RADIAN GROUP INCRDN

RADIAN GROUP INC Goodwill & Intangibles Disclosure

10-KFiled Feb 25, 20222 min read
Goodwill and Other Acquired Intangible Assets, Net
All of our goodwill and other acquired intangible assets relate to our homegenius segment. There was no change to our goodwill balance of $9.8 million during the years ended December 31, 2021 and 2020.
The following is a summary of the gross and net carrying amounts and accumulated amortization (including impairment) of our other acquired intangible assets as of the periods indicated.
Other acquired intangible assets
December 31, 2021 December 31, 2020
(In thousands)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Client relationships$43,550 $(34,620)$8,930 $43,550 $(31,559)$11,991 
Technology8,285 (7,675)610 8,285 (7,370)915 
Licenses 463 (212)251 463 (128)335 
Total$52,298 $(42,507)$9,791 $52,298 $(39,057)$13,241 
For the years ended December 31, 2021, 2020 and 2019, amortization expense (including impairment) was $3.4 million, $5.1 million and $8.6 million, respectively. The estimated amortization expense for 2022 and thereafter is as follows.
Estimated amortization expense
(In thousands)Estimated Amortization Expense
2022$3,397 
20233,361 
20243,033 
Thereafter— 
Total$9,791 
Impairment Analysis
As part of our 2021 annual goodwill impairment assessment performed during the fourth quarter, we estimated the fair value of the reporting unit using primarily an income approach. The key factor in our fair value analysis was forecasted future cash flows. We considered both positive and negative factors and concluded that, after considering all of the factors and evidence available, there was no impairment of goodwill indicated as of the measurement date because the estimated fair value of the reporting unit exceeded our carrying amount. Additionally, there was no impairment indicated for the remaining other acquired intangible assets as of December 31, 2021.
Based primarily on the wind down of our traditional appraisal business in the fourth quarter of 2020, we recognized impairments of $1.0 million and $0.3 million related to client relationships and technology, respectively, as of December 31, 2020.
In January 2020, we completed the sale of Clayton, through which we provided mortgage services related to loan acquisition, RMBS securitization and distressed asset reviews and servicer and loan surveillance services. We recognized an impairment charge of $4.8 million for goodwill allocated to the Clayton asset group and an impairment of other acquired intangible assets for $13.7 million as of December 31, 2019.

About Goodwill & Intangibles Disclosures

Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.

Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.

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