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Note 4 - Segment Reporting (Note) | 9 Months Ended
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Sep. 30, 2021
Segment Reporting [Abstract] |
Segment Reporting | Segment Reporting We have two strategic business units that we manage separately—Mortgage and homegenius. Our Mortgage segment derives its revenue from mortgage insurance and other mortgage and risk services, including contract underwriting and fulfillment solutions provided to mortgage lending institutions and mortgage credit investors. Our homegenius segment offers a broad array of title, valuation, asset management, SaaS and other real estate services to mortgage lenders, mortgage and real estate investors, GSEs, real estate brokers and agents. In addition, we report as All Other activities that include: (i) income (losses) from assets held by our holding company; (ii) related general corporate operating expenses not attributable or allocated to our reportable segments; (iii) for all periods through its sale in January 2020, income and expenses related to Clayton; (iv) for all periods presented, the income and expenses related to our traditional appraisal services, which we wound down beginning in the fourth quarter of 2020; and (v) certain other immaterial revenue and expense items. As described in Note 4 of Notes to Consolidated Financial Statements in our 2020 Form 10-K, we implemented several changes to our segment reporting in 2020, including related to the wind down of our traditional appraisal business announced in the fourth quarter of 2020. All changes to the composition of our segment reporting have been reflected in our segment operating results for all periods presented. During the second quarter of 2021, our Real Estate segment was renamed “homegenius” to align with updates to our branding strategy for the segment’s products and services. The homegenius segment name change had no impact on the composition of our segments or on our previously reported historical financial position, results of operations, cash flow or segment level results. We allocate corporate operating expenses to both reportable segments based on each segment’s forecasted annual percentage of total revenue, which approximates the estimated percentage of management time spent on each segment. In addition, we allocate all corporate interest expense to our Mortgage segment, due to the capital-intensive nature of our mortgage insurance business. With the exception of goodwill and other acquired intangible assets that relate to our homegenius segment, which are reviewed as part of our annual goodwill impairment assessment, we do not manage assets by segment. See Note 1 for additional details about our Mortgage and homegenius businesses. Adjusted Pretax Operating Income (Loss) 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 each of Radian’s business segments and to allocate resources to the segments. Adjusted pretax operating income (loss) is defined as pretax income (loss) excluding the effects of: (i) net gains (losses) on investments and other financial instruments; (ii) loss on extinguishment of debt; (iii) amortization and impairment of goodwill and other acquired intangible assets; and (iv) impairment of other long-lived assets and other non-operating items, such as impairment of internal-use software, gains (losses) from the sale of lines of business and acquisition-related income and expenses. See Note 4 of Notes to Consolidated Financial Statements in our 2020 Form 10-K for detailed information regarding items excluded from adjusted pretax operating income (loss), including the reasons for their treatment. Although adjusted pretax operating income (loss) excludes certain items that have occurred in the past and are expected to occur in the future, the excluded items represent those that are: (i) not viewed as part of the operating performance of our primary activities or (ii) not expected to result in an economic impact equal to the amount reflected in pretax income (loss). The reconciliation of adjusted pretax operating income (loss) for our reportable segments to consolidated pretax income (loss) is as follows.
Reconciliation of adjusted pretax operating income (loss) by segment
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Adjusted pretax operating income (loss) |  |  |  |  |  |  |  |
Mortgage |  | $ | 163,124 |  |  | $ | 147,336 |  |  | $ | 528,873 |  |  | $ | 267,182 |
homegenius |  | (5,557) |  |  | (5,046) |  |  | (25,208) |  |  | (12,108) |
Total adjusted pretax operating income (loss) for reportable segments (1) |  | 157,567 |  |  | 142,290 |  |  | 503,665 |  |  | 255,074 |
All Other adjusted pretax operating income (loss) |  | 3,082 |  |  | 2,690 |  |  | 9,019 |  |  | 6,006 |
Net gains (losses) on investments and other financial instruments |  | 2,098 |  |  | 17,652 |  |  | 12,578 |  |  | 42,901 |
Amortization and impairment of other acquired intangible assets |  | (862) |  |  | (961) |  |  | (2,587) |  |  | (2,919) |
Impairment of other long-lived assets and other non-operating items |  | (244) |  |  | (466) |  |  | (4,349) |  |  | (788) |
Consolidated pretax income |  | $ | 161,641 |  |  | $ | 161,205 |  |  | $ | 518,326 |  |  | $ | 300,274 |
(1)Includes allocated corporate operating expenses and depreciation expense as follows.
