Radian Announces Completion of Quota Share Reinsurance Agreement to Proactively Manage MI Risk-to-Capital and Releases Delinquency Data for March
Initially cedes $532 million in MI risk in force as of April 1, 2012
Writes $6.5 billion of new MI business in first quarter of 2012
Delinquencies Decline Again in March
PHILADELPHIA--(BUSINESS WIRE)--Apr. 10, 2012--
Radian Guaranty Inc., the mortgage insurance subsidiary (MI) of Radian
Group Inc., today announced that it has entered a quota share
reinsurance agreement, effective April 1, 2012, with an external
reinsurance provider in order to proactively manage its mortgage
insurance risk-to-capital position. This represents the completion of
the reinsurance arrangement described by the company during its fourth
quarter 2011 earnings conference call, and is a continuation of the
company’s ongoing capital management activities designed to increase
financial flexibility. The company also released data for new insurance
written and primary mortgage insurance delinquencies for March 2012.
“The risk-to-capital ratio is an important financial measure for any
mortgage insurer, and we have demonstrated our ability over the past
year to proactively manage Radian Guaranty’s risk-to-capital position
through investment gains, internal reinsurance, restructuring and
commutations,” stated Radian CEO S.A. Ibrahim. “The external reinsurance
agreement provides us with additional capital flexibility. We are off to
a strong start in 2012 with $6.5 billion of high-quality, new business
written in the first quarter, along with another decline in delinquent
loans.”
Quota Share Reinsurance Agreement
Through the quota share reinsurance agreement, Radian is ceding 20
percent of its new insurance written (NIW) beginning with the fourth
quarter of 2011. As of April 1, 2012, this represents $532 million of
the company’s risk in force. The total amount of risk that may be ceded
through this arrangement is limited and is expected to be between $1.25
billion and $1.6 billion. At a 25 to 1 risk-to-capital ratio, the
equivalent capital benefit associated with ceding this amount of risk
would be between $50 million and $62.5 million. Radian has the ability,
at its option, to commute two-thirds of the reinsurance on December 31,
2014.
March Delinquency Data
The information below regarding new delinquencies and cures is reported
to Radian from loan servicers. The accuracy of these reports may be
affected by several factors, including the date on which the report is
generated and by the timing of servicing transfers. These details may
also be found on Radian’s website at http://www.radian.biz/page?name=NewsReleases.
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January
2012
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February
2012
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March
2012
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Primary New Insurance Written ($ in billions)
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$2.00
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$2.05
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$2.43
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Beginning Primary Delinquent Inventory
(# of loans)
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110,861
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109,803
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107,230
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Plus: New Delinquencies
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7,192
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6,073
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5,394
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Less: Cures
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(6,138)
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(6,581)
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(6,678)
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Less: Paids
(including those charged to a deductible or captive)
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(1,118)
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(1,198)
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(1,506)
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Less: Rescissions and Denials
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(994)
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(867)
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(1,413)
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Ending Primary Delinquent Inventory
(# of loans)
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109,803
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107,230
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103,027
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About Radian
Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia, provides
private mortgage insurance and related risk mitigation products and
services to mortgage lenders nationwide through its principal operating
subsidiary, Radian Guaranty Inc. These services help promote and
preserve homeownership opportunities for homebuyers, while protecting
lenders from default-related losses on residential first mortgages and
facilitating the sale of low-downpayment mortgages in the secondary
market. Additional information may be found at www.radian.com.
Forward-Looking Statements
Some of the statements in this press release may constitute
“forward-looking statements” within the meaning of the United States
Private Securities Litigation Reform Act of 1995. These statements are
based on our current expectations, estimates and projections. Words such
as "will," "expects," "believes" and similar expressions are used to
identify these forward-looking statements. These statements are only
predictions and as such are not guarantees of future performance and
involve risks, uncertainties and assumptions that are difficult to
predict. Forward-looking statements are based upon assumptions as to
future events or our future financial performance that may not prove to
be accurate. Actual outcomes and results may differ materially from what
is expressed or forecast in these forward-looking statements. As a
result, these statements speak only as of the date they were made, and
we undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. For more information regarding these risks
and uncertainties as well as certain additional risks that we face, you
should refer to the Risk Factors detailed in Item 1A of Part I of our
Annual Report on Form 10-K for the year ended December 31, 2011 and
subsequent reports and registration statements filed from time to time
with the Securities and Exchange Commission.
Source: Radian Group Inc.
Radian Group Inc.
Terri Perry, 215-231-1486
terri.williams-perry@radian.com
