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Delaware
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23-2691170
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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1601 Market Street, Philadelphia, PA
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19103
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $.001 par value per share
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New York Stock Exchange
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Preferred Stock Purchase Rights
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New York Stock Exchange
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Large accelerated filer
x
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Accelerated filer
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o
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Non-accelerated filer
o
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(Do not check if a smaller reporting company)
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Smaller reporting company
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o
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Form 10-K
Reference Document
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Definitive Proxy Statement for the Registrant’s 2016 Annual Meeting of Stockholders
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Part III
(Items 10 through 14)
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TABLE OF CONTENTS
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Page
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PART I
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Item 1
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Item 1A
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Item 1B
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Item 2
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Item 3
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Item 4
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PART II
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Item 5
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Item 6
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Item 7
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Item 7A
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Item 8
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Item 9
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Item 9A
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Item 9B
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PART III
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Item 10
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Item 11
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Item 12
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Item 13
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Item 14
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PART IV
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Item 15
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Term
|
Definition
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QM
|
Qualified mortgage
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QM Rule
|
Rule issued by the CFPB on January 10, 2013, defining qualified mortgage and ability to repay requirements
|
QSR
|
Quota share reinsurance
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QSR Transactions
|
The Initial QSR Transaction and Second QSR Transaction, collectively
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Radian
|
Radian Group Inc. together with its consolidated subsidiaries
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Radian Asset Assurance
|
Radian Asset Assurance Inc., a New York domiciled insurance company that was formerly a subsidiary of Radian Guaranty
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Radian Asset Assurance Stock Purchase Agreement
|
The Stock Purchase Agreement dated December 22, 2014, between Radian Guaranty and Assured to sell 100% of the issued and outstanding shares of Radian Asset Assurance, Radian’s financial guaranty insurance subsidiary, to Assured
|
Radian Group
|
Radian Group Inc., the registrant
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Radian Guaranty
|
Radian Guaranty Inc., a Pennsylvania domiciled insurance subsidiary of Radian Group
|
Radian Insurance
|
Radian Insurance Inc., a Pennsylvania domiciled insurance subsidiary of Radian Guaranty
|
Radian Mortgage Insurance
|
Radian Mortgage Insurance Inc., a Pennsylvania domiciled subsidiary of Radian Guaranty
|
Radian Reinsurance
|
Radian Reinsurance Inc., a Pennsylvania domiciled insurance subsidiary of Radian Group
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RBC States
|
Risk-based capital states, which are those states that currently impose a statutory or regulatory risk-based capital requirement
|
Red Bell
|
Red Bell Real Estate, LLC, a wholly-owned subsidiary of Clayton
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Reinstatements
|
Reversals of previous Rescissions, Claim Denials and Claim Curtailments
|
REIT
|
Real Estate Investment Trust
|
REMIC
|
Real Estate Mortgage Investment Conduit
|
REO
|
Real Estate Owned
|
Rescission
|
Our legal right, under certain conditions, to unilaterally rescind coverage on our mortgage insurance policies if we determine that a loan did not qualify for insurance
|
RESPA
|
Real Estate Settlement Procedures Act of 1974
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RGRI
|
Radian Guaranty Reinsurance Inc., a Pennsylvania domiciled insurance subsidiary of Enhance Financial Services Group Inc., a New York domiciled non-insurance subsidiary of Radian Group
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RIF
|
Risk in force is equal to the underlying loan unpaid principal balance multiplied by the insurance coverage percentage
|
Risk-to-capital
|
Under certain state regulations, a minimum ratio of statutory capital calculated relative to the level of net risk in force
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RMAI
|
Radian Mortgage Assurance Inc., a Pennsylvania domiciled insurance subsidiary of Radian Guaranty
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RMBS
|
Residential mortgage-backed securities
|
RSU
|
Restricted stock unit
|
S&P
|
Standard & Poor’s Financial Services LLC
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SAP
|
Statutory accounting practices include those required or permitted, if applicable, by the insurance departments of the respective states of domicile of our insurance subsidiaries
|
SARs
|
Stock appreciation rights
|
SEC
|
United States Securities and Exchange Commission
|
Second QSR Transaction
|
Second Quota share reinsurance transaction entered into with a third-party reinsurance provider in the fourth quarter of 2012
|
Second-liens
|
Second-lien mortgage loans
|
Senior Notes due 2015
|
Our 5.375% unsecured senior notes due June 2015 ($250 million principal amount)
|
Senior Notes due 2017
|
Our 9.000% unsecured senior notes due June 2017 ($195.5 million principal amount)
|
Senior Notes due 2019
|
Our 5.500% unsecured senior notes due June 2019 ($300 million principal amount)
|
Senior Notes due 2020
|
Our 5.250% unsecured senior notes due June 2020 ($350 million principal amount)
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Services
|
Radian’s Mortgage and Real Estate Services business segment, which provides mortgage- and real estate-related products and services to the mortgage finance market
|
Term
|
Definition
|
Servicing Only Loans
|
With respect to the BofA Settlement Agreement, loans other than Legacy Loans that were or are serviced by the Insureds and were 90 days or more past due as of July 31, 2014, or if servicing has been transferred to a servicer other than the Insureds, 90 days or more past due as of the transfer date
|
SFR
|
Single family rental
|
Single Premium Policy/Policies
|
Insurance policies where premiums are paid in a single payment at origination
|
Single Premium QSR
|
Quota share reinsurance agreement covering certain Single Premium Policies, entered into with a panel of third-party reinsurers in the first quarter of 2016
|
Sovereign
|
Sovereign or independent governmental units, including various levels of government (sub-sovereign), collectively
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Stage of Default
|
The stage a loan is in relative to the foreclosure process, based on whether or not a foreclosure sale has been scheduled or held
|
Statutory RBC Requirement
|
Risk-based capital requirement imposed by the RBC States, requiring a minimum surplus level and, in certain states, a minimum ratio of statutory capital relative to the level of risk
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Structured Transactions
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With respect to mortgage insurance, transactions in which mortgage insurance is provided on a group of mortgages after they have been originated. Structured Transactions contrast with Flow Business, in which mortgage insurance is provided on mortgages on an individual loan basis as they are originated
|
Subject Loans
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Loans covered under the BofA Settlement Agreement, comprising Legacy Loans and Servicing Only Loans
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Surplus Note
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0% Note issued in December 2015 by Radian Guaranty to Radian Group, due December 31, 2025 ($325 million principal amount)
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The White Case
|
A putative class action under RESPA titled White v. PNC Financial Services Group filed in the U.S. District Court for the Eastern District of Pennsylvania
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The Menichino Case
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A putative class action under RESPA titled Menichino, et al. v. Citibank, N.A., et al. filed in the U.S. District Court for the Western District of Pennsylvania
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The Manners Case
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A putative class action under RESPA titled Manners, et al. v. Fifth Third Bank, et al. filed in the U.S. District Court for the Western District of Pennsylvania
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TILA
|
Truth in Lending Act
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Time in Default
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The time period from the point a loan reaches default status (based on the month the default occurred) to the current reporting date
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TRID
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TILA-RESPA Integrated Disclosure
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TSR
|
Total stockholder return
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U.S.
|
The United States of America
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U.S. Treasury
|
United States Department of the Treasury
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Unearned Premium Reserves
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Premiums received but not yet earned
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VA
|
U.S. Department of Veterans Affairs
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ValuAmerica
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ValuAmerica, Inc., a wholly-owned subsidiary of Clayton
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VIE
|
Variable interest entity is a legal entity subject to the variable interest entity subsections of the accounting standard regarding consolidation, and generally includes a corporation, trust or partnership in which, by design, equity investors do not have a controlling financial interest or do not have sufficient equity at risk to finance activities without additional subordinated financial support
|
Wisconsin OCI
|
Office of the Commissioner of Insurance of the State of Wisconsin
|
•
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changes in general economic and political conditions, including in particular but without limitation, unemployment rates and changes in housing markets and mortgage credit markets;
|
•
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changes in the way customers, investors, regulators or legislators perceive the strength of private mortgage insurers;
|
•
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Radian Guaranty Inc.’s ability to remain eligible under the PMIERs and other applicable requirements imposed by the FHFA and by the GSEs to insure loans purchased by the GSEs;
|
•
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our ability to maintain sufficient holding company liquidity to meet our short- and long-term liquidity needs and to successfully execute and implement our capital plans, including our ability to enter into and receive GSE approval for a reinsurance transaction to reduce exposure to our Single Premium Policies, which we may not be able to do on favorable terms, if at all;
|
•
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our ability to successfully execute and implement our business plans and strategies, including in particular but without limitation, plans and strategies that require GSE approval;
|
•
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our ability to maintain an adequate level of capital in our insurance subsidiaries to satisfy existing and future state regulatory requirements;
|
•
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changes in the charters or business practices of, or rules or regulations imposed by or applicable to the GSEs;
|
•
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any disruption in the servicing of mortgages covered by our insurance policies, as well as poor servicer performance;
|
•
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a decrease in the Persistency Rates of our monthly premium mortgage insurance policies;
|
•
|
heightened competition in our mortgage insurance business, including in particular but without limitation, increased price competition;
|
•
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changes to the current system of housing finance;
|
•
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the effect of the Dodd-Frank Act on the financial services industry in general, and on our businesses in particular;
|
•
|
the adoption of new laws and regulations, or changes in existing laws and regulations, or the way they are interpreted;
|
•
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the amount and timing of potential payments or adjustments associated with federal or other tax examinations, including deficiencies assessed by the IRS resulting from its examination of our 2000 through 2007 tax years, which we are currently contesting;
|
•
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the possibility that we may fail to estimate accurately the likelihood, magnitude and timing of losses in connection with establishing loss reserves for our mortgage insurance business;
|
•
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volatility in our results of operations caused by changes in the fair value of our assets and liabilities, including a significant portion of our investment portfolio;
|
•
|
changes in GAAP or SAP rules and guidance, or their interpretation;
|
•
|
legal and other limitations on amounts we may receive from our subsidiaries; and
|
•
|
the possibility that we may need to impair the estimated fair value of goodwill established in connection with our acquisition of Clayton.
|
Item 1.
|
Business.
|
KEY ACCOMPLI
SHMENTS FO
R 2015
|
• Increased pretax income from continuing operations for 2015 by 8% over 2014, from $407.2 million to $437.8 million
|
• Increased adjusted pretax operating income for 2015 by 49% over 2014, from $342.4 million to $510.9 million
(1)
|
• Effectively managed risk and capital positions to achieve PMIERs compliance by the December 31, 2015 effective date
|
• Completed the sale of Radian Asset Assurance for a purchase price of approximately $810 million, supporting PMIERs compliance and our strategic focus on the mortgage and real estate industries
|
• Completed a series of debt and equity transactions to strengthen our capital position, reducing our overall cost of capital and improving our debt maturity profile
|
• Wrote $41.4 billion of NIW, an increase of 11% over 2014
»
NIW consisted of 100% Prime business; 62% with FICO of 740 or above
»
Added 136 new mortgage insurance customers in 2015
|
• Grew our IIF to $175.6 billion at December 31, 2015, from $171.8 billion as of December 31, 2014
|
• Improved composition of mortgage insurance portfolio
»
New business written after 2008 represents 75% of primary RIF, or 84% including HARP volume. This high quality business is expected to generate strong returns on capital
|
• Continued improvement in credit quality of mortgage insurance portfolio
»
Experienced 22% decline in total defaults in 2015 compared to 2014
|
• Clayton acquired Red Bell and ValuAmerica, expanding the scope of our Services offerings and advancing our strategy to be positioned to offer products and services throughout the entire mortgage value chain
|
(1)
|
Adjusted pretax operating income is a non-GAAP financial measure. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Consolidated—Use of Non-GAAP Financial Measure” for a reconciliation of adjusted pretax operating income to the most comparable GAAP measure, pretax income from continuing operations.
|
RADIAN’S LONG-TERM STRATEGIC OBJECTIVES
|
• Grow earnings per share while maintaining attractive returns on equity
»
Write high-quality and profitable NIW
»
Improve margins through efficiency initiatives and business mix
|
• Expand the role of mortgage insurance in the mortgage finance industry
|
• Grow fee income by expanding our presence in the real estate and mortgage finance industries
|
• Enhance our financial strength and improve our debt maturity profile
|
• Manage risk and compliance proactively through strong governance and culture
|
II.
|
Mortgage Insurance
|
A.
|
Business
|
B.
|
Mortgage Insurance Portfolio
|
•
|
general economic conditions (in particular home prices and unemployment);
|
•
|
the age of the loans insured;
|
•
|
the geographic dispersion of the properties securing the insured loans and the condition of the housing market;
|
•
|
the quality of underwriting decisions at loan origination; and
|
•
|
the credit characteristics of the borrower and the characteristics of the loans insured (including LTV, purpose of the loan, type of loan instrument, source of down payment, and type of underlying property securing the loan).
|
1.
|
Direct Primary RIF by Year of Policy Origination
|
|
December 31, 2015
|
|||||||||||||||||
($ in millions)
|
RIF
|
|
Number of Defaults
|
|
Delinquency Rate
|
|
Percentage of Reserve for Losses
|
|
Average FICO
(1)
at Origination
|
|
Original Average LTV
|
|||||||
2005 and prior
|
$
|
2,823
|
|
|
13,287
|
|
|
13.9
|
%
|
|
34.7
|
%
|
|
675
|
|
|
89.4
|
%
|
2006
|
1,666
|
|
|
5,649
|
|
|
13.0
|
|
|
16.7
|
|
|
688
|
|
|
91.0
|
|
|
2007
|
3,891
|
|
|
9,089
|
|
|
10.6
|
|
|
31.8
|
|
|
701
|
|
|
92.5
|
|
|
2008
|
2,798
|
|
|
3,727
|
|
|
6.4
|
|
|
10.9
|
|
|
726
|
|
|
90.7
|
|
|
2009
|
736
|
|
|
436
|
|
|
2.5
|
|
|
1.0
|
|
|
754
|
|
|
89.8
|
|
|
2010
|
616
|
|
|
167
|
|
|
1.3
|
|
|
0.4
|
|
|
764
|
|
|
91.6
|
|
|
2011
|
1,294
|
|
|
279
|
|
|
1.1
|
|
|
0.5
|
|
|
761
|
|
|
91.9
|
|
|
2012
|
5,010
|
|
|
596
|
|
|
0.7
|
|
|
1.1
|
|
|
762
|
|
|
92.0
|
|
|
2013
|
8,056
|
|
|
1,037
|
|
|
0.7
|
|
|
1.6
|
|
|
756
|
|
|
92.3
|
|
|
2014
|
7,646
|
|
|
837
|
|
|
0.6
|
|
|
1.1
|
|
|
747
|
|
|
92.6
|
|
|
2015
|
10,091
|
|
|
199
|
|
|
0.1
|
|
|
0.2
|
|
|
748
|
|
|
92.4
|
|
|
Total
|
$
|
44,627
|
|
|
35,303
|
|
|
|
|
|
100.0
|
%
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
2.
|
Geographic Dispersion
|
|
December 31,
|
||||||||||
|
2015
|
|
2014
|
||||||||
Top Ten States
|
RIF
|
|
Reserve for Losses
|
|
RIF
|
|
Reserve for Losses
|
||||
California
|
12.8
|
%
|
|
6.5
|
%
|
|
13.7
|
%
|
|
6.8
|
%
|
Texas
|
7.5
|
|
|
3.6
|
|
|
7.1
|
|
|
3.1
|
|
Florida
|
6.2
|
|
|
13.1
|
|
|
6.0
|
|
|
16.8
|
|
Illinois
|
5.7
|
|
|
5.3
|
|
|
5.6
|
|
|
6.1
|
|
Georgia
|
4.2
|
|
|
3.5
|
|
|
4.3
|
|
|
3.2
|
|
New Jersey
|
3.8
|
|
|
12.2
|
|
|
3.9
|
|
|
9.8
|
|
Virginia
|
3.5
|
|
|
1.6
|
|
|
3.4
|
|
|
1.5
|
|
Pennsylvania
|
3.2
|
|
|
3.7
|
|
|
3.2
|
|
|
3.8
|
|
Colorado
|
3.1
|
|
|
0.8
|
|
|
3.2
|
|
|
1.0
|
|
Arizona
|
3.1
|
|
|
1.3
|
|
|
3.2
|
|
|
1.4
|
|
Total
|
53.1
|
%
|
|
51.6
|
%
|
|
53.6
|
%
|
|
53.5
|
%
|
|
|
|
|
|
|
|
|
|
December 31,
|
||||||||||
|
2015
|
|
2014
|
||||||||
Top Fifteen CBSAs
(1)
|
RIF
|
|
Reserve for Losses
|
|
RIF
|
|
Reserve for Losses
|
||||
Chicago, IL-IN-WI
|
5.4
|
%
|
|
5.0
|
%
|
|
5.3
|
%
|
|
5.8
|
%
|
New York, NY-NJ-PA
|
4.9
|
|
|
18.8
|
|
|
5.0
|
|
|
15.0
|
|
Los Angeles - Long Beach, CA
|
3.7
|
|
|
1.9
|
|
|
4.1
|
|
|
2.0
|
|
Washington, DC-MD-VA
|
3.6
|
|
|
2.8
|
|
|
3.6
|
|
|
2.4
|
|
Atlanta, GA
|
3.4
|
|
|
2.6
|
|
|
3.4
|
|
|
2.4
|
|
Dallas, TX
|
2.9
|
|
|
1.2
|
|
|
2.7
|
|
|
1.1
|
|
Philadelphia, PA-NJ-DE-MD
|
2.6
|
|
|
3.9
|
|
|
2.6
|
|
|
3.4
|
|
Phoenix/Mesa, AZ
|
2.3
|
|
|
0.9
|
|
|
2.3
|
|
|
0.9
|
|
Houston, TX
|
2.0
|
|
|
1.2
|
|
|
2.0
|
|
|
1.0
|
|
Boston, MA-NH
|
2.0
|
|
|
1.6
|
|
|
2.0
|
|
|
1.4
|
|
Denver, CO
|
2.0
|
|
|
0.4
|
|
|
2.1
|
|
|
0.5
|
|
Minneapolis-St. Paul, MN-WI
|
1.9
|
|
|
0.8
|
|
|
1.9
|
|
|
0.9
|
|
Miami, FL
|
1.8
|
|
|
4.9
|
|
|
1.8
|
|
|
6.0
|
|
Riverside-San Bernardino, CA
|
1.7
|
|
|
1.2
|
|
|
1.7
|
|
|
1.3
|
|
Seattle, WA
|
1.6
|
|
|
1.3
|
|
|
1.6
|
|
|
1.8
|
|
Total
|
41.8
|
%
|
|
48.5
|
%
|
|
42.1
|
%
|
|
45.9
|
%
|
|
|
|
|
|
|
|
|
3.
