile and the risk return.
And they are driving economic value across selection to really pick and choose across that universe of purchase volume. So I think we're well positioned to kind of the target, the economic value alongside that growth. And I think as we've said before, we're not really focus on market share. We've turned that kind of tools across the broader market. So I think we're well positioned for that. And you know, like to see that, that growth materialize.

Scott Hanold

Okay. That's helpful detail. Just on the persistency that ticked up a little bit sequentially and others have kind of seeing flattish persistence or even down a little bit.
And I'm just wondering if you could comment on whether you think you can see further improvement there, and it's obviously closer to peak levels, but you have a lot of customers of a lot of our embedded home equity in their. So just curious what your what your thoughts are on persistency.

Sumita Pandit

Yes. I think on a 12-month basis, I would say our persistency has went in and around that 84% level. So I do think that you know what you're seeing as a small uptick in small fluctuations in the quarterly measure. We don't expect persistency to go up as such.
We think that we are pretty much at stable levels now it is possible that we see some pockets of refinance activity as rates decline and in which case, we'll see an impact in our persistency. But I would just remind you that 70% of our in-force book is still has been written at less than 6% now trade.
So we expect persistency to remain more or less high in the in the low 80s and feel pretty good about it.

Scott Hanold

Okay, great. And then just last question was just on use of excess capital. Now it sounds like buybacks is number one use, but Tom, you talked about dividend.
You're just increases in regular dividends, special dividends, reinvestments in the business, M&A or anything else like that? It sounds like you're through that is the data caps and at the lowest level, it's been probably ever at least from a long time. But just any thoughts on the excess capital uses over the next 12 months?

Sumita Pandit

Yes, I'll start and I'll jump in with other thoughts on some of the strategic uses. I would say, you know, as you pointed out, like we've been pretty consistent about our capital return this quarter.
We returned about $87 million last one year at three $60 million last three years, $1.2 billion last five years, $1.9 billion. So I think you'll see that we have been consistently returning capital back to shareholders and we are also the highest yielding dividends stock in the industry.
I would say, you know, from a forward view, I think in our prepared remarks, you mentioned that we use some of our excess Holdco liquidity to pay down our debt and brought down our leverage ratio to 18.5%. The bill, that date $844 million liquidity backup to about $1billion pretty quickly buyer.
And just given our expectation of dividend, somebody doesn't guarantee to group. So I think that we will continue to buy back shares. We believe that, you know, we are still reasonably undervalue guiding $1.5 is just in REO CI. And if you just think about in our last Investor Day, we've given some estimates of our expectation of future discounted earnings from our existing book.
That was about $13.5 a share. So we still think that we are trading reasonably below our intrinsic value and will continue to buy back shares. And we have the liquidity to do that. Rick you want to comment on some of our M&A initiatives

Rick Thornberry

so, I think for us, obviously, we're going to in the US in our businesses are kind of inorganic growth phases, continue to invest in our mortgage insurance business where we see opportunities. So those are kind of one form of strategic capital.
You mentioned M&A. We obviously get a lot of looks a lot of different M&A opportunities. We have done one for a while because we haven't really seen the value. But I would say like a normal capital allocation waterfall Summit and I and our team we go through, you know, we prioritize return of capital shareholders and being very disciplined and focused on that.
And then you know, thinking about how we invest either organically or inorganically to improve returns and long-term value for shareholders. So I think we have a pretty disciplined track record of how we manage capital.
The good news is today, we're in a situation where we have significant Holdco liquidity I submit to. So we just paid off our debt and we're going to still have near enough somewhere in that $1 billion category at year end. Tremendous PMIERs excess capital of $2.1 billion in the third quarter.
So we've got a lot of flexibility around our franchise to think about allocating capital effectively to improve returns for shareholders. So we always talk in hindsight, so not much forward to talk about there, but the best forward view is what we've done in the past. So I think sometimes it's trying to buy half of orders. Great.

Scott Hanold

Thanks for that detail.

Operator

Thank you, I'd like to turn it back to Rick Thornberry for closing remarks.

Rick Thornberry

Yes. Well, I appreciate everybody joining us today is Bill eventful week. I know we're probably of exhaustive from watching all the political activities over the last several months and coming to a conclusion.
But I appreciate your interest in Radian and look forward to crossing paths in the near future and continuing to answer your questions and answers share our insights about our business. So thank you very much and have a very happy holiday season.

Operator

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