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Mortgage |  |  |  |  |  |  |  |
Allocated corporate operating expenses (a) |  | $ | 34,341 |  |  | $ | 29,127 |  |  | $ | 95,225 |  |  | $ | 83,700 |
Direct depreciation expense |  | 2,240 |  |  | 2,895 |  |  | 7,342 |  |  | 9,719 |
homegenius |  |  |  |  |  |  |  |
Allocated corporate operating expenses (b) |  | $ | 4,918 |  |  | $ | 3,248 |  |  | $ | 13,635 |  |  | $ | 9,438 |
Direct depreciation expense |  | 639 |  |  | 679 |  |  | 1,828 |  |  | 2,113 |
(a)Includes allocated depreciation expense of $0.8 million and $2.5 million for the three and nine months ended September 30, 2021, respectively, and $0.8 million and $1.7 million for the three and nine months ended September 30, 2020, respectively. (b)Includes allocated depreciation expense of $0.1 million and $0.4 million for the three and nine months ended September 30, 2021, respectively, and $0.1 million and $0.2 million for the three and nine months ended September 30, 2020, respectively. Revenue The reconciliation of revenue for our reportable segments to consolidated revenues is as follows.
Reconciliation of revenues by segment
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Revenues |  |  |  |  |  |  |  |
Mortgage (1) |  | $ | 274,659 |  |  | $ | 320,013 |  |  | $ | 862,757 |  |  | $ | 922,040 |
homegenius (2) |  | 45,091 |  |  | 29,793 |  |  | 104,337 |  |  | 78,866 |
Total revenues for reportable segments |  | 319,750 |  |  | 349,806 |  |  | 967,094 |  |  | 1,000,906 |
All Other revenues (1) |  | 3,996 |  |  | 8,641 |  |  | 12,100 |  |  | 25,869 |
Net gains (losses) on investments and other financial instruments |  | 2,098 |  |  | 17,652 |  |  | 12,578 |  |  | 42,901 |
Other non-operating revenue |  | — |  |  | — |  |  | — |  |  | 247 |
Elimination of inter-segment revenues |  | (86) |  |  | (865) |  |  | (207) |  |  | (1,167) |
Total revenues |  | $ | 325,758 |  |  | $ | 375,234 |  |  | $ | 991,565 |  |  | $ | 1,068,756 |
(1)Includes immaterial inter-segment revenues for the nine months ended September 30, 2020. (2)Includes immaterial inter-segment revenues for the three and nine months ended September 30, 2021 and 2020. The table below, which represents total services revenue on our condensed consolidated statements of operations for the periods indicated, represents the disaggregation of services revenues from external customers, by type.
Services revenue
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) |  | 2021 |  | 2020 |  | 2021 |  | 2020
homegenius services |  |  |  |  |  |  |  |
Title services |  | $ | 12,926 |  |  | $ | 5,085 |  |  | $ | 30,382 |  |  | $ | 17,671 |
Asset management services |  | 9,538 |  |  | 7,379 |  |  | 20,976 |  |  | 22,275 |
Valuation services |  | 9,418 |  |  | 7,177 |  |  | 22,798 |  |  | 17,195 |
SaaS and other real estate services |  | 837 |  |  | 2,120 |  |  | 2,742 |  |  | 5,340 |
Mortgage services |  | 5,027 |  |  | 3,914 |  |  | 13,110 |  |  | 10,965 |
All Other services (1) |  | 27 |  |  | 8,268 |  |  | 124 |  |  | 20,499 |
Total services revenue |  | $ | 37,773 |  |  | $ | 33,943 |  |  | $ | 90,132 |  |  | $ | 93,945 |
(1)Includes services revenue from Clayton prior to its sale in January 2020 and amounts related to our traditional appraisal business, which we wound down beginning in the fourth quarter of 2020. Revenue recognized related to services made available to customers and billed is reflected in accounts and notes receivable. Accounts and notes receivable includes $17.7 million and $18.8 million as of September 30, 2021 and December 31, 2020, respectively, related to services revenue contracts. Revenue recognized related to services performed and not yet billed is recorded in unbilled receivables and reflected in other assets. See Note 2 of Notes to Consolidated Financial Statements in our 2020 Form 10-K for information regarding our accounting policies and the services we offer.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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