|
Mortgage Loan Characteristics
|
|
December 31,
|
||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Prime
|
$
|
202.4
|
|
|
$
|
200.2
|
|
|
$
|
195.8
|
|
Alt-A
|
190.6
|
|
|
190.3
|
|
|
190.0
|
|
|||
A minus and below
|
129.0
|
|
|
129.5
|
|
|
129.9
|
|
|||
Total portfolio
|
199.3
|
|
|
196.8
|
|
|
192.1
|
|
C.
|
Defaults and Claims
|
|
December 31,
|
||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||||||||
States with highest number of defaults:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Florida
|
3,571
|
|
|
10.1
|
%
|
|
6,122
|
|
|
13.5
|
%
|
|
9,530
|
|
|
15.6
|
%
|
New Jersey
|
2,686
|
|
|
7.6
|
|
|
3,103
|
|
|
6.8
|
|
|
3,503
|
|
|
5.8
|
|
New York
|
2,682
|
|
|
7.6
|
|
|
3,161
|
|
|
7.0
|
|
|
3,632
|
|
|
6.0
|
|
Texas
|
2,019
|
|
|
5.7
|
|
|
2,215
|
|
|
4.9
|
|
|
2,885
|
|
|
4.7
|
|
Illinois
|
1,894
|
|
|
5.4
|
|
|
2,600
|
|
|
5.7
|
|
|
3,776
|
|
|
6.2
|
|
|
Year Ended December 31,
|
||||||||||
(In millions)
|
2015
|
|
2014
|
|
2013
|
||||||
States with highest direct claims paid (first-lien):
|
|
|
|
|
|
||||||
Florida
|
$
|
183.4
|
|
|
$
|
166.3
|
|
|
$
|
247.6
|
|
Illinois
|
64.2
|
|
|
73.5
|
|
|
108.2
|
|
|||
California
|
52.2
|
|
|
80.8
|
|
|
201.5
|
|
|||
New Jersey
|
38.5
|
|
|
31.4
|
|
|
44.1
|
|
|||
Washington
|
29.3
|
|
|
28.4
|
|
|
44.5
|
|
D.
|
Claims Management
|
(1)
|
pay the maximum liability and allow the insured lender to keep title to the property. The maximum liability is determined by multiplying
(x)
the claim amount (which consists of the unpaid loan principal, plus past due interest for a period of time specified in our Master Policies and certain expenses associated with the default) by
(y)
the applicable coverage percentage;
|
(2)
|
pay the amount of the claim required to make the lender whole (not to exceed our maximum liability), following an approved sale; or
|
(3)
|
pay the full claim amount and acquire title to the property.
|
•
|
a review to determine compliance with applicable loan origination programs and our mortgage insurance policy requirements, including: (i) whether the loan qualified for insurance at the time the certificate of coverage was issued; and (ii) whether the insured has satisfied its obligation in meeting all necessary conditions in order for us to pay a claim (commonly referred to as “claim perfection”), including submitting all necessary documentation in connection with the claim;
|
•
|
analysis and prompt processing to ensure that valid claims are paid in an accurate and timely manner;
|
•
|
responses to loss mitigation opportunities presented by the insured; and
|
•
|
management and disposal of acquired real estate.
|
•
|
a failure to report information to us on a timely basis as required under our Master Policies;
|
•
|
a failure to pursue loss mitigation opportunities presented by borrowers, realtors and/or any other interested parties;
|
•
|
a failure to pursue loan modifications and/or refinancings through programs available to borrowers or an undue delay in presenting claims to us (including as a result of improper handling of foreclosure proceedings), which increases the interest or other components of a claim we are required to pay; and
|
•
|
a failure to initiate and diligently pursue foreclosure or other appropriate proceedings within the timeframe specified in our Master Policies.
|
E.
|
Risk Management
|
F.
|
Customers
|
G.
|
Sales, Marketing and Customer Support
|
H.
|
Competition
|
•
|
Arch U.S. MI (acquired CMG Mortgage Company effective January 30, 2014);
|
•
|
Essent Guaranty Inc.;
|
•
|
Genworth Financial Inc.;
|
•
|
Mortgage Guaranty Insurance Corporation;
|
•
|
NMI Holdings, Inc.; and
|
•
|
United Guaranty Corporation.
|
III.
|
Mortgage and Real Estate Services (“Services”)
|
A.
|
Acquisition of Clayton
|
B.
|
Business
|
1.
|
Services Offered
|
2.
|
Mortgage and Real Estate Services Revenue Drivers
|
|
% of Services Revenue
(1)
2015/2014
|
Market Segments
|
Clients
|
Current Revenue Drivers
|
Potential Future Revenue Drivers
|
Loan Review and Due Diligence
|
28%/36%
|
Mortgage Origination
|
Banks, REITs, Mortgage Originators
|
Balanced Mix of Non-Agency RMBS Securitization, Whole Loan Trades (Performing & Non-Performing) and Origination Services
|
Non-Agency RMBS Securitization Due Diligence
GSE Risk-Sharing Transactions
Leverage Radian’s Large Client Base to Grow Origination Services
|
Performing & Non-Performing Loan Trades
|
Banks, Investment Banks, Private Equity Firms, REITs
|
||||
Non-Agency RMBS Securitization
|
Banks, Investment Banks, REITs
|
||||
GSE Risk-Sharing Transactions
|
GSEs, Banks, Investment Banks
|
||||
MSR Transactions
|
Banks, REITs, Mortgage Servicers
|
|
% of Services Revenue
(1)
2015/2014
|
Market Segments
|
Clients
|
Current Revenue Drivers
|
Potential Future Revenue Drivers
|
Surveillance
|
20%/17%
|
Non-Performing Loan Servicing/Servicing Compliance Oversight
|
Banks, Mortgage Servicers
|
Oversight of Non-Performing Loan Servicing/Compliance for Large Banks and Servicers
Surveillance on Pre-2008 Non-Agency RMBS for Issuers
|
Surveillance on New Non-Agency RMBS Issuance for Issuers and for Investors
ARR Services and Surveillance for other ABS Asset Classes
Oversight of Non-Performing Loan Servicing/Compliance for Large Banks and Servicers
|
Non-Agency RMBS Securitization/Surveillance
|
Banks, Investment Banks, REITs, Asset Managers
|
||||
ABS Securitization/ARR Services
|
Auto, Credit Card, Equipment & Student Loan Issuers
|
||||
Valuation and Component Services
|
31%/23%
|
SFR Securitization
|
Banks, Investment Banks, Issuers
|
SFR Securitizations by and Debt Facilities for Large Institutional SFR Investors
SFR Acquisitions (Private Equity Firms, REITs)
Non-Performing Loan Servicing (Banks, Mortgage Servicers)
Mortgage Origination Support
|
SFR Securitizations by and Debt Facilities for Small and Large SFR Investors
Valuation Support for Mortgage Origination, Servicing and RMBS Securitization with Red Bell Technology
Title Policies and Appraisals Services w/ValuAmerica
|
Title Policies, Title Curative, Appraisal Services
|
Mortgage Originators, SFR Owners, Banks
|
||||
SFR Debt Facilities
|
Banks, Private Equity Firms, REITs
|
||||
Non-Performing Loan Trades
|
Banks, Private Equity Firms, REITs
|
||||
Non-Performing Loan Servicing
|
Banks, Mortgage Servicers
|
||||
SFR Acquisitions
|
Private Equity Firms, REITs
|
||||
Mortgage Origination
|
Banks, REITs, Mortgage Originators
|
|
% of Services Revenue
(1)
2015/2014
|
Market Segments
|
Clients
|
Current Revenue Drivers
|
Potential Future Revenue Drivers
|
REO Management
|
14%/16%
|
REO Asset Management
|
Banks, GSEs, Mortgage Servicers, Private Equity Firms
|
REO Asset Management Services - Remaining Backlog of Distressed Loans
|
REO Asset Management Services - Remaining Backlog of Distressed Loans, Property Sales
REO Asset Management Technology - Red Bell
’
s Pyramid System
|
SFR Rental Property
|
Private Equity Firms, REITs
|
||||
EuroRisk
|
7%/8%
|
Performing & Non-Performing Loan Trades
|
Banks, Investment Banks, Private Equity Firms
|
Non-Performing Loan Trades
|
RMBS Securitization
Non-Performing Loan Trades
|
Mortgage Origination
|
Banks, Mortgage Originators
|
||||
RMBS Securitization
|
Banks, Investment Banks
|
(1)
|
Represents the percentage of total Services revenue for the each of the years ended December 31, 2014 and 2015, respectively.
|
3.
|
Fee-for-Service Contracts
|
C.
|
Customers
|
•
|
Banks, credit unions, independent mortgage banks and other originators of mortgage loans;
|
•
|
RMBS/ABS issuers, securitization trusts, the GSEs, private equity, hedge funds, REITs, investment banks and other investors in mortgage-related debt instruments, whole loans and other securities;
|
•
|
SFR owners;
|
•
|
Mortgage servicers; and
|
•
|
Regulators and rating agencies involved in the mortgage, real estate and housing finance markets.
|
D.
|
Competition
|
•
|
Loan Review and Due Diligence
– American Mortgage Consultants, Inc. and JCIII & Associates (consolidated in a business combination as American Mortgage Consultants, Inc., effective December 2015), Digital Risk, LLC, LenderLive Network, Inc., Opus Capital Markets Consultants, LLC and Stewart Lender Services, Inc.
|
•
|
Surveillance
– CoreLogic, Inc., Digital Risk, LLC, FTI Consulting, Inc., Pentalpha Surveillance LLC and Promontory Financial Group, LLC
|
•
|
Valuation and Component Services
– Carrington Property Services, LLC, ClearCapital.com, Inc., CoreLogic, Inc., Pro Teck Valuation Services, First American, Collateral Analytics and Black Knight Financial Services
|
•
|
REO Management
– Altisource Portfolio Solutions S.A., Solutionstar Holdings LLC, Stewart Lender Services, Inc. and VRM Mortgage Services
|
•
|
EuroRisk
– Deloitte LLP, PricewaterhouseCoopers LLP, Ernst & Young LLP, KPMG LLP, Situs Group, LLC, Euristix Ltd, Rockstead Ltd and Grant Thornton
|
IV.
|
Discontinued Operations — Financial Guaranty
|
A.
|
Business
|
V.
|
Investment Policy and Portfolio
|
•
|
At least 75% of our investment portfolio, based on market value, must consist of investment securities that are assigned a quality designation of NAIC 1 by the NAIC or equivalent ratings by a NRSRO (i.e., “A-” or better by S&P and “A3” or better by Moody’s);
|
•
|
A maximum of 15% of our investment portfolio, based on market value, may consist of investment securities that are assigned a quality designation of NAIC 2 by the NAIC or equivalent ratings by a NRSRO (i.e., “BBB+” to “BBB-” by S&P and “Baa1” to “Baa3” by Moody’s); and
|
•
|
A maximum of 10% of our investment portfolio, based on market value, may consist of investment securities that are assigned quality designations NAIC 3 through 6 or equivalent ratings by a NRSRO (i.e., “BB+” and below by S&P and “Ba1” and below by Moody’s) and other investments not assigned NAIC quality designations (generally equity).
|
A.
|
Investment Portfolio Diversification
|
B.
|
Investment Portfolio Scheduled Maturity
|
|
Fair
Value
|
|
Percent
|
|||
($ in millions)
|
|
|
|
|||
|
|
|
|
|||
Due in one year or less (1)
|
$
|
1,113.5
|
|
|
25.9
|
%
|
Due after one year through five years (1)
|
502.7
|
|
|
11.7
|
|
|
Due after five years through ten years (1)
|
801.7
|
|
|
18.6
|
|
|
Due after ten years (1)
|
565.4
|
|
|
13.2
|
|
|
RMBS (2)
|
297.1
|
|
|
6.9
|
|
|
CMBS (2)
|
544.6
|
|
|
12.7
|
|
|
Other ABS (2)
|
371.6
|
|
|
8.6
|
|
|
Other investments (3)
|
105.3
|
|
|
2.4
|
|
|
Total
|
$
|
4,301.9
|
|
|
100.0
|
%
|
|
|
|
|
(1)
|
Actual maturities may differ as a result of calls before scheduled maturity.
|
(2)
|
RMBS, CMBS and other ABS are shown separately, as they are not due at a single maturity date.
|
(3)
|
No stated maturity date.
|
C.
|
Investment Portfolio by Rating
|
VI.
|
Enterprise Risk Management
|
VII.
|
Regulation
|
A.
|
State Regulation
|
1.
|
Our Insurance Subsidiaries
|
•
|
Radian Guaranty
.
Radian Guaranty is our primary mortgage insurance company. Radian Guaranty is our only mortgage insurance company that is eligible to insure GSE loans. It is a monoline insurer, restricted to writing only residential mortgage guaranty insurance. In addition to Pennsylvania, Radian Guaranty is authorized to write mortgage guaranty insurance (or in states where there is no specific authorization for mortgage guaranty insurance, the applicable line of insurance under which mortgage guaranty insurance is regulated) in each of the other 49 states, the District of Columbia and Guam. Radian Guaranty is a direct subsidiary of Radian Group.
|
•
|
Radian Reinsurance.
