Radian Receives Approval of RMAI Subsidiary from Freddie Mac through 2013
Company continues to write new MI business in Radian Guaranty
PHILADELPHIA--(BUSINESS WIRE)--Dec. 21, 2012--
Radian Guaranty Inc., the mortgage insurance subsidiary of Radian Group
Inc., today announced that on December 20, 2012, Freddie Mac agreed to
extend its approval of Radian Mortgage Assurance Inc. (RMAI), a wholly
owned subsidiary of Radian Guaranty, as a limited eligible mortgage
insurer for an additional one-year period that will expire on December
31, 2013. As previously disclosed, RMAI maintains a similar approval for
the same time period from Fannie Mae.
As of September 30, 2012, Radian Guaranty maintained a risk-to-capital
ratio of 20.1:1, which is below the 25:1 risk-to-capital limit imposed
by certain states. In the event Radian Guaranty is no longer in
compliance with the risk-based capital requirements of certain states,
the company plans to write new mortgage insurance business in those
states through state-specific waivers or similar relief, or by using
RMAI. The amended approval from Freddie Mac does not require any capital
contributions from Radian Group to Radian Guaranty or RMAI beyond those
required under the original approval. Based on the original approval, as
previously announced, Radian Group contributed $100 million to Radian
Guaranty in February 2012, and is required to contribute $50 million of
additional capital to RMAI only in the event that Radian Guaranty were
to exceed the risk-based capital requirements of those states for which
a waiver or other relief has not been obtained. RMAI currently has $19
million of existing capital.
“Our top priority at Radian is to continue writing new, high-quality
mortgage insurance business. This helps to improve the credit
composition of our mortgage insurance book and better position Radian
for a return to operating profitability next year,” stated Chief
Executive Officer S.A. Ibrahim. “The support of our stakeholders is
critical to this effort and the extension of Freddie Mac’s approval of
RMAI is an illustration of that support.”
In addition to the states approved under the original agreement with
Freddie Mac, the amended approval also approves RMAI to write business
in Idaho provided that Radian Guaranty continues its efforts to obtain a
waiver approval or denial from Idaho state insurance regulators.
Further, the amended approval requires Radian Guaranty to diligently
pursue an extension of existing waivers beyond their current expiration
dates, including those waivers in California, Florida, Illinois and New
Jersey that expire as of the end of 2012. The company has submitted
requests in each of these states for an extension of the existing
waivers. To the extent that any such extension is not granted, Radian
Guaranty is required to seek further modification of the amended
approval to allow the company to use RMAI in such states.
The amended approval with Freddie Mac includes an additional condition
related to the time-frame by which Radian Guaranty evaluates and
internally resolves claims. Specifically, the amended approval provides
that: (1) within 120 days of the amended approval, Radian Guaranty will
pay to Freddie Mac or otherwise resolve internally (e.g., through loss
mitigation actions such as rescission or denial) a majority of all
claims outstanding greater than 90 days; and (2) going forward, a
majority of claims must be paid or otherwise resolved internally (e.g.,
through loss mitigation actions such as rescission or denial) within 90
days of the date the claims are perfected. The terms and conditions of
the amended approval may be found on the Form 8-K filed by Radian Group
Inc. with the SEC today and the original approval may be found as
Exhibit 10.66 to Radian Group Inc.’s Annual Report on Form 10-K for the
year ended December 31, 2011. As was the case with the original
approval, Freddie Mac, in its sole discretion, may modify the terms and
conditions of the amended approval or withdraw it.
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.
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, Item 1A
of Part II of our Quarterly Reports on Form 10-Q filed in 2012, and
subsequent reports and registration statements filed from time to time
with the Securities and Exchange Commission.
Source: Radian Group Inc.
Radian Group Inc.
Emily Riley, 215-231-1035
emily.riley@radian.com