Radian Reinsurance is our exclusive affiliated reinsurer that is eligible to provide affiliate reinsurance to Radian Guaranty. Radian Reinsurance is a direct subsidiary of Radian Group.
|
•
|
Radian Insurance
. Radian Insurance is our insurance subsidiary that is authorized in Hong Kong to insure our remaining Hong Kong insurance portfolio and also insures our other remaining non-traditional risk. Radian Insurance is a direct subsidiary of Radian Guaranty.
|
2.
|
Insurance Holding Company Regulation
|
3.
|
Dividends
|
4.
|
Risk-to-Capital
|
5.
|
Contingency Reserves
|
6.
|
Reinsurance
|
7.
|
Our Services Business - Real Estate, Title and Appraisal Management Licensing
|
B.
|
GSE Requirements
|
•
|
implementation of new minimum requirements for master insurance policies for loans the GSEs acquire that include, among other requirements, specific standards for loss mitigation and claims processing activities; and
|
•
|
The PMIERs as discussed above.
|
C.
|
Federal Regulation
|
1.
|
Housing Finance Reform
|
2.
|
FHA
|
3.
|
The Dodd-Frank Act
|
4.
|
RESPA
|
5.
|
Homeowner Assistance Programs
|
•
|
In 2009, the GSEs began offering the HARP program, which allows a borrower who is not delinquent to refinance his or her mortgage to a more stable or affordable loan if such borrower has been unable to take advantage of lower interest rates because his or her home has decreased in value. The HARP program, as subsequently modified by the HARP 2 program, was extended to December 31, 2015, for loans that were originated or acquired by the GSEs by or before May 30, 2009. Under recently adopted legislation, the program was further extended and now will terminate by December 31, 2016. The FHFA and the GSEs are exploring options to replace HARP 2 with an on-going refinance program. In February 2009, the U.S. Treasury established HAMP as a program to modify certain loans to make them more affordable to borrowers, with the goal of reducing the number of foreclosures. Under HAMP, an eligible borrower’s monthly payments may be lowered by lowering interest rates, extending the term of the mortgage or deferring principal. The HAMP program was extended to December 31, 2016, and cannot be extended without new legislation.
|
•
|
HAFA, which became effective in April 2010, is intended to provide additional alternatives to foreclosures by providing incentives to encourage a borrower and servicer to agree that: (i) a borrower can sell his or her home for less than the full amount due on the mortgage and fully satisfy the mortgage; or (ii) a borrower can voluntarily transfer ownership of his or her home to the servicer in full satisfaction of the mortgage. Loans that are eligible for this program must have been originated prior to January 1, 2009. The program is available through participating lenders through December 31, 2016.
|
•
|
The U.S. Treasury also has developed uniform guidance for loan modifications to be used by participating servicers in the private sector. The GSEs have incorporated material aspects of these guidelines for loans that they own and loans backing securities that they guarantee.
|
6.
|
The SAFE Mortgage Licensing Act (“SAFE Act”)
|
7.
|
Mortgage Insurance Cancellation
|
8.
|
The Fair Credit Reporting Act
|
9.
|
Privacy and Information Security - Gramm-Leach-Bliley Act of 1999 (the “GLBA”) and State Law
|
10.
|
Asset Backed Securitizations
|
•
|
New asset-level disclosure requirements for ABS backed by residential mortgage loans, commercial mortgage loans, automobile loans or leases, re-securitizations of ABS backed by any of those asset types, and debt securities; and
|
•
|
A requirement that the transaction documents provide for the appointment of an “asset representations manager” to review the pool assets when certain trigger events occur.
|
11.
|
FDCPA
|
12.
|
Mortgage Insurance Tax Deduction
|
D.
|
Basel III
|
E.
|
Foreign Regulation
|
VIII.
|
Employees
|
Item 1A.
|
Risk Factors.
|
•
|
prevailing mortgage interest rates compared to the mortgage rates on our IIF, which affects the incentives for borrowers to refinance (i.e., lower current interest rates make it more attractive for borrowers to refinance and receive a lower interest rate);
|
•
|
applicable policies for mortgage insurance cancellation, along with the current value of the homes underlying the mortgages in our IIF;
|
•
|
the credit policies of lenders, which may make it more difficult for homeowners to refinance loans; and
|
•
|
economic conditions that can affect a borrower’s decision to pay-off a mortgage earlier than required.
|
•
|
eligibility requirements for a mortgage insurer to become and remain an approved eligible insurer for the GSEs;
|
•
|
the underwriting standards on mortgages they purchase;
|
•
|
policies or requirements that may result in a reduction in the number of mortgages they acquire;
|
•
|
the national conforming loan limit for mortgages they acquire;
|
•
|
the level of mortgage insurance required, including expanding the loans that are eligible for reduced insurance coverage;
|
•
|
the terms on which mortgage insurance coverage may be canceled before reaching the cancellation thresholds established by law;
|
•
|
the requirements for terms required to be included in master policies for the mortgage insurance policies they acquire;
|
•
|
requirements for actions to be taken that are intended to avoid or mitigate loss on insured mortgages that are in default;
|
•
|
the amount of LLPAs or guarantee fees (which may result in a higher cost to borrowers) that the GSEs charge on loans that require mortgage insurance; and
|
•
|
influence a mortgage lender’s selection of the mortgage insurer providing coverage.
|
•
|
restrictions on mortgage credit due to changes in lender underwriting standards, more restrictive regulatory requirements such as the required ability-to-pay determination prior to extending credit, and the significantly reduced private securitization market;
|
•
|
home mortgage interest rates;
|
•
|
the health of the domestic economy generally, as well as specific conditions in regional and local economies;
|
•
|
housing affordability;
|
•
|
population trends, including the rate of household formation;
|
•
|
the rate of home price appreciation;
|
•
|
government housing policy encouraging loans to first-time homebuyers; and
|
•
|
the practices of the GSEs, including the extent to which the guaranty fees, LLPAs, credit underwriting guidelines and other business terms provided by the GSEs affect lenders’ willingness to extend credit for low down payment mortgages.
|
•
|
governmental policy, including further decreases in the pricing of FHA insurance or changes in the terms of such insurance;
|
•
|
capital constraints of the private mortgage insurance industry;
|
•
|
the tightening by private mortgage insurers of underwriting guidelines based on risk concerns;
|
•
|
increases in the LLPAs charged by the GSEs on loans that require mortgage insurance and changes in the amount of guarantee fees for the loans that they acquire (which may result in higher cost to borrowers); and
|
•
|
the perceived operational ease of using FHA insurance compared to the products of private mortgage insurers.
|
•
|
lenders and other investors holding mortgages in their portfolio and self-insuring;
|
•
|
lenders using pass-through vehicles that take on the risk of loss for loans ultimately sold to the GSEs;
|
•
|
engaging in credit-linked note transactions or other structured risk transfer transactions in the capital markets;
|
•
|
risk sharing or using other risk mitigation techniques in conjunction with reduced levels of private mortgage insurance coverage; and
|
•
|
lenders originating mortgages using “piggyback” structures to avoid private mortgage insurance, such as a
|
•
|
Legislation or regulatory action impacting the charters or business practices of the GSEs;
|
•
|
Legislative reform of the U.S. housing finance system;
|
•
|
Legislation and regulation impacting the FHA and its competitive position versus private mortgage insurers;
|
•
|
State insurance laws and regulations that address, among other items, licensing of companies to transact business, claims handling, reinsurance requirements, premium rates, policy forms offered to customers and requirements for Risk-to-capital, minimum policyholder positions, reserves (including contingency reserves), surplus, reinsurance and payment of dividends;
|
•
|
The application of state, federal or private sector programs aimed at supporting borrowers and the housing market;
|
•
|
The application of RESPA, the FCRA and other laws to our businesses;
|
•
|
The amendments to Regulation AB (commonly referred to as Regulation AB II) that were adopted by the SEC in August 2014 to introduce several new requirements related to public offerings of ABS, including public offerings of RMBS for which our Services business traditionally has provided due diligence and servicer surveillance services and new credit rating agency reform rules (the “NRSRO Rules”) adopted by the SEC in August 2014, including new requirements applicable to providers of third-party due diligence services, such as our Services business, for both publicly and privately issued ABS;
|
•
|
The application of the TRID rules requiring enhanced disclosures to consumers in connection with the origination of residential mortgage loans, which may have an adverse effect on the residential mortgage market, including a negative impact on the volume of loans in the market;
|
•
|
New federal standards and oversight for mortgage insurers, including as a result of the Federal Insurance Office of the U.S. Treasury having published a study on how to modernize and improve the system of insurance regulation in the U.S. that, among other things, calls for federal standards and oversight for mortgage insurers to be developed and implemented. See “Item 1. Business—Regulation—Other Federal Regulation—
The Dodd-Frank Act
.”;
|
•
|
The implementation of new regulations under the Dodd-Frank Act. See “Item 1. Business—Regulation—Other Federal Regulation—
The Dodd-Frank Act
.”; and
|
•
|
The implementation in the U.S. of the Basel II capital adequacy requirements and the Basel III guidelines.
|
•
|
Our Services revenue is dependent on a limited number of large customers that represent a significant proportion of our Services total revenues. Radian Guaranty also does business with many of these significant customers. In the event of a dispute between a significant customer and either of our business segments, the overall customer relationship for Radian could be negatively impacted. The loss or reduction of business from one or more of these significant customers could adversely affect our revenues and results of operations.
|
•
|
While Clayton is not a defendant in litigation arising out of the financial crisis involving the issuance of RMBS in connection with which it has provided services, it has been in the past, and may again be in the future, subpoenaed by various parties to provide documents and information related to such litigation, and there can be no assurance that Clayton will not be subject to future claims against it, whether in connection with such litigation or otherwise. It is possible that our exposure to potential liabilities resulting from our Services business, some of which may be material or unknown, could exceed amounts we can recover through indemnification claims.
|
Item 1B.
|
Unresolved Staff Comments.
|
Item 2.
|
Properties.
|
Item 3.
|
Legal Proceedings.
|
Item 4.
|
Mine Safety Disclosures.
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
|
2015
|
|
2014
|
||||||||||||
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
1st Quarter
|
$
|
17.15
|
|
|
$
|
15.19
|
|
|
$
|
16.24
|
|
|
$
|
13.75
|
|
2nd Quarter
|
19.13
|
|
|
16.55
|
|
|
15.58
|
|
|
13.39
|
|
||||
3rd Quarter
|
19.12
|
|
|
15.69
|
|
|
15.14
|
|
|
12.18
|
|
||||
4th Quarter
|
17.00
|
|
|
12.82
|
|
|
17.50
|
|
|
13.96
|
|
Item 6.
|
Selected Financial Data.
|
(In millions, except per-share amounts and ratios)
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
||||||||||
Net premiums earned—insurance
|
$
|
915.9
|
|
|
$
|
844.5
|
|
|
$
|
781.4
|
|
|
$
|
702.4
|
|
|
$
|
680.9
|
|
Services revenue
(1)
|
153.8
|
|
|
76.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net investment income
|
81.5
|
|
|
65.7
|
|
|
68.1
|
|
|
72.7
|
|
|
105.3
|
|
|||||
Net gains (losses) on investments and other financial instruments
|
35.7
|
|
|
80.0
|
|
|
(106.5
|
)
|
|
122.1
|
|
|
152.1
|
|
|||||
Total revenues
|
1,193.3
|
|
|
1,072.7
|
|
|
749.9
|
|
|
902.7
|
|
|
943.6
|
|
|||||
Provision for losses
|
198.6
|
|
|
246.1
|
|
|
562.7
|
|
|
921.5
|
|
|
1,286.8
|
|
|||||
Direct cost of services
(1)
|
90.0
|
|
|
43.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other operating expenses
|
246.2
|
|
|
252.3
|
|
|
257.4
|
|
|
167.7
|
|
|
144.5
|
|
|||||
Interest expense
|
91.1
|
|
|
90.5
|
|
|
74.6
|
|
|
51.8
|
|
|
61.4
|
|
|||||
Amortization and impairment of intangible assets
|
13.0
|
|
|
8.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Pretax income (loss) from continuing operations
|
437.8
|
|
|
407.2
|
|
|
(173.3
|
)
|
|
(272.4
|
)
|
|
(585.0
|
)
|
|||||
Income tax provision (benefit)
|
156.3
|
|
|
(852.4
|
)
|
|
(31.5
|
)
|
|
(48.3
|
)
|
|
(138.2
|
)
|
|||||
Net income (loss) from continuing operations
|
281.5
|
|
|
1,259.6
|
|
|
(141.9
|
)
|
|
(224.1
|
)
|
|
(446.7
|
)
|
|||||
Income (loss) from discontinued operations, net of tax
(2)
|
5.4
|
|
|
(300.1
|
)
|
|
(55.1
|
)
|
|
(227.4
|
)
|
|
748.9
|
|
|||||
Net income (loss)
|
286.9
|
|
|
959.5
|
|
|
(197.0
|
)
|
|
(451.5
|
)
|
|
302.2
|
|
|||||
Diluted net income (loss) per share from continuing operations
(3)
|
$
|
1.20
|
|
|
$
|
5.44
|
|
|
$
|
(0.85
|
)
|
|
$
|
(1.69
|
)
|
|
$
|
(3.38
|
)
|
Diluted net income (loss) per share
(3)
|
$
|
1.22
|
|
|
$
|
4.16
|
|
|
$
|
(1.18
|
)
|
|
$
|
(3.41
|
)
|
|
$
|
2.28
|
|
Cash dividends declared per share
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
Average shares outstanding-diluted
|
246.3
|
|
|
233.9
|
|
|
166.4
|
|
|
132.5
|
|
|
132.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
||||||||||
Total investments
|
$
|
4,298.7
|
|
|
$
|
3,629.3
|
|
|
$
|
3,361.7
|
|
|
$
|
3,417.8
|
|
|
$
|
3,678.4
|
|
Total assets held for sale
|
—
|
|
|
1,736.4
|
|
|
1,768.1
|
|
|
1,965.6
|
|
|
2,403.8
|
|
|||||
Total assets
|
5,642.1
|
|
|
6,842.3
|
|
|
5,606.0
|
|
|
5,894.6
|
|
|
6,648.4
|
|
|||||
Unearned premiums
|
680.3
|
|
|
644.5
|
|
|
567.1
|
|
|
382.4
|
|
|
233.4
|
|
|||||
Reserve for losses and LAE
|
976.4
|
|
|
1,560.0
|
|
|
2,164.4
|
|
|
3,083.6
|
|
|
3,247.9
|
|
|||||
Long-term debt and other borrowings
|
1,219.5
|
|
|
1,192.3
|
|
|
914.3
|
|
|
655.0
|
|
|
810.2
|
|
|||||
Liabilities held for sale
|
—
|
|
|
947.0
|
|
|
642.6
|
|
|
722.0
|
|
|
851.2
|
|
|||||
Stockholders’ equity
|
2,496.9
|
|
|
2,097.1
|
|
|
939.6
|
|
|
736.3
|
|
|
1,182.3
|
|
|||||
Book value per share
|
$
|
12.07
|
|
|
$
|
10.98
|
|
|
$
|
5.43
|
|
|
$
|
5.51
|
|
|
$
|
8.88
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except per-share amounts and ratios)
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
||||||||||
Selected Ratios—Mortgage Insurance
(4)
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss ratio
|
21.7
|
%
|
|
29.1
|
%
|
|
72.0
|
%
|
|
131.2
|
%
|
|
189.0
|
%
|
|||||
Expense ratio - NPE basis
|
23.9
|
%
|
|
29.6
|
%
|
|
36.6
|
%
|
|
28.7
|
%
|
|
26.6
|
%
|
|||||
Expense ratio - NPW basis
|
22.6
|
%
|
|
27.0
|
%
|
|
30.1
|
%
|
|
25.0
|
%
|
|
25.3
|
%
|
|||||
Risk-to-capital-Radian Guaranty only
|
14.3
|
:1
|
|
17.9:1
|
|
|
19.5:1
|
|
|
20.8:1
|
|
|
21.5:1
|
|
|||||
Risk-to-capital-Mortgage Insurance combined
|
14.6
|
:1
|
|
20.3:1
|
|
|
24.0:1
|
|
|
29.9:1
|
|
|
30.9:1
|
|
|||||
Other Data—Mortgage Insurance
|
|
|
|
|
|
|
|
|
|
||||||||||
Primary NIW
|
$
|
41,411
|
|
|
$
|
37,349
|
|
|
$
|
47,255
|
|
|
$
|
37,061
|
|
|
$
|
15,510
|
|
Direct primary IIF
|
175,584
|
|
|
171,810
|
|
|
161,240
|
|
|
140,363
|
|
|
126,185
|
|
|||||
Direct primary RIF
|
44,627
|
|
|
43,239
|
|
|
40,017
|
|
|
34,372
|
|
|
30,692
|
|
|||||
Persistency Rate (12 months ended)
(5)
|
78.8
|
%
|
|
84.2
|
%
|
|
82.1
|
%
|
|
82.9
|
%
|
|
85.4
|
%
|
|||||
Persistency (quarterly, annualized)
(5)
|
81.8
|
%
|
|
83.3
|
%
|
|
83.5
|
%
|
|
81.5
|
%
|
|
84.7
|
%
|
(1)
|
Primarily represents the activity of Clayton, acquired June 30, 2014.
|
(2)
|
Radian completed the sale of Radian Asset Assurance to Assured on April 1, 2015, pursuant to the Radian Asset Assurance Stock Purchase Agreement dated as of December 22, 2014. Until the April 1, 2015 sale date, the operating results of Radian Asset Assurance were classified as discontinued operations for all periods presented in our condensed consolidated statements of operations. See Note 3 of Notes to Consolidated Financial Statements for additional information.
|
(3)
|
Diluted net income (loss) per share and average share information in accordance with the accounting standard regarding earnings per share.
|
(4)
|
Calculated using amounts determined under GAAP, using provision for losses to calculate the loss ratio and policy acquisition costs and other operating expenses to calculate the expense ratio both as a percentage of net premiums earned and net premiums written. Expense ratios include amounts that have been reallocated to the Mortgage Insurance segment that were previously allocated to the financial guaranty segment, but were not reclassified to discontinued operations.
|
(5)
|
In 2015, we refined our Persistency Rate calculation to incorporate loan level detail rather than aggregated portfolio data. Prior periods have been recalculated and reflect the current calculation methodology.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
I
ndex to Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
PAGE
|
•
|
the transfer of
$325 million
of cash and marketable securities to Radian Guaranty in exchange for a Surplus Note issued by Radian Guaranty; and
|
•
|
a capital contribution of
$50 million
to an exclusive affiliated reinsurer of Radian Guaranty.
|
•
|
the issuance of
$350 million
aggregate principal amount of Senior Notes due 2020;
|
•
|
the purchases of approximately
$389.1 million
aggregate principal amount of Convertible Senior Notes due 2017;
|
•
|
the termination of a corresponding portion of the capped call transactions related to the purchased Convertible Senior Notes due 2017; and
|
•
|
the entry into an ASR program to repurchase an aggregate of
$202 million
of Radian Group common stock.
|
•
|
a net increase in available holding company liquidity of approximately
$26.0 million
;
|
•
|
a net increase in long-term debt of approximately
$16.0 million
;
|
•
|
a net decrease in the equity component of currently redeemable convertible senior notes of approximately
$55.0 million
; and
|
•
|
a net increase in stockholders’ equity of approximately
$90.4 million
.
|
CUSTOMERS
|
• Mortgage bankers
|
• Mortgage brokers
|
• Commercial banks
|
• Savings institutions
|
• Credit unions
|
• Community banks
|
REVENUE DRIVERS
|
• IIF
|
• Persistency Rate
|
• Mortgage origination market
|
• Premium rates
|
• Penetration percentage of private mortgage insurance
|
• Radian’s market share
|
ADDITIONAL FUTURE DRIVERS
|
• Growth in IIF
|
• Continued diversification of client base
|
• Improving borrower access to credit may create expanded origination market
|
• Increasing rate of household formation
|
• Market demand for low down payment loans
|
• Participation in GSE efforts to increase credit risk transfer
|
•
|
NIW.
NIW is affected by the overall size of the mortgage origination market, the penetration percentage of private mortgage insurance into the overall mortgage origination market and our market share of the private mortgage insurance market. The overall mortgage origination market is influenced by macroeconomic factors such as household formation, household composition, home affordability, interest rates, housing markets in general, credit availability and the impact of various legislative and regulatory actions that may influence the housing and mortgage finance industries. The penetration percentage of private mortgage insurance is mainly influenced by the competitiveness of private mortgage insurance for GSE conforming loans compared to FHA insurance, and the relative percentage of mortgage originations that are for purchased homes versus refinances.
|
•
|
the mortgage origination volume from home purchases and refinancings;
|
•
|
private mortgage insurance penetration as a percentage of the mortgage origination market; and
|
•
|
the composition of the insured mortgage market between private mortgage insurance and FHA insurance.
|
•
|
Premiums.
The premium rates we charge for our insurance are based on a number of borrower, loan and property characteristics. Premiums on our mortgage insurance products are generally paid as Monthly Premiums or Single Premiums. In addition, premiums may be paid as a combination of an up-front premium at origination plus monthly renewals, or in some cases, as annual or other periodic premiums paid over multiple years.
|
•
|
Losses
.
Incurred losses represent the estimated future claim payments on newly defaulted insured loans as well as any change in our claim estimates for existing defaults. Our mortgage insurance incurred losses are driven primarily by new defaults and changes in the estimates we use to determine our losses, including estimates with respect to the likelihood, magnitude and timing of anticipated losses, and our estimate of the rate at which we expect defaults will ultimately result in paid claims. Other factors influencing incurred losses include:
|
-
|
The product mix of our total direct RIF (loans with higher risk characteristics generally result in more delinquencies and claims);
|
-
|
The average loan size (higher average loan amounts generally result in higher incurred losses);
|
-
|
The percentage of coverage on insured loans (higher percentages of insurance coverage generally result in higher incurred losses) and the presence of structural mitigants such as deductibles or stop losses;
|
-
|
Changes in housing values (declines in housing values generally make it more difficult for borrowers to sell a home to avoid default or for the property to be sold to mitigate any claim, and also may negatively affect a borrower’s willingness to continue to make mortgage payments when the home value is less than the mortgage balance);
|
-
|
The distribution of claims over the life cycle of a portfolio (historically, claims are relatively low during the first two years after a loan is originated and then increase over a period of several years before declining; however, several factors can impact and change this cycle, including the economic environment, the quality of the underwriting of the loan, characteristics of the mortgage loan, the credit profile of the borrower, housing prices and unemployment rates);
|
-
|
Our ability to mitigate potential losses through Rescissions, Claim Denials, cancellations and Claim Curtailments on claims submitted to us. These actions all reduce our incurred losses. However, if these Loss Mitigation Activities are successfully challenged at rates that are higher than expected or we agree to settle disputes related to our Loss Mitigation Activities at levels above our expected losses, our incurred losses will increase. As our Legacy Portfolio has become a smaller percentage of our overall insured portfolio, there has been a decrease in the amount of Loss Mitigation Activity with respect to the claims we receive, and we expect this trend to continue. As a result, our future Loss Mitigation Activity is not expected to mitigate our losses to the same extent as in prior years;
|
-
|
The BofA Settlement Agreement established that Radian will limit Rescissions, Claim Denials or Claim Curtailments on Legacy Loans. See Note 10 of Notes to Consolidated Financial Statements for additional information about the BofA Settlement Agreement; and
|
-
|
The Freddie Mac Agreement established certain terms for the treatment of the loans subject to that agreement, including claim payments, Loss Mitigation Activity and insurance coverage, and capped Radian Guaranty’s claim exposure on such loans. See Note 10 of Notes to Consolidated Financial Statements for additional information.
|
•
|
Other Operating Expenses
.
Our other operating expenses are affected by the level of NIW, as well as the level of RIF. Additionally, in recent periods, our operating expenses have been impacted significantly by compensation expense associated with changes in the estimated fair value of certain of our long-term equity-based incentive awards that are settled in cash. The fair value of these awards, and associated compensation expense, have been dependent, in large part, on our stock price at any given point in time. Substantially all of these awards vested and were paid to grantees in June 2014 and June 2015. Therefore, although these awards had produced significant expense volatility in the past due to their valuation relative to Radian Group’s common stock price, the expense volatility from these awards will not continue in the future.
|
•
|
Third-Party Reinsurance.
We use third-party reinsurance in our mortgage insurance business to manage capital and risk. When we enter into a reinsurance agreement, the reinsurer receives a premium and, in exchange, agrees to insure an agreed upon portion of incurred losses. This arrangement has the impact of reducing our earned premiums but also reduces our net RIF, which provides capital relief to the insurance subsidiary ceding the RIF and reduces our incurred losses by any incurred losses ceded in accordance with the reinsurance agreement. In addition, we often receive ceding commissions from the reinsurer as part of the transaction, which reduces our operating expenses. In the past, we also had entered into capital markets-based reinsurance transactions designed to transfer all or a portion of the risk associated with certain higher risk mortgage insurance products. See Note 8 of Notes to Consolidated Financial Statements for more information about our reinsurance arrangements.
|
•
|
Services Revenue
.
Our Services revenue is primarily derived from: (i) loan review and due diligence services; (ii) surveillance services, including RMBS surveillance, loan servicer oversight, loan-level servicing compliance reviews and operational reviews of mortgage servicers and originators; (iii) valuation and component services, providing outsourcing solutions primarily for the SFR and real estate markets, as well as outsourced solutions for appraisal, title and closing services; and (iv) REO management services. See “Mortgage and Real Estate Services—Business—
Mortgage and Real Estate Services Revenue Drivers”
for additional information regarding current and expected future revenue drivers.
|
-
|
Fixed-Price Contracts.
Under a fixed-price contract, we agree to perform the specified work for a pre-determined per-unit or per-file price. To the extent our actual direct and allocated indirect costs decrease or increase from the estimates upon which the price was negotiated, we will generate more or less profit, respectively, or could incur a loss. We use fixed-price contracts in our valuation and component services, as well as in our loan review and due diligence services. These contracts are also used in our surveillance business for our servicer oversight services and RMBS surveillance services, as well as in our REO management business.
|
-
|
Time-and-Expense Contracts.
Under a time-and-expense contract, we are paid a fixed hourly rate, and we are reimbursed for billable out-of-pocket expenses as work is performed. To the extent our actual direct labor costs decrease or increase in relation to the fixed hourly billing rates provided in the contract, we may generate more or less profit, respectively. However, since these contracts are generally short-term in nature, the risk is limited to the periods covered by the contracts. These contracts are used in our loan review, due diligence and EuroRisk services offerings, as well as in the consulting services that we offer as part of our surveillance business.
|
-
|
Percentage-of-Sale Contracts.
A portion of REO management services are provided under percentage-of-sale contracts, in which we are paid a contractual percentage of the sale proceeds upon the sale of each property. To the extent the sale of a property is delayed or not consummated, or the sales proceeds are significantly less than originally estimated, we may generate less profit than anticipated, or could incur a loss. These contracts are only used for our REO management services.
|
•
|
Direct Cost of Services.
Our direct cost of services is primarily affected by our level of services revenue. Our direct cost of services primarily consists of employee compensation and related payroll benefits, including the cost of billable labor assigned to revenue-generating activities and, to a lesser extent, other direct costs of providing services such as travel and related expenses incurred in providing client services and costs paid to outside vendors. The level of these costs may fluctuate if market rates of compensation change, or if there is decreased availability or a loss of qualified employees.
|
•
|
Operating Expenses.
Our operating expenses primarily consist of salaries and benefits not classified as direct cost of services because they are related to employees, such as sales and corporate employees, that are not directly involved in providing client services. Operating expenses also include other selling, general and administrative expenses, depreciation, as well as allocations of corporate general and administrative expenses.
|
•
|
Radian Asset Assurance Stock Purchase Agreement.
Radian completed the sale of Radian Asset Assurance to Assured on April 1, 2015, pursuant to the Radian Asset Assurance Stock Purchase Agreement dated as of December 22, 2014. Until the April 1, 2015 sale date, the operating results of Radian Asset Assurance were classified as discontinued operations for all periods presented in our consolidated statements of operations. Previously, Radian Asset Assurance had represented substantially all of the financial guaranty segment; therefore, as a result of the sale, we no longer report a financial guaranty business segment.
|
•
|
Investment Income.
Investment income is determined primarily by the investment balances held and the average yield on our overall investment portfolio.
|
•
|
Net Gains (Losses) on Investments.
The recognition of realized investment gains or losses can vary significantly across periods as the activity is highly discretionary based on such factors as market opportunities, our tax and capital profile and overall market cycles that impact the timing of the sales of securities. Unrealized investment gains and losses arise primarily from changes in the market value of our investments that are classified as trading and these unrealized gains and losses are generally the result of changes in interest rates or credit spreads and may not necessarily result in economic gains or losses.
|
•
|
Amortization and Impairment of Intangible Assets.
Amortization of intangible assets represents the periodic expense required to amortize the cost of intangible assets over their estimated useful lives. The periodic review of intangible assets for potential impairment may also impact consolidated results. Our intangible assets primarily relate to the acquisition of Clayton, and their valuation is based on management’s assumptions, which are inherently subject to risks and uncertainties. See Note 7 of Notes to Consolidated Financial Statements for additional information.
|
|
|
|
$ Change
|
||||||||||||||||
|
Year Ended December 31,
|
|
Favorable (Unfavorable)
|
||||||||||||||||
($ in millions, except per-share amounts)
|
2015
|
|
2014
|
|
2013
|
|
2015 vs. 2014
|
|
2014 vs. 2013
|
||||||||||
Net income (loss) from continuing operations
|
$
|
281.5
|
|
|
$
|
1,259.6
|
|
|
$
|
(141.9
|
)
|
|
$
|
(978.1
|
)
|
|
$
|
1,401.5
|
|
Income (loss) from discontinued operations, net of tax
|
5.4
|
|
|
(300.1
|
)
|
|
(55.1
|
)
|
|
305.5
|
|
|
(245.0
|
)
|
|||||
Net income (loss)
|
286.9
|
|
|
959.5
|
|
|
(197.0
|
)
|
|
(672.6
|
)
|
|
1,156.5
|
|
|||||
Diluted net income (loss) per share
|
1.22
|
|
|
4.16
|
|
|
(1.18
|
)
|
|
(2.94
|
)
|
|
5.34
|
|
|||||
Book value per share at December 31,
|
12.07
|
|
|
10.98
|
|
|
5.43
|
|
|
1.09
|
|
|
5.55
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net premiums earned-insurance
|
$
|
915.9
|
|
|
$
|
844.5
|
|
|
$
|
781.4
|
|
|
$
|
71.4
|
|
|
$
|
63.1
|
|
Services revenue
|
153.8
|
|
|
76.7
|
|
|
—
|
|
|
77.1
|
|
|
76.7
|
|
|||||
Net investment income
|
81.5
|
|
|
65.7
|
|
|
68.1
|
|
|
15.8
|
|
|
(2.4
|
)
|
|||||
Net gains (losses) on investments and other financial instruments
|
35.7
|
|
|
80.0
|
|
|
(106.5
|
)
|
|
(44.3
|
)
|
|
186.5
|
|
|||||
Provision for losses
|
198.6
|
|
|
246.1
|
|
|
562.7
|
|
|
47.5
|
|
|
316.6
|
|
|||||
Policy acquisition costs
|
22.4
|
|
|
24.4
|
|
|
28.5
|
|
|
2.0
|
|
|
4.1
|
|
|||||
Direct cost of services
|
90.0
|
|
|
43.6
|
|
|
—
|
|
|
(46.4
|
)
|
|
(43.6
|
)
|
|||||
Other operating expenses
|
246.2
|
|
|
252.3
|
|
|
257.4
|
|
|
6.1
|
|
|
5.1
|
|
|||||
Interest expense
|
91.1
|
|
|
90.5
|
|
|
74.6
|
|
|
(0.6
|
)
|
|
(15.9
|
)
|
|||||
Loss on induced conversion and debt extinguishment
|
94.2
|
|
|
—
|
|
|
—
|
|
|
(94.2
|
)
|
|
—
|
|
|||||
Amortization and impairment of intangible assets
|
13.0
|
|
|
8.6
|
|
|
—
|
|
|
(4.4
|
)
|
|
(8.6
|
)
|
|||||
Income tax provision (benefit)
|
156.3
|
|
|
(852.4
|
)
|
|
(31.5
|
)
|
|
(1,008.7
|
)
|
|
820.9
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted pretax operating income (loss)
(1)
|
510.9
|
|
|
342.4
|
|
|
(67.4
|
)
|
|
168.5
|
|
|
409.8
|
|
(1)
|
See “—
Use of Non-GAAP Financial Measure
” below.
|
|
Year Ended December 31,
|
||||||||||
(In millions)
|
2015
|
|
2014
|
|
2013
|
||||||
Net unrealized (losses) gains related to change in fair value of trading securities and other investments
|
$
|
(27.0
|
)
|
|
$
|
92.2
|
|
|
$
|
(117.2
|
)
|
Net realized gains (losses) on sales
|
62.1
|
|
|
(8.3
|
)
|
|
18.3
|
|
|||
Net gains (losses) on other financial instruments
|
0.6
|
|
|
(3.9
|
)
|
|
(7.6
|
)
|
|||
Net gains (losses) on investments and other financial instruments
|
$
|
35.7
|
|
|
$
|
80.0
|
|
|
$
|
(106.5
|
)
|
|
|
|
|
|
|
(1)
|
Net gains (losses) on investments and other financial instruments.
The recognition of realized investment gains or losses can vary significantly across periods as the activity is highly discretionary based on the timing of individual securities sales due to such factors as market opportunities, our tax and capital profile and overall market cycles. Unrealized investment gains and losses arise primarily from changes in the market value of our investments that are classified as trading. These valuation adjustments may not necessarily result in economic gains or losses.
|
(2)
|
Loss on induced conversion and debt extinguishment.
Gains or losses on early extinguishment of debt or losses incurred to purchase our convertible debt prior to maturity are discretionary activities that are undertaken in order to take advantage of market opportunities to strengthen our financial and capital positions; therefore, these activities are not viewed as part of our operating performance. Such transactions do not reflect expected future operations and do not provide meaningful insight regarding our current or past operating trends. Therefore, these items are excluded from our calculation of adjusted pretax operating income (loss).
|
(3)
|
Acquisition-related expenses.
Acquisition-related expenses represent the costs incurred to effect an acquisition of a business (i.e., a business combination). Because we pursue acquisitions on a strategic and selective basis and not in the ordinary course of our business, we do not view acquisition-related expenses as a consequence of a primary business activity. Therefore, we do not consider these expenses to be part of our operating performance and they are excluded from our calculation of adjusted pretax operating income (loss).
|
(4)
|
Amortization and impairment of intangible assets.
Amortization of intangible assets represents the periodic expense required to amortize the cost of intangible assets over their estimated useful lives. Intangible assets with an indefinite useful life are also periodically reviewed for potential impairment and impairment adjustments are made whenever appropriate. These charges are not viewed as part of the operating performance of our primary activities and therefore are excluded from our calculation of adjusted pretax operating income (loss).
|
(5)
|
Net impairment losses recognized in earnings.
The recognition of net impairment losses on investments can vary significantly in both size and timing, depending on market credit cycles. We do not view these impairment losses to be indicative of our fundamental operating activities. Therefore, whenever these losses occur, we exclude them from our calculation of adjusted pretax operating income (loss).
|
(1)
|
The change in expected economic loss or recovery associated with our previously owned VIEs is included in adjusted pretax operating income (loss) above for the years ended December 31, 2014 and 2013, although it represents amounts that are not included in net income. Therefore, for purposes of this reconciliation, net gains (losses) on investments and other financial instruments has been adjusted by income of
$0.1 million
and
$0.6 million
for the years ended December 31, 2014 and 2013, respectively, to reverse this item.
|
|
|
|
$ Change
|
|
||||||||||||||||
|
Year Ended December 31,
|
|
Favorable (Unfavorable)
|
|
||||||||||||||||
(In millions)
|
2015
|
|
2014
|
|
2013
|
|
2015 vs. 2014
|
|
2014 vs. 2013
|
|
||||||||||
Adjusted pretax operating income (loss)
(1)
|
$
|
513.1
|
|
|
$
|
336.9
|
|
|
$
|
(67.4
|
)
|
|
$
|
176.2
|
|
|
$
|
404.3
|
|
|
Net premiums written—insurance
|
968.5
|
|
|
925.2
|
|
|
951.0
|
|
|
43.3
|
|
|
(25.8
|
)
|
|
|||||
Net premiums earned—insurance
|
915.9
|
|
|
844.5
|
|
|
781.4
|
|
|
71.4
|
|
|
63.1
|
|
|
|||||
Net investment income
|
81.5
|
|
|
65.7
|
|
|
68.1
|
|
|
15.8
|
|
|
(2.4
|
)
|
|
|||||
Provision for losses
|
198.4
|
|
|
246.9
|
|
|
562.7
|
|
|
48.5
|
|
|
315.8
|
|
|
|||||
Other operating expenses
|
196.4
|
|
|
225.5
|
|
|
257.4
|
|
|
29.1
|
|
|
31.9
|
|
|
|||||
Interest expense
|
73.4
|
|
|
81.6
|
|
|
74.6
|
|
|
8.2
|
|
|
(7.0
|
)
|
|
(1)
|
Our senior management uses adjusted pretax operating income (loss) as our primary measure to evaluate the fundamental financial performance of the Company’s business segments.
|
(1)
|
In 2009, the GSEs began offering HARP, which allows a borrower who is not delinquent to refinance a mortgage if the borrower has been unable to take advantage of lower interest rates because the borrower’s home has decreased in value. As of December 31, 2015, approximately 9.1% of our total primary RIF had successfully completed a HARP refinance. The HARP programs are scheduled to terminate on December 31, 2016. We exclude HARP loans from our NIW for the period in which the refinance occurs. During 2015, new HARP loans accounted for $0.7 billion of newly refinanced loans that were not included in Radian Guaranty’s NIW for the period, compared to $1.7 billion for 2014.
|
|
Year Ended December 31,
|
|||||||||||||||||||
($ in millions)
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
Total primary NIW by FICO score
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
>=740
|
$
|
25,683
|
|
|
62.0
|
%
|
|
$
|
23,043
|
|
|
61.7
|
%
|
|
$
|
33,466
|
|
|
70.8
|
%
|
680-739
|
12,954
|
|
|
31.3
|
|
|
11,737
|
|
|
31.4
|
|
|
11,971
|
|
|
25.3
|
|
|||
620-679
|
2,774
|
|
|
6.7
|
|
|
2,569
|
|
|
6.9
|
|
|
1,818
|
|
|
3.9
|
|
|||
Total primary NIW
|
$
|
41,411
|
|
|
100.0
|
%
|
|
$
|
37,349
|
|
|
100.0
|
%
|
|
$
|
47,255
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
($ in millions)
|
2015
|
|
2014
|
|
2013
|
||||||
Percentage of primary NIW
|
|
|
|
|
|
||||||
Monthly and Other premiums
|
69
|
%
|
|
72
|
%
|
|
68
|
%
|
|||
Single premiums
|
31
|
%
|
|
28
|
%
|
|
32
|
%
|
|||
|
|
|
|
|
|
||||||
Refinances
|
21
|
%
|
|
17
|
%
|
|
30
|
%
|
|||
|
|
|
|
|
|
||||||
LTV
|
|
|
|
|
|
||||||
95.01% and above
|
3.0
|
%
|
|
0.4
|
%
|
|
2.6
|
%
|
|||
90.01% to 95.00%
|
49.8
|
%
|
|
52.9
|
%
|
|
45.4
|
%
|
|||
85.01% to 90.00%
|
34.0
|
%
|
|
33.8
|
%
|
|
37.3
|
%
|
|||
80.01% to 85.00%
|
13.2
|
%
|
|
12.9
|
%
|
|
14.7
|
%
|
|||
ARMs
|
|
|
|
|
|
||||||
Less than five years
|
<1%
|
|
|
<1%
|
|
|
<1%
|
|
|||
Five years and longer
|
1.9
|
%
|
|
3.5
|
%
|
|
2.0
|
%
|
|||
|
|
|
|
|
|
||||||
Primary risk written
|
$
|
10,435
|
|
|
$
|
9,448
|
|
|
$
|
11,737
|
|
|
December 31,
|
||||||||||
($ in millions)
|
2015
|
|
2014
|
|
2013
|
||||||
Primary IIF
|
|
|
|
|
|
||||||
Monthly and Other premiums
|
69
|
%
|
|
71
|
%
|
|
73
|
%
|
|||
Single premiums
|
31
|
%
|
|
29
|
%
|
|
27
|
%
|
|||
|
|
|
|
|
|
||||||
Total primary IIF
|
$
|
175,584
|
|
|
$
|
171,810
|
|
|
$
|
161,240
|
|
|
|
|
|
|
|
||||||
Persistency Rate (12 months ended)
(1)
|
78.8
|
%
|
(2)
|
84.2
|
%
|
|
82.1
|
%
|
|||
Persistency Rate (quarterly, annualized)
(1)
|
81.8
|
%
|
(3)
|
83.3
|
%
|
|
83.5
|
%
|
(1)
|
Effective March 31, 2015, we refined our Persistency Rate calculation to incorporate loan level detail rather than aggregated portfolio data. Prior periods have been recalculated and reflect the current calculation methodology.
|
(2)
|
The Persistency Rate for the 12 months ended December 31, 2015 decreased from 2014 primarily due to increased refinancing activity and the cancellations of Single Premium Policies due to prepayments that servicers had not previously reported to Radian. See
“
—
Net Premiums Written and Earned,”
below.
|
(3)
|
The Persistency Rate annualized based on the quarter ended December 31, 2015 decreased from 2014 due to increased refinancing activity in the fourth quarter of 2015 as compared to the same quarter in 2014.
|
|
December 31,
|
|||||||||||||||||||
($ in millions)
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
Primary RIF by Product
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Flow
|
$
|
42,771
|
|
|
95.8
|
%
|
|
$
|
41,071
|
|
|
95.0
|
%
|
|
$
|
37,792
|
|
|
94.4
|
%
|
Structured
|
1,856
|
|
|
4.2
|
|
|
2,168
|
|
|
5.0
|
|
|
2,225
|
|
|
5.6
|
|
|||
Total primary RIF
|
$
|
44,627
|
|
|
100.0
|
%
|
|
$
|
43,239
|
|
|
100.0
|
%
|
|
$
|
40,017
|
|
|
100.0
|
%
|
Primary RIF by Risk Grade
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Prime
|
$
|
42,170
|
|
|
94.5
|
%
|
|
$
|
40,326
|
|
|
93.3
|
%
|
|
$
|
36,613
|
|
|
91.5
|
%
|
Alt-A
|
1,427
|
|
|
3.2
|
|
|
1,720
|
|
|
4.0
|
|
|
2,017
|
|
|
5.0
|
|
|||
A minus and below
|
1,030
|
|
|
2.3
|
|
|
1,193
|
|
|
2.7
|
|
|
1,387
|
|
|
3.5
|
|
|||
Total primary RIF
|
$
|
44,627
|
|
|
100.0
|
%
|
|
$
|
43,239
|
|
|
100.0
|
%
|
|
$
|
40,017
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|||||||||||||||||||
($ in millions)
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
Total primary RIF by FICO score
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
>=740
|
$
|
25,467
|
|
|
57.1
|
%
|
|
$
|
24,511
|
|
|
56.7
|
%
|
|
$
|
22,127
|
|
|
55.3
|
%
|
680-739
|
13,543
|
|
|
30.3
|
|
|
12,817
|
|
|
29.6
|
|
|
11,659
|
|
|
29.1
|
|
|||
620-679
|
4,806
|
|
|
10.8
|
|
|
4,973
|
|
|
11.6
|
|
|
5,140
|
|
|
12.9
|
|
|||
<=619
|
811
|
|
|
1.8
|
|
|
938
|
|
|
2.1
|
|
|
1,091
|
|
|
2.7
|
|
|||
Total primary RIF
|
$
|
44,627
|
|
|
100.0
|
%
|
|
$
|
43,239
|
|
|
100.0
|
%
|
|
$
|
40,017
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Primary RIF on defaulted loans
|
$
|
1,625
|
|
|
|
|
$
|
2,089
|
|
|
|
|
$
|
2,786
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|||||||||||||||||||
($ in millions)
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
Total primary RIF by LTV
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
95.01% and above
|
$
|
3,249
|
|
|
7.3
|
%
|
|
$
|
3,547
|
|
|
8.2
|
%
|
|
$
|
4,171
|
|
|
10.4
|
%
|
90.01% to 95.00%
|
22,479
|
|
|
50.4
|
|
|
20,521
|
|
|
47.5
|
|
|
17,239
|
|
|
43.1
|
|
|||
85.01% to 90.00%
|
15,184
|
|
|
34.0
|
|
|
15,307
|
|
|
35.4
|
|
|
14,750
|
|
|
36.9
|
|
|||
85.00% and below
|
3,715
|
|
|
8.3
|
|
|
3,864
|
|
|
8.9
|
|
|
3,857
|
|
|
9.6
|
|
|||
Total primary RIF
|
$
|
44,627
|
|
|
100.0
|
%
|
|
$
|
43,239
|
|
|
100.0
|
%
|
|
$
|
40,017
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Percentage of primary RIF
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Refinances
|
23
|
%
|
|
|
|
26
|
%
|
|
|
|
29
|
%
|
|
|
||||||
Loan Type:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Fixed
|
96.1
|
%
|
|
|
|
95.2
|
%
|
|
|
|
94.1
|
%
|
|
|
||||||
ARMs (fully indexed)
(1)
|
3.4
|
|
|
|
|
4.1
|
|
|
|
|
4.9
|
|
|
|
||||||
Loans with potential negative amortization
|
0.5
|
|
|
|
|
0.7
|
|
|
|
|
1.0
|
|
|
|
||||||
Total
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total primary RIF by policy year
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
2005 and prior
|
$
|
2,823
|
|
|
6.3
|
%
|
|
$
|
3,540
|
|
|
8.2
|
%
|
|
$
|
4,461
|
|
|
11.1
|
%
|
2006
|
1,666
|
|
|
3.7
|
|
|
2,001
|
|
|
4.6
|
|
|
2,326
|
|
|
5.8
|
|
|||
2007
|
3,891
|
|
|
8.7
|
|
|
4,592
|
|
|
10.6
|
|
|
5,247
|
|
|
13.1
|
|
|||
2008
|
2,798
|
|
|
6.3
|
|
|
3,394
|
|
|
7.9
|
|
|
3,950
|
|
|
9.9
|
|
|||
2009
|
736
|
|
|
1.7
|
|
|
1,081
|
|
|
2.5
|
|
|
1,448
|
|
|
3.6
|
|
|||
2010
|
616
|
|
|
1.4
|
|
|
925
|
|
|
2.1
|
|
|
1,206
|
|
|
3.0
|
|
|||
2011
|
1,294
|
|
|
2.9
|
|
|
1,809
|
|
|
4.2
|
|
|
2,263
|
|
|
5.7
|
|
|||
2012
|
5,010
|
|
|
11.2
|
|
|
6,534
|
|
|
15.1
|
|
|
7,710
|
|
|
19.3
|
|
|||
2013
|
8,056
|
|
|
18.1
|
|
|
10,265
|
|
|
23.8
|
|
|
11,406
|
|
|
28.5
|
|
|||
2014
|
7,646
|
|
|
17.1
|
|
|
9,098
|
|
|
21.0
|
|
|
—
|
|
|
—
|
|
|||
2015
|
10,091
|
|
|
22.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total primary RIF
|
$
|
44,627
|
|
|
100.0
|
%
|
|
$
|
43,239
|
|
|
100.0
|
%
|
|
$
|
40,017
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
“Fully Indexed” refers to loans where payment adjustments are equal to mortgage interest-rate adjustments.
|
|
At or For the Year Ended December 31,
|
||||||||||
($ in thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Initial QSR Transaction
|
|
|
|
|
|
||||||
Ceded premiums written
|
$
|
14,471
|
|
|
$
|
10,217
|
|
|
$
|
23,047
|
|
% of premiums written
|
1.4
|
%
|
|
1.0
|
%
|
|
2.2
|
%
|
|||
Ceded premiums earned
|
$
|
22,157
|
|
|
$
|
17,319
|
|
|
$
|
29,746
|
|
% of total premiums
|
2.3
|
%
|
|
1.9
|
%
|
|
3.5
|
%
|
|||
Ceding commissions written
|
$
|
3,134
|
|
|
$
|
4,862
|
|
|
$
|
5,762
|
|
RIF included in Initial QSR Transaction
(1)
|
$
|
836,192
|
|
|
$
|
1,105,545
|
|
|
$
|
1,329,544
|
|
|
|
|
|
|
|
||||||
Second QSR Transaction
|
|
|
|
|
|
||||||
Ceded premiums written
|
$
|
15,742
|
|
|
$
|
33,750
|
|
|
$
|
40,225
|
|
% of premiums written
|
1.6
|
%
|
|
3.4
|
%
|
|
3.9
|
%
|
|||
Ceded premiums earned
|
$
|
24,818
|
|
|
$
|
29,820
|
|
|
$
|
18,356
|
|
% of total premiums
|
2.6
|
%
|
|
3.3
|
%
|
|
2.2
|
%
|
|||
Ceding commissions written
|
$
|
8,309
|
|
|
$
|
11,813
|
|
|
$
|
14,079
|
|
RIF included in Second QSR Transaction
(1)
|
$
|
1,294,838
|
|
|
$
|
1,615,554
|
|
|
$
|
1,298,631
|
|
|
|
|
|
|
|
||||||
First-Lien Captives
|
|
|
|
|
|
||||||
Premiums ceded to captives
|
$
|
9,987
|
|
|
$
|
12,996
|
|
|
$
|
17,901
|
|
% of total premiums
|
1.0
|
%
|
|
1.4
|
%
|
|
2.1
|
%
|
|||
IIF subject to captives
(2)
|
2.1
|
%
|
|
2.8
|
%
|
|
4.0
|
%
|
|||
RIF subject to captives
(3)
|
1.9
|
%
|
|
2.7
|
%
|
|
3.8
|
%
|
(1)
|
RIF ceded under QSR Transactions and included in primary RIF.
|
(2)
|
IIF on captives as a percentage of total IIF.
|
(3)
|
RIF on captives as a percentage of total RIF.
|
|
Year Ended December 31,
|
||||||||||
(In millions)
|
2015
|
|
2014
|
|
2013
|
||||||
Current year defaults
(1)
|
$
|
229.1
|
|
|
$
|
351.2
|
|
|
$
|
519.2
|
|
Prior year defaults
|
(29.7
|
)
|
|
(105.6
|
)
|
|
45.4
|
|
|||
Second-lien PDR and other
|
(1.0
|
)
|
|
1.3
|
|
|
(1.9
|
)
|
|||
Provision for losses
|
$
|
198.4
|
|
|
$
|
246.9
|
|
|
$
|
562.7
|
|
|
|
|
|
|
|
(1)
|
Related to underlying defaulted loans with a most recent default notice dated in the year indicated. For example, if a loan had defaulted in a prior year, but then subsequently cured and later re-defaulted in the current year, that default would be considered a current year default.
|
(1)
|
Beginning in the first quarter of 2014, insured loans subject to the Freddie Mac Agreement are included in the denominator (7,353 insured loans at December 31, 2015) and loans in default subject to the Freddie Mac Agreement are excluded from the numerator (2,821 loans in default at December 31, 2015).
|
|
December 31,
|
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
Default statistics—primary insurance:
|
|
|
|
|
|
|||
Total primary insurance
|
|
|
|
|
|
|||
Prime
|
|
|
|
|
|
|||
Number of insured loans
|
816,797
|
|
|
797,436
|
|
|
741,554
|
|
Number of loans in default
|
22,223
|
|
|
28,246
|
|
|
37,932
|
|
Percentage of loans in default
|
2.72
|
%
|
|
3.54
|
%
|
|
5.12
|
%
|
Alt-A
|
|
|
|
|
|
|||
Number of insured loans
|
32,411
|
|
|
38,953
|
|
|
44,905
|
|
Number of loans in default
|
5,813
|
|
|
8,136
|
|
|
11,209
|
|
Percentage of loans in default
|
17.94
|
%
|
|
20.89
|
%
|
|
24.96
|
%
|
A minus and below
|
|
|
|
|
|
|||
Number of insured loans
|
31,902
|
|
|
36,688
|
|
|
40,930
|
|
Number of loans in default
|
7,267
|
|
|
8,937
|
|
|
11,768
|
|
Percentage of loans in default
|
22.78
|
%
|
|
24.36
|
%
|
|
28.75
|
%
|
Total primary insurance
|
|
|
|
|
|
|||
Number of insured loans
(1)
|
881,110
|
|
|
873,077
|
|
|
839,249
|
|
Number of loans in default
(2)
|
35,303
|
|
|
45,319
|
|
|
60,909
|
|
Percentage of loans in default
|
4.01
|
%
|
|
5.19
|
%
|
|
7.26
|
%
|
Default statistics—pool insurance:
|
|
|
|
|
|
|||
Number of loans in default
|
5,796
|
|
|
8,297
|
|
|
11,921
|
|
(1)
|
Includes
7,353
, 9,101 and 11,860 insured loans subject to the Freddie Mac Agreement
at December 31, 2015
,
2014
and
2013
, respectively.
|
(2)
|
Excludes
2,821
, 4,467 and 7,221 loans that are in default
at December 31, 2015
,
2014
and
2013
, respectively, that are subject to the Freddie Mac Agreement, and for which we no longer have claims exposure.
|
|
Year Ended December 31,
|
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
Beginning default inventory
|
45,319
|
|
|
60,909
|
|
|
93,169
|
|
Less: Freddie Mac Agreement Loans
|
—
|
|
|
—
|
|
|
9,756
|
|
Plus: New defaults
(1)
|
42,607
|
|
|
47,976
|
|
|
58,577
|
|
Less: Cures
(1)
|
40,607
|
|
|
46,091
|
|
|
56,507
|
|
Less: Claims paid
(2) (3)
|
13,492
|
|
|
16,049
|
|
|
22,554
|
|
Less: Rescissions
(4)
|
129
|
|
|
227
|
|
|
967
|
|
Less: Claim (Reinstatements) Denials
(5)
|
(83
|
)
|
|
383
|
|
|
1,053
|
|
Less: Net (Reinstatements), Rescissions or Claim Denials related to the BofA Settlement Agreement
(6)
|
(1,522
|
)
|
|
816
|
|
|
—
|
|
Ending default inventory
|
35,303
|
|
|
45,319
|
|
|
60,909
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
Intra-period new defaults
|
29,265
|
|
|
32,489
|
|
|
39,584
|
|
(2)
|
Includes those charged to a deductible or captive.
|
(3)
|
Includes claim payments related to the BofA Settlement Agreement for 2015.
|
(4)
|
Net of any previous Rescissions that were reinstated during the period. Such reinstated Rescissions may ultimately result in a paid claim.
|
(5)
|
Net of any Claim Denials that were reinstated during the period. Such previously denied but reinstated claims are generally reviewed for possible Rescission prior to any claim payment.
|
(6)
|
Includes Rescissions, Claim Denials and Reinstatements on the population of loans subject to the BofA Settlement Agreement. Net (Reinstatements), Rescissions or Claim Denials related to the BofA Settlement Agreement prior to the February 1, 2015 Implementation Date represent such activities on loans that subsequently became subject to the BofA Settlement Agreement.
|
|
December 31, 2015
|
|||||||||||||||||
|
Total
|
|
Foreclosure Stage Defaulted Loans
|
|
Cure % During the 4th Quarter
|
|
Reserve for Losses
|
|
% of Reserve
|
|||||||||
($ in thousands)
|
#
|
|
%
|
|
#
|
|
%
|
|
$
|
|
%
|
|||||||
Missed payments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Three payments or less
|
10,742
|
|
|
30.4
|
%
|
|
187
|
|
|
29.0
|
%
|
|
$
|
107,632
|
|
|
13.1
|
%
|
Four to eleven payments
|
8,481
|
|
|
24.0
|
|
|
541
|
|
|
16.2
|
|
|
127,183
|
|
|
15.5
|
|
|
Twelve payments or more
|
13,731
|
|
|
38.9
|
|
|
3,160
|
|
|
4.2
|
|
|
473,440
|
|
|
57.6
|
|
|
Pending claims
|
2,349
|
|
|
6.7
|
|
|
N/A
|
|
|
1.5
|
|
|
113,570
|
|
|
13.8
|
|
|
Total
|
35,303
|
|
|
100.0
|
%
|
|
3,888
|
|
|
|
|
|
821,825
|
|
|
100.0
|
%
|
|
IBNR and other
|
|
|
|
|
|
|
|
|
83,066
|
|
|
|
||||||
LAE
|
|
|
|
|
|
|
|
|
26,108
|
|
|
|
||||||
Total primary reserves
|
|
|
|
|
|
|
|
|
$
|
930,999
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
||||
Key Reserve Assumptions
|
||||
Gross Default to Claim Rate %
|
|
Net Default to Claim Rate %
|
|
Claim Severity %
|
48%
|
|
46%
|
|
101%
|
|
December 31, 2014
|
|||||||||||||||||
|
Total
|
|
Foreclosure Stage Defaulted Loans
|
|
Cure % During the 4th Quarter
|
|
Reserve for Losses
|
|
% of Reserve
|
|||||||||
($ in thousands)
|
#
|
|
%
|
|
#
|
|
%
|
|
$
|
|
%
|
|||||||
Missed payments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Three payments or less
|
11,192
|
|
|
24.7
|
%
|
|
174
|
|
|
30.6
|
%
|
|
$
|
142,503
|
|
|
11.9
|
%
|
Four to eleven payments
|
10,413
|
|
|
23.0
|
|
|
695
|
|
|
15.8
|
|
|
195,440
|
|
|
16.3
|
|
|
Twelve payments or more
|
18,071
|
|
|
39.9
|
|
|
3,984
|
|
|
3.9
|
|
|
593,466
|
|
|
49.5
|
|
|
Pending claims
|
5,643
|
|
|
12.4
|
|
|
N/A
|
|
|
0.8
|
|
|
266,826
|
|
|
22.3
|
|
|
Total
|
45,319
|
|
|
100.0
|
%
|
|
4,853
|
|
|
|
|
1,198,235
|
|
|
100.0
|
%
|
||
IBNR and other
|
|
|
|
|
|
|
|
|
223,114
|
|
|
|
||||||
LAE
|
|
|
|
|
|
|
|
|
56,164
|
|
|
|
||||||
Total primary reserves
|
|
|
|
|
|
|
|
|
$
|
1,477,513
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2014
|
||||
Key Reserve Assumptions
|
||||
Gross Default to Claim Rate %
|
|
Net Default to Claim Rate %
|
|
Claim Severity %
|
57%
|
|
52%
|
|
104%
|
|
December 31,
|
||||||||||
(In millions)
|
2015
|
|
2014
|
|
2013
|
||||||
Decrease to our loss reserve due to estimated future Rescissions and Claim Denials
|
$
|
69
|
|
|
$
|
125
|
|
|
$
|
247
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Net claims paid
(1)
:
|
|
|
|
|
|
||||||
Prime
|
$
|
281,971
|
|
|
$
|
533,563
|
|
|
$
|
760,601
|
|
Alt-A
|
83,568
|
|
|
132,752
|
|
|
183,846
|
|
|||
A minus and below
|
55,664
|
|
|
92,526
|
|
|
111,828
|
|
|||
Total primary claims paid
|
421,203
|
|
|
758,841
|
|
|
1,056,275
|
|
|||
Pool
|
34,870
|
|
|
64,191
|
|
|
115,192
|
|
|||
Second-lien and other
|
(323
|
)
|
|
2,011
|
|
|
2,995
|
|
|||
Subtotal
|
455,750
|
|
|
825,043
|
|
|
1,174,462
|
|
|||
Impact of Freddie Mac Agreement
|
—
|
|
|
—
|
|
|
254,667
|
|
|||
Impact of captive terminations
|
(12,065
|
)
|
|
(1,156
|
)
|
|
—
|
|
|||
Impact of settlements
(2)
|
320,983
|
|
|
14,375
|
|
|
9,899
|
|
|||
Total net claims paid
|
$
|
764,668
|
|
|
$
|
838,262
|
|
|
$
|
1,439,028
|
|
Average net claim paid
(3)
:
|
|
|
|
|
|
||||||
Prime
|
$
|
46.4
|
|
|
$
|
46.4
|
|
|
$
|
46.8
|
|
Alt-A
|
58.7
|
|
|
56.3
|
|
|
56.3
|
|
|||
A minus and below
|
39.8
|
|
|
38.2
|
|
|
37.0
|
|
|||
Total average net primary claim paid
|
47.3
|
|
|
46.6
|
|
|
46.9
|
|
|||
Pool
|
58.5
|
|
|
56.9
|
|
|
65.6
|
|
|||
Second-lien and other
|
(7.5
|
)
|
|
15.6
|
|
|
15.9
|
|
|||
Total average net claim paid
|
$
|
47.8
|
|
|
$
|
47.0
|
|
|
$
|
48.0
|
|
|
|
|
|
|
|
||||||
Average direct primary claim paid
(3) (4)
|
$
|
48.4
|
|
|
$
|
47.9
|
|
|
$
|
49.1
|
|
Average total direct claim paid
(3) (4)
|
$
|
48.8
|
|
|
$
|
48.3
|
|
|
$
|
50.1
|
|
(1)
|
Net of reinsurance recoveries.
|
(2)
|
Includes the impact of the BofA Settlement Agreement from Implementation Date.
|
(3)
|
Calculated without giving effect to the impact of the Freddie Mac Agreement and the termination of captive transactions and settlements.
|
(4)
|
Before reinsurance recoveries.
|
Direct Claims Paid vs. Premiums Written—Primary Insurance
|
||||||||||||||||||||||||||||||
Year of
Origination
|
|
End of 1st year
|
|
End of 2nd year
|
|
End of 3rd year
|
|
End of 4th year
|
|
End of 5th year
|
|
End of 6th year
|
|
End of 7th year
|
|
End of 8th year
|
|
End of 9th year
|
|
End of 10th year
|
||||||||||
2006
|
|
0.9
|
%
|
|
13.1
|
%
|
|
45.4
|
%
|
|
63.6
|
%
|
|
94.4
|
%
|
|
117.5
|
%
|
|
128.1
|
%
|
|
139.3
|
%
|
|
144.9
|
%
|
|
151.3
|
%
|
2007
|
|
0.5
|
%
|
|
9.8
|
%
|
|
33.6
|
%
|
|
81.0
|
%
|
|
124.2
|
%
|
|
142.4
|
%
|
|
162.6
|
%
|
|
171.7
|
%
|
|
178.8
|
%
|
|
—
|
|
2008
|
|
0.2
|
%
|
|
5.0
|
%
|
|
29.2
|
%
|
|
61.2
|
%
|
|
78.0
|
%
|
|
97.8
|
%
|
|
106.2
|
%
|
|
111.8
|
%
|
|
—
|
|
|
—
|
|
2009
|
|
0.0
|
%
|
|
1.3
|
%
|
|
3.9
|
%
|
|
7.6
|
%
|
|
11.7
|
%
|
|
14.2
|
%
|
|
15.3
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
2010
|
|
0.0
|
%
|
|
0.4
|
%
|
|
1.3
|
%
|
|
3.1
|
%
|
|
4.9
|
%
|
|
5.5
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
2011
|
|
0.0
|
%
|
|
0.2
|
%
|
|
1.1
|
%
|
|
2.0
|
%
|
|
2.7
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
2012
|
|
0.0
|
%
|
|
0.1
|
%
|
|
0.5
|
%
|
|
0.8
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
2013
|
|
0.0
|
%
|
|
0.1
|
%
|
|
0.4
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
2014
|
|
0.0
|
%
|
|
0.0
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
2015
|
|
0.0
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
December 31,
|
|||||||||||||||||||
($ in millions)
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
Direct claims paid by origination year (first-lien):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
2005 and prior
|
$
|
218
|
|
|
29.3
|
%
|
|
$
|
219
|
|
|
27.0
|
%
|
|
$
|
303
|
|
|
25.7
|
%
|
2006
|
154
|
|
|
20.7
|
|
|
163
|
|
|
20.1
|
|
|
239
|
|
|
20.3
|
|
|||
2007
|
270
|
|
|
36.2
|
|
|
302
|
|
|
37.1
|
|
|
446
|
|
|
37.9
|
|
|||
2008
|
88
|
|
|
11.8
|
|
|
107
|
|
|
13.2
|
|
|
169
|
|
|
14.3
|
|
|||
2009
|
7
|
|
|
0.9
|
|
|
12
|
|
|
1.5
|
|
|
15
|
|
|
1.3
|
|
|||
2010
|
2
|
|
|
0.3
|
|
|
4
|
|
|
0.5
|
|
|
4
|
|
|
0.3
|
|
|||
2011
|
2
|
|
|
0.3
|
|
|
3
|
|
|
0.3
|
|
|
2
|
|
|
0.2
|
|
|||
2012
|
2
|
|
|
0.3
|
|
|
2
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|||
2013
|
2
|
|
|
0.2
|
|
|
1
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
2014
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total direct claims paid
(1)
|
$
|
745
|
|
|
100.0
|
%
|
|
$
|
813
|
|
|
100.0
|
%
|
|
$
|
1,178
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents total first-lien direct claims paid, excluding impact of reinsurance and LAE expenses and Freddie Mac Agreement.
|
|
Year Ended December 31,
|
|
$ Change
|
||||||||
($ in millions)
|
2015
|
|
2014
(1)
|
|
Favorable (Unfavorable)
|
||||||
Adjusted pretax operating (loss) income
(2)
|
$
|
(2.2
|
)
|
|
$
|
5.4
|
|
|
$
|
(7.6
|
)
|
Services revenue
|
157.4
|
|
|
76.7
|
|
|
80.7
|
|
|||
Direct cost of services
|
93.5
|
|
|
43.6
|
|
|
(49.9
|
)
|
|||
Gross profit on services
|
63.9
|
|
|
33.1
|
|
|
30.8
|
|
|||
Other operating expenses
|
48.4
|
|
|
20.1
|
|
|
(28.3
|
)
|
|||
Interest expense
|
17.7
|
|
|
8.9
|
|
|
(8.8
|
)
|
(1)
|
Reflects the results of operations of Clayton from the June 30, 2014 date of acquisition.
|
(2)
|
Our senior management uses adjusted pretax operating income (loss) as our primary measure to evaluate the fundamental financial performance of the Company’s business segments.
|
|
|
|
Payments Due by Period
|
|
||||||||||||||||||||
(In thousands)
|
Total
|
|
2016
|
|
2017-2018
|
|
2019-2020
|
|
Thereafter
|
|
Uncertain
|
|
||||||||||||
Long-term debt obligations (principal and interest) (Note 11)
|
$
|
1,488,534
|
|
|
$
|
62,816
|
|
|
$
|
345,526
|
|
(1)
|
$
|
1,080,192
|
|
(2)
|
$
|
—
|
|
|
$
|
—
|
|
|
Operating lease obligations (Note 17)
|
84,654
|
|
|
8,646
|
|
|
8,338
|
|
|
11,361
|
|
|
56,309
|
|
|
—
|
|
|
||||||
Reserve for losses and LAE (Note 10)
(3)
|
976,399
|
|
|
425,221
|
|
|
551,178
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
Purchase obligations
|
10,402
|
|
|
4,404
|
|
|
3,999
|
|
|
1,999
|
|
|
—
|
|
|
—
|
|
|
||||||
Unrecognized tax benefits (Note 13)
|
185,944
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
185,944
|
|
(4)
|
||||||
Total
|
$
|
2,745,933
|
|
|
$
|
501,087
|
|
|
$
|
909,041
|
|
|
$
|
1,093,552
|
|
|
$
|
56,309
|
|
|
$
|
185,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
For our Convertible Senior Notes due 2017, excludes the conversion premium amount that may be settled upon conversion in cash, shares of our common stock or a combination thereof, at our election.
|
(2)
|
Includes
$390 million
of Convertible Senior Notes due 2019 that may be settled upon conversion in cash, shares of our common stock or a combination thereof, at our election, as well as
$300 million
and
$350 million
of senior notes due 2019 and 2020, respectively, that may be redeemed, in whole or part at any time prior to maturity.
|
(3)
|
Our reserve for losses and LAE reflects the application of accounting policies described below in “Critical Accounting Policies—Reserve for Losses and LAE.” The payments due by period are based on management’s estimates and assume that all of the loss reserves included in the table will result in claim payments, net of expected recoveries.
|
(4)
|
The timing of these potential payments is uncertain given the nature of the obligations.
|
•
|
Radian Guaranty and RMAI are parties to a cross-guaranty agreement. This agreement provides that if either party fails to make a payment to a policyholder, then the other party will step in and make the payment. The obligations of both parties are unconditional and irrevocable; however, no payments may be made without prior approval by the Pennsylvania Insurance Department.
|
•
|
Radian Group and RMAI are parties to a guaranty agreement, which provides that Radian Group will make sufficient funds available to RMAI to ensure that RMAI has a minimum of $5 million of statutory policyholders’ surplus every calendar quarter. RMAI had
$8.1 million
of statutory policyholders’ surplus and no RIF exposure
as of December 31, 2015
.
|
•
|
Radian Group and Radian Mortgage Insurance, a subsidiary of Radian Guaranty, are parties to a guaranty agreement in which Radian Group has agreed for the benefit of Radian Mortgage Insurance’s creditors to make funds available on demand for the full and complete payment of all due but unpaid liabilities. Radian Mortgage Insurance had
$2.8 million
of statutory policyholders’ surplus at December 31, 2015.
|
•
|
To allow our mortgage insurance customers to comply with applicable securities regulations for issuers of ABS (including MBS), we have been required, depending on the amount of credit enhancement we were providing, to provide: (1) audited financial statements for the insurance subsidiary participating in these transactions; or (2) a full and unconditional holding-company level guarantee for our insurance subsidiaries’ obligations in such transactions. Radian Group has guaranteed two Structured Transactions for Radian Guaranty with approximately
$119.2 million
of aggregate remaining credit exposure
as of December 31, 2015
.
|
•
|
Radian Group and RGRI are parties to an Assumption and Indemnification Agreement with regard to RGRI’s portion of the Deficiency Amounts relating to the IRS litigation. This indemnification agreement was made in lieu of an immediate capital contribution to RGRI that otherwise would have been required for RGRI to maintain its minimum statutory policyholders’ surplus requirements in light of the remeasurement as of December 31, 2011 of uncertain tax positions related to the portfolio of REMIC residual interests. See Note 13 of Notes to Consolidated Financial Statements for additional information regarding the IRS matter. We can provide no assurance regarding the outcome of this IRS matter, which may take several years to resolve. As such, there remains significant uncertainty with regard to the amount and timing of any potential payments under the indemnity agreement described above. See “Item 1A. Risk Factors—
Resolution of our dispute with the IRS could adversely affect us.
”
|
CAPITAL AND DEBT MATURITY MANAGEMENT
|
•
Issued $350 million aggregate principal amount of Senior Notes due 2020 for net proceeds of approximately $343.3 million
|
•
Purchased approximately $389.1 million aggregate principal amount of Convertible Senior Notes due 2017, for a combination of approximately $126.8 million in cash and 28.4 million shares of Radian Group common stock
|
•
Terminated a corresponding portion of the capped call transactions related to the purchased Convertible Senior Notes due 2017, as a result of which we received consideration of 2.3 million shares of Radian Group common stock and $13.2 million in cash
|
•
Entered into an ASR program to repurchase an aggregate of $202 million of Radian Group common stock, which was fully funded in the second quarter of 2015 from proceeds of the Senior Notes Due 2020.
|
PMIERS COMPLIANCE: RADIAN’S FOURTH QUARTER 2015 TRANSACTIONS
|
•
Transferred $325 million of cash and marketable securities to Radian Guaranty in exchange for a Surplus Note issued by Radian Guaranty
|
•
Made a capital contribution of $50 million to an exclusive affiliated reinsurer of Radian Guaranty
|
•
Chose not to exercise its option to recapture a portion of the risk ceded under the Second QSR Transaction in exchange for a profit commission of approximately $8.0 million based on performance to date and an $8.5 million prepaid supplemental ceding commission, thus managing Radian Guaranty’s Minimum Required Assets
|
•
|
Radian Guaranty may redeem 50% of the Surplus Note balance on or after June 30, 2016.
|
•
|
On or after June 30, 2016, and prior to May 31, 2017, in addition to amounts paid above, Radian Guaranty may redeem the note balance up to the amount by which Available Assets then exceed Minimum Required Assets (as defined in the PMIERs) less $150 million.
|
•
|
On or after May 31, 2017, Radian Guaranty may redeem any remaining note balance.
|
(1)
|
the repayment of our outstanding long-term debt, including:
|
•
|
$195.5 million
principal amount of outstanding debt due in June 2017;
|
•
|
$52.4 million
principal amount of convertible debt due in November 2017, which must be settled in cash, plus any related conversion premium which may, at our option, be settled in cash, common stock or a combination thereof;
|
•
|
$390.0 million
principal amount of convertible debt due in March 2019 for which the principal amount and any conversion premium may, at our option, be settled in cash, common stock or a combination thereof;
|
•
|
$300 million
principal amount of outstanding debt due in June 2019; and
|
•
|
$350 million
principal amount of outstanding debt due in June 2020;
|
(2)
|
potential additional capital contributions to our subsidiaries; and
|
(3)
|
potential payments to the U.S. Treasury resulting from our ongoing dispute with the IRS relating to the examination of our 2000 through 2007 consolidated federal income tax returns by the IRS, as discussed above.
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Net income (loss)
|
$
|
286,924
|
|
|
$
|
959,517
|
|
|
$
|
(196,985
|
)
|
Less: Income (loss) from discontinued operations, net of tax
|
5,385
|
|
|
(300,057
|
)
|
|
(55,134
|
)
|
|||
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
|
|
||||||
Net (gains) losses on investments and other financial instruments recognized in earnings
|
(35,693
|
)
|
|
(79,989
|
)
|
|
105,890
|
|
|||
Loss on induced conversion and debt extinguishment
|
94,207
|
|
|
—
|
|
|
—
|
|
|||
Net payments related to derivative contracts and VIEs
(1)
|
(3,203
|
)
|
|
(125
|
)
|
|
(8,574
|
)
|
|||
Net cash received (paid) for commutations, terminations and recaptures
(1)
|
(8,047
|
)
|
|
1,105
|
|
|
(254,667
|
)
|
|||
Deferred income tax (benefit) provision
|
156,170
|
|
|
(825,843
|
)
|
|
(31,847
|
)
|
|||
Amortization and impairment of intangible assets
|
12,986
|
|
|
8,648
|
|
|
—
|
|
|||
Depreciation and other amortization, net
|
68,639
|
|
|
57,301
|
|
|
69,726
|
|
|||
Change in:
|
|
|
|
|
|
|
|||||
Accounts and notes receivable
|
25,656
|
|
|
(28,310
|
)
|
|
6,556
|
|
|||
Unearned premiums
|
35,796
|
|
|
77,432
|
|
|
184,659
|
|
|||
Reserve for losses and LAE
|
(575,594
|
)
|
|
(604,906
|
)
|
|
(664,588
|
)
|
|||
Other assets
|
21,620
|
|
|
37,460
|
|
|
61,302
|
|
|||
Other liabilities
|
(58,562
|
)
|
|
(55,592
|
)
|
|
54,354
|
|
|||
Net cash provided by (used in) operating activities, continuing operations
|
15,514
|
|
|
(153,245
|
)
|
|
(619,040
|
)
|
|||
Net cash (used in) provided by operating activities, discontinued operations
|
(1,759
|
)
|
|
17,071
|
|
|
(45,897
|
)
|
|||
Net cash provided by (used in) operating activities
|
$
|
13,755
|
|
|
$
|
(136,174
|
)
|
|
$
|
(664,937
|
)
|
|
|
|
|
|
|
(1)
|
Cash item.
|
|
Moody’s
(1)
|
|
S&P
(2)
|
Radian Group
|
Ba3
|
|
B+
|
Radian Guaranty
|
Baa3
|
|
BB+
|
(1)
|
Moody’s outlook for Radian Group and Radian Guaranty currently is Stable.
|
(2)
|
S&P’s outlook for Radian Group and Radian Guaranty currently is Positive.
|
Level I
|
—
Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
|
Level II
|
—
Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities; and
|
Level III
|
—
Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Level III inputs are used to measure fair value only to the extent that observable inputs are not available.
|
•
|
the extent and the duration of the decline in value;
|
•
|
the reasons for the decline in value (e.g., credit event, interest related or market fluctuations); and
|
•
|
the financial position, access to capital and near term prospects of the issuer, including the current and future impact of any specific events.
|
•
|
whether there are cumulative losses from previous years;
|
•
|
future projections of taxable income within the applicable carryback and carryforward periods, including the sustainability of our forecasts of future taxable income under potential stress scenarios;
|
•
|
degree of certainty regarding our projected incurred losses;
|
•
|
future reversals of existing taxable temporary differences; and
|
•
|
potential tax planning strategies.
|
Item 8.
|
Financial Statements and Supplementary Data.
|
Index to Consolidated Financial Statements
|
|
Annual Financial Statements:
|
PAGE
|
Financial Statements as of December 31, 2015 and 2014 and for the years ended December 31, 2015, 2014 and 2013:
|
|
Notes to Consolidated Financial Statements:
|
|
|
December 31,
2015 |
|
December 31,
2014 |
||||
($ in thousands, except share and per-share amounts)
|
|
|
|
||||
ASSETS
|
|
|
|
||||
Investments (Note 6)
|
|
|
|
||||
Fixed-maturities available for sale—at fair value (amortized cost $1,893,356 and $528,660)
|
$
|
1,865,461
|
|
|
$
|
536,890
|
|
Equity securities available for sale—at fair value (cost $75,538 and $76,900)
|
75,430
|
|
|
143,368
|
|
||
Trading securities—at fair value
|
1,279,137
|
|
|
1,633,584
|
|
||
Short-term investments—at fair value
|
1,076,944
|
|
|
1,300,872
|
|
||
Other invested assets
|
1,714
|
|
|
14,585
|
|
||
Total investments
|
4,298,686
|
|
|
3,629,299
|
|
||
Cash
|
46,898
|
|
|
30,465
|
|
||
Restricted cash
|
13,000
|
|
|
14,031
|
|
||
Accounts and notes receivable
|
61,734
|
|
|
85,792
|
|
||
Deferred income taxes, net (Note 13)
|
577,945
|
|
|
700,201
|
|
||
Goodwill and other intangible assets, net (Note 7)
|
289,417
|
|
|
288,240
|
|
||
Other assets (Note 9)
|
354,420
|
|
|
357,864
|
|
||
Assets held for sale (Note 3)
|
—
|
|
|
1,736,444
|
|
||
Total assets
|
$
|
5,642,100
|
|
|
$
|
6,842,336
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Unearned premiums
|
$
|
680,300
|
|
|
$
|
644,504
|
|
Reserve for losses and loss adjustment expenses (“LAE”) (Note 10)
|
976,399
|
|
|
1,560,032
|
|
||
Long-term debt (Note 11)
|
1,219,454
|
|
|
1,192,299
|
|
||
Other liabilities
|
269,016
|
|
|
326,743
|
|
||
Liabilities held for sale (Note 3)
|
—
|
|
|
947,008
|
|
||
Total liabilities
|
3,145,169
|
|
|
4,670,586
|
|
||
Commitments and Contingencies (Note 17)
|
|
|
|
||||
Equity component of currently redeemable convertible senior notes (Note 11)
|
—
|
|
|
74,690
|
|
||
Stockholders’ equity
|
|
|
|
||||
Common stock: par value $.001 per share; 485,000,000 shares authorized at December 31, 2015 and 2014; 224,432,465 and 208,601,020 shares issued at December 31, 2015 and 2014, respectively; 206,871,768 and 191,053,530 shares outstanding at December 31, 2015 and 2014, respectively
|
224
|
|
|
209
|
|
||
Treasury stock, at cost: 17,560,697 and 17,547,490 shares at December 31, 2015 and 2014, respectively
|
(893,176
|
)
|
|
(892,961
|
)
|
||
Additional paid-in capital
|
2,716,618
|
|
|
2,531,513
|
|
||
Retained earnings
|
691,742
|
|
|
406,814
|
|
||
Accumulated other comprehensive (loss) income (“AOCI”) (Note 12)
|
(18,477
|
)
|
|
51,485
|
|
||
Total stockholders’ equity
|
2,496,931
|
|
|
2,097,060
|
|
||
Total liabilities and stockholders’ equity
|
$
|
5,642,100
|
|
|
$
|
6,842,336
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands, except per-share amounts)
|
2015
|
|
2014
|
|
2013
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Net premiums earned—insurance
|
$
|
915,908
|
|
|
$
|
844,528
|
|
|
$
|
781,420
|
|
Services revenue
|
153,815
|
|
|
76,693
|
|
|
—
|
|
|||
Net investment income
|
81,537
|
|
|
65,655
|
|
|
68,121
|
|
|||
Net gains (losses) on investments and other financial instruments
|
35,693
|
|
|
79,989
|
|
|
(106,525
|
)
|
|||
Other income
|
6,300
|
|
|
5,820
|
|
|
6,890
|
|
|||
Total revenues
|
1,193,253
|
|
|
1,072,685
|
|
|
749,906
|
|
|||
Expenses:
|
|
|
|
|
|
||||||
Provision for losses
|
198,585
|
|
|
246,083
|
|
|
562,747
|
|
|||
Policy acquisition costs
|
22,424
|
|
|
24,446
|
|
|
28,485
|
|
|||
Direct cost of services
|
89,963
|
|
|
43,605
|
|
|
—
|
|
|||
Other operating expenses
|
246,157
|
|
|
252,283
|
|
|
257,402
|
|
|||
Interest expense
|
91,102
|
|
|
90,464
|
|
|
74,618
|
|
|||
Loss on induced conversion and debt extinguishment
|
94,207
|
|
|
—
|
|
|
—
|
|
|||
Amortization and impairment of intangible assets
|
12,986
|
|
|
8,648
|
|
|
—
|
|
|||
Total expenses
|
755,424
|
|
|
665,529
|
|
|
923,252
|
|
|||
Pretax income (loss) from continuing operations
|
437,829
|
|
|
407,156
|
|
|
(173,346
|
)
|
|||
Income tax provision (benefit)
|
156,290
|
|
|
(852,418
|
)
|
|
(31,495
|
)
|
|||
Net income (loss) from continuing operations
|
281,539
|
|
|
1,259,574
|
|
|
(141,851
|
)
|
|||
Income (loss) from discontinued operations, net of tax
|
5,385
|
|
|
(300,057
|
)
|
|
(55,134
|
)
|
|||
Net income (loss)
|
$
|
286,924
|
|
|
$
|
959,517
|
|
|
$
|
(196,985
|
)
|
|
|
|
|
|
|
||||||
Net income (loss) per share:
|
|
|
|
|
|
||||||
Basic:
|
|
|
|
|
|
||||||
Net income (loss) from continuing operations
|
$
|
1.41
|
|
|
$
|
6.83
|
|
|
$
|
(0.85
|
)
|
Income (loss) from discontinued operations
|
0.03
|
|
|
(1.63
|
)
|
|
(0.33
|
)
|
|||
Net income (loss)
|
$
|
1.44
|
|
|
$
|
5.20
|
|
|
$
|
(1.18
|
)
|
|
|
|
|
|
|
||||||
Diluted:
|
|
|
|
|
|
||||||
Net income (loss) from continuing operations
|
$
|
1.20
|
|
|
$
|
5.44
|
|
|
$
|
(0.85
|
)
|
Income (loss) from discontinued operations
|
0.02
|
|
|
(1.28
|
)
|
|
(0.33
|
)
|
|||
Net income (loss)
|
$
|
1.22
|
|
|
$
|
4.16
|
|
|
$
|
(1.18
|
)
|
|
|
|
|
|
|
||||||
Weighted-average number of common shares outstanding—basic
|
199,910
|
|
|
184,551
|
|
|
166,366
|
|
|||
Weighted-average number of common and common equivalent shares outstanding—diluted
|
246,332
|
|
|
233,902
|
|
|
166,366
|
|
|||
|
|
|
|
|
|
||||||
Dividends per share
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Net income (loss)
|
$
|
286,924
|
|
|
$
|
959,517
|
|
|
$
|
(196,985
|
)
|
Other comprehensive income (loss), net of tax (see Note 12):
|
|
|
|
|
|
||||||
Net foreign currency translation adjustments
|
(217
|
)
|
|
(226
|
)
|
|
—
|
|
|||
Unrealized (losses) gains on investments:
|
|
|
|
|
|
||||||
Unrealized holding (losses) gains arising during the period
|
(22,573
|
)
|
|
13,650
|
|
|
19,149
|
|
|||
Less: Reclassification adjustment for net (losses) gains included in net income (loss)
|
44,183
|
|
|
(1,039
|
)
|
|
656
|
|
|||
Net unrealized (losses) gains on investments
|
(66,756
|
)
|
|
14,689
|
|
|
18,493
|
|
|||
Activity related to investments recorded as assets held for sale
|
(3,254
|
)
|
|
(302
|
)
|
|
2,597
|
|
|||
Other comprehensive (loss) income, net of tax
|
(70,227
|
)
|
|
14,161
|
|
|
21,090
|
|
|||
Comprehensive income (loss)
|
$
|
216,697
|
|
|
$
|
973,678
|
|
|
$
|
(175,895
|
)
|
(In thousands)
|
Common
Stock
|
|
Treasury
Stock
|
|
Additional
Paid-in
Capital
|
Retained
Earnings (Deficit)
|
AOCI
|
Total
|
||||||||||
BALANCE, JANUARY 1, 2013
|
$
|
151
|
|
$
|
(892,094
|
)
|
$
|
1,967,414
|
|
$
|
(355,241
|
)
|
$
|
16,095
|
|
$
|
736,325
|
|
Net loss
|
—
|
|
—
|
|
—
|
|
(196,985
|
)
|
—
|
|
(196,985
|
)
|
||||||
Net unrealized gain on investments, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
21,090
|
|
21,090
|
|
||||||
Repurchases of common stock under incentive plans
|
—
|
|
(713
|
)
|
—
|
|
—
|
|
—
|
|
(713
|
)
|
||||||
Issuance of common stock - stock offering
|
39
|
|
—
|
|
299,371
|
|
—
|
|
—
|
|
299,410
|
|
||||||
Issuance of common stock under incentive plans
|
1
|
|
—
|
|
62
|
|
—
|
|
—
|
|
63
|
|
||||||
Issuance of common stock under benefit plans
|
—
|
|
—
|
|
672
|
|
—
|
|
—
|
|
672
|
|
||||||
Issuance of convertible debt (See Note 11)
|
—
|
|
—
|
|
77,026
|
|
—
|
|
—
|
|
77,026
|
|
||||||
Net actuarial gain
|
—
|
|
—
|
|
—
|
|
—
|
|
198
|
|
198
|
|
||||||
Stock-based compensation expense, net
|
—
|
|
—
|
|
4,191
|
|
—
|
|
—
|
|
4,191
|
|
||||||
Dividends declared
|
—
|
|
—
|
|
(1,632
|
)
|
—
|
|
—
|
|
(1,632
|
)
|
||||||
BALANCE, DECEMBER 31, 2013
|
$
|
191
|
|
$
|
(892,807
|
)
|
$
|
2,347,104
|
|
$
|
(552,226
|
)
|
$
|
37,383
|
|
$
|
939,645
|
|
Net income
|
—
|
|
—
|
|
—
|
|
959,517
|
|
—
|
|
959,517
|
|
||||||
Net foreign currency translation adjustment, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
(226
|
)
|
(226
|
)
|
||||||
Net unrealized gain on investments, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
14,387
|
|
14,387
|
|
||||||
Repurchases of common stock under incentive plans
|
—
|
|
(154
|
)
|
—
|
|
—
|
|
—
|
|
(154
|
)
|
||||||
Issuance of common stock - stock offering
|
18
|
|
—
|
|
247,170
|
|
—
|
|
—
|
|
247,188
|
|
||||||
Issuance of common stock under incentive plans
|
—
|
|
—
|
|
182
|
|
—
|
|
—
|
|
182
|
|
||||||
Issuance of common stock under benefit plans
|
—
|
|
—
|
|
959
|
|
—
|
|
—
|
|
959
|
|
||||||
Net actuarial loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(59
|
)
|
(59
|
)
|
||||||
Stock-based compensation expense, net
|
—
|
|
—
|
|
12,176
|
|
—
|
|
—
|
|
12,176
|
|
||||||
Reclassification to equity component of currently redeemable convertible senior notes
|
—
|
|
—
|
|
(74,690
|
)
|
—
|
|
—
|
|
(74,690
|
)
|
||||||
Dividends declared
|
—
|
|
—
|
|
(1,388
|
)
|
(477
|
)
|
—
|
|
(1,865
|
)
|
||||||
BALANCE, DECEMBER 31, 2014
|
$
|
209
|
|
$
|
(892,961
|
)
|
$
|
2,531,513
|
|
$
|
406,814
|
|
$
|
51,485
|
|
$
|
2,097,060
|
|
Net income
|
—
|
|
—
|
|
—
|
|
286,924
|
|
—
|
|
286,924
|
|
||||||
Net foreign currency translation adjustment, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
(217
|
)
|
(217
|
)
|
||||||
Net unrealized loss on investments, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
(70,010
|
)
|
(70,010
|
)
|
||||||
Repurchases of common stock under incentive plans
|
—
|
|
(215
|
)
|
—
|
|
—
|
|
—
|
|
(215
|
)
|
||||||
Issuance of common stock under incentive plans
|
1
|
|
—
|
|
1,284
|
|
—
|
|
—
|
|
1,285
|
|
||||||
Issuance of common stock under benefit plans
|
—
|
|
—
|
|
1,138
|
|
—
|
|
—
|
|
1,138
|
|
||||||
Stock-based compensation expense, net
|
—
|
|
—
|
|
15,513
|
|
—
|
|
—
|
|
15,513
|
|
||||||
Impact of extinguishment of Convertible Senior Notes due 2017
|
28
|
|
—
|
|
336,358
|
|
—
|
|
—
|
|
336,386
|
|
||||||
Net actuarial gain
|
—
|
|
—
|
|
—
|
|
—
|
|
265
|
|
265
|
|
||||||
Shares repurchased under ASR (Note 18)
|
(11
|
)
|
—
|
|
(201,989
|
)
|
—
|
|
—
|
|
(202,000
|
)
|
||||||
Termination of capped calls (Note 11)
|
(3
|
)
|
—
|
|
13,153
|
|
—
|
|
—
|
|
13,150
|
|
||||||
Change in equity component of currently redeemable convertible senior notes
|
—
|
|
—
|
|
19,648
|
|
—
|
|
—
|
|
19,648
|
|
||||||
Dividends declared
|
—
|
|
—
|
|
—
|
|
(1,996
|
)
|
—
|
|
(1,996
|
)
|
||||||
BALANCE, DECEMBER 31, 2015
|
$
|
224
|
|
$
|
(893,176
|
)
|
$
|
2,716,618
|
|
$
|
691,742
|
|
$
|
(18,477
|
)
|
$
|
2,496,931
|
|
Radian Group Inc.
|
|||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||||||
(In thousands)
|
Year Ended December 31,
|
||||||||||
2015
|
|
2014
|
|
2013
|
|||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
286,924
|
|
|
$
|
959,517
|
|
|
$
|
(196,985
|
)
|
Less: Income (loss) from discontinued operations, net of tax
|
5,385
|
|
|
(300,057
|
)
|
|
(55,134
|
)
|
|||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Net (gains) losses on investments and other financial instruments recognized in earnings
|
(35,693
|
)
|
|
(79,989
|
)
|
|
105,890
|
|
|||
Loss on induced conversion and debt extinguishment
|
94,207
|
|
|
—
|
|
|
—
|
|
|||
Net payments related to derivative contracts and VIEs
|
(3,203
|
)
|
|
(125
|
)
|
|
(8,574
|
)
|
|||
Net cash (paid) received for commutations, terminations and recaptures
|
(8,047
|
)
|
|
1,105
|
|
|
(254,667
|
)
|
|||
Deferred income tax provision (benefit)
|
156,170
|
|
|
(825,843
|
)
|
|
(31,847
|
)
|
|||
Amortization and impairment of intangible assets
|
12,986
|
|
|
8,648
|
|
|
—
|
|
|||
Depreciation and other amortization, net
|
68,639
|
|
|
57,301
|
|
|
69,726
|
|
|||
Change in:
|
|
|
|
|
|
|
|
|
|||
Accounts and notes receivable
|
25,656
|
|
|
(28,310
|
)
|
|
6,556
|
|
|||
Unearned premiums
|
35,796
|
|
|
77,432
|
|
|
184,659
|
|
|||
Reserve for losses and LAE
|
(575,594
|
)
|
|
(604,906
|
)
|
|
(664,588
|
)
|
|||
Other assets
|
21,620
|
|
|
37,460
|
|
|
61,302
|
|
|||
Other liabilities
|
(58,562
|
)
|
|
(55,592
|
)
|
|
54,354
|
|
|||
Net cash provided by (used in) operating activities, continuing operations
|
15,514
|
|
|
(153,245
|
)
|
|
(619,040
|
)
|
|||
Net cash (used in) provided by operating activities, discontinued operations
|
(1,759
|
)
|
|
17,071
|
|
|
(45,897
|
)
|
|||
Net cash provided by (used in) operating activities
|
13,755
|
|
|
(136,174
|
)
|
|
(664,937
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Proceeds from sales of fixed-maturity investments available for sale
|
20,100
|
|
|
19,672
|
|
|
17,185
|
|
|||
Proceeds from sales of equity securities available for sale
|
146,049
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from sales of trading securities
|
78,826
|
|
|
469,582
|
|
|
299,577
|
|
|||
Proceeds from redemptions of fixed-maturity investments held to maturity
|
—
|
|
|
350
|
|
|
325
|
|
|||
Proceeds from redemptions of fixed-maturity investments available for sale
|
103,595
|
|
|
4,985
|
|
|
538
|
|
|||
Proceeds from redemptions of equity securities available for sale
|
—
|
|
|
—
|
|
|
10,503
|
|
|||
Proceeds from redemptions of trading securities
|
221,914
|
|
|
201,597
|
|
|
233,763
|
|
|||
Purchases of fixed-maturity investments available for sale
|
(1,486,318
|
)
|
|
(519,166
|
)
|
|
(21,432
|
)
|
|||
Purchases of equity securities available for sale
|
(75,538
|
)
|
|
—
|
|
|
—
|
|
|||
Purchases of trading securities
|
—
|
|
|
—
|
|
|
(259,897
|
)
|
|||
Sales, redemptions (purchases) of short-term investments, net
|
222,882
|
|
|
(364,855
|
)
|
|
(363,446
|
)
|
|||
Sales of other assets and other invested assets, net
|
16,717
|
|
|
7,836
|
|
|
41,397
|
|
|||
Proceeds from the sale of investment in affiliate, net of cash transferred
|
784,866
|
|
|
—
|
|
|
—
|
|
|||
Purchases of property and equipment, net
|
(25,466
|
)
|
|
(18,495
|
)
|
|
(6,004
|
)
|
|||
Acquisitions, net of cash acquired
|
(10,837
|
)
|
|
(295,977
|
)
|
|
—
|
|
|||
Net cash (used in) investing activities, continuing operations
|
(3,210
|
)
|
|
(494,471
|
)
|
|
(47,491
|
)
|
|||
Net cash provided by investing activities, discontinued operations
|
4,999
|
|
|
156,839
|
|
|
107,790
|
|
|||
Net cash provided by (used in) investing activities
|
1,789
|
|
|
(337,632
|
)
|
|
60,299
|
|
Radian Group Inc.
|
|||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||||||
(In thousands)
|
Year Ended December 31,
|
||||||||||
2015
|
|
2014
|
|
2013
|
|||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Dividends paid
|
(1,996
|
)
|
|
(1,865
|
)
|
|
(1,632
|
)
|
|||
Issuance of long-term debt, net
|
343,334
|
|
|
293,809
|
|
|
377,783
|
|
|||
Purchases and redemptions of long-term debt
|
(156,172
|
)
|
|
(57,223
|
)
|
|
(79,372
|
)
|
|||
Proceeds from termination of capped calls
|
13,150
|
|
|
—
|
|
|
—
|
|
|||
Issuance of common stock
|
1,285
|
|
|
247,188
|
|
|
299,410
|
|
|||
Purchase of shares under ASR
|
(202,000
|
)
|
|
—
|
|
|
—
|
|
|||
Excess tax benefits from stock-based awards
|
3,000
|
|
|
107
|
|
|
752
|
|
|||
Net cash provided by financing activities, continuing operations
|
601
|
|
|
482,016
|
|
|
596,941
|
|
|||
Net cash provided by (used in) financing activities, discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net cash provided by financing activities
|
601
|
|
|
482,016
|
|
|
596,941
|
|
|||
Effect of exchange rate changes on cash
|
(133
|
)
|
|
(68
|
)
|
|
—
|
|
|||
Increase (decrease) in cash
|
16,012
|
|
|
8,142
|
|
|
(7,697
|
)
|
|||
Cash, beginning of period
|
30,465
|
|
|
22,880
|
|
|
29,408
|
|
|||
Less: (Decrease) increase in cash of business held for sale
|
(421
|
)
|
|
557
|
|
|
(1,169
|
)
|
|||
Cash, end of period
|
$
|
46,898
|
|
|
$
|
30,465
|
|
|
$
|
22,880
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
||||||
Income taxes paid (received), continuing operations
|
$
|
3,712
|
|
|
$
|
(4,312
|
)
|
|
$
|
4,436
|
|
Income taxes paid, discontinued operations
|
2,036
|
|
|
13,891
|
|
|
1,051
|
|
|||
Interest paid
|
61,077
|
|
|
50,702
|
|
|
40,380
|
|
•
|
Loan Review and Due Diligence
—Loan-level due diligence for various asset classes and securitizations, with a primary focus on the mortgage and RMBS markets, utilizing skilled professionals and proprietary technology, with offerings focused on credit underwriting, regulatory compliance and collateral valuation;
|
•
|
Surveillance
—Monitoring of mortgage servicer and loan performance, with Risk Management and Servicing Oversight solutions that include RMBS surveillance, Regulatory and Operational loan level oversight, asset representation review and consulting services;
|
•
|
Valuation and Component Services
—Outsourced solutions offered through Green River Capital, primarily focused on the SFR market, including valuations, property inspections, title reviews, lease reviews, tax lien reviews and due diligence reviews for SFR and residential real estate markets; as well as outsourced solutions for appraisal, title and closing services;
|
•
|
REO Management
—REO asset management services offered through Green River Capital, which include management of the entire REO disposition process for our clients; and
|
•
|
EuroRisk
—Outsourced mortgage services in the United Kingdom and Europe, with offerings that include due diligence services, quality control reviews, valuation reviews and consulting services.
|
•
|
Radian Group transferred
$325 million
of cash and marketable securities to Radian Guaranty in exchange for a Surplus Note issued by Radian Guaranty. This Surplus Note has a
0%
interest rate and is scheduled to mature on December 31, 2025. See Note 14 for additional information.
|
•
|
Radian Group contributed
$50 million
to an exclusive affiliated reinsurer of Radian Guaranty. See Note 14 for information on Radian Reinsurance.
|
•
|
the issuance of
$350 million
aggregate principal amount of Senior Notes due 2020;
|
•
|
the purchases of approximately
$389.1 million
aggregate principal amount of Convertible Senior Notes due 2017;
|
•
|
the termination of a corresponding portion of the capped call transactions related to the purchased Convertible Senior Notes due 2017; and
|
•
|
the entry into an ASR program to repurchase an aggregate of
$202 million
of Radian Group common stock.
|
Level I
|
—
Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
|
Level II
|
—
Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities; and
|
Level III
|
—
Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Level III inputs are used to measure fair value only to the extent that observable inputs are not available.
|
•
|
whether there are cumulative losses from previous years;
|
•
|
future projections of taxable income within the applicable carryback and carryforward periods, including the sustainability of our forecasts of future taxable income under potential stress scenarios;
|
•
|
degree of certainty regarding our projected incurred losses;
|
•
|
future reversals of existing taxable temporary differences; and
|
•
|
potential tax planning strategies.
|
•
|
the extent and the duration of the decline in value;
|
•
|
the reasons for the decline in value (e.g., credit event, interest related or market fluctuations); and
|
•
|
the financial position, access to capital and near term prospects of the issuer, including the current and future impact of any specific events.
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Net premiums earned
|
$
|
1,007
|
|
|
$
|
37,194
|
|
|
$
|
49,474
|
|
Net investment income
|
9,153
|
|
|
35,633
|
|
|
39,966
|
|
|||
Net gains (losses) on investments and other financial instruments
|
21,486
|
|
|
55,312
|
|
|
(47,930
|
)
|
|||
Impairment losses on investments
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||
Change in fair value of derivative instruments
|
2,625
|
|
|
130,617
|
|
|
(32,406
|
)
|
|||
Other income
|
—
|
|
|
88
|
|
|
(20
|
)
|
|||
Total revenues
|
34,271
|
|
|
258,844
|
|
|
9,081
|
|
|||
|
|
|
|
|
|
||||||
Provision for losses
|
502
|
|
|
2,853
|
|
|
2,486
|
|
|||
Policy acquisition costs
|
(191
|
)
|
|
6,340
|
|
|
13,178
|
|
|||
Other operating expense
|
4,107
|
|
|
23,726
|
|
|
27,127
|
|
|||
Total expenses
|
4,418
|
|
|
32,919
|
|
|
42,791
|
|
|||
|
|
|
|
|
|
||||||
Equity in net (loss) income of affiliates
|
(13
|
)
|
|
(13
|
)
|
|
1
|
|
|||
Income (loss) from operations of businesses held for sale
|
29,840
|
|
|
225,912
|
|
|
(33,709
|
)
|
|||
Loss on sale
|
(14,280
|
)
|
|
(467,527
|
)
|
|
—
|
|
|||
Income tax provision
|
10,175
|
|
|
58,442
|
|
|
21,425
|
|
|||
Income (loss) from discontinued operations, net of tax
|
$
|
5,385
|
|
|
$
|
(300,057
|
)
|
|
$
|
(55,134
|
)
|
|
December 31,
|
||||||
(In thousands)
|
2015
|
|
2014
|
||||
Fixed-maturity investments
|
$
|
—
|
|
|
$
|
224,552
|
|
Equity securities
|
—
|
|
|
3,749
|
|
||
Trading securities
|
—
|
|
|
689,887
|
|
||
Short-term investments
|
—
|
|
|
435,413
|
|
||
Other invested assets
|
—
|
|
|
108,206
|
|
||
Other assets
|
—
|
|
|
274,637
|
|
||
Total assets held for sale
|
$
|
—
|
|
|
$
|
1,736,444
|
|
|
|
|
|
||||
Unearned premiums
|
$
|
—
|
|
|
$
|
158,921
|
|
Reserve for losses and LAE
|
—
|
|
|
31,558
|
|
||
VIE debt
|
—
|
|
|
85,016
|
|
||
Derivative liabilities
|
—
|
|
|
183,370
|
|
||
Other liabilities
|
—
|
|
|
488,143
|
|
||
Total liabilities held for sale
|
$
|
—
|
|
|
$
|
947,008
|
|
(1)
|
Net gains (losses) on investments and other financial instruments.
The recognition of realized investment gains or losses can vary significantly across periods as the activity is highly discretionary based on the timing of individual securities sales due to such factors as market opportunities, our tax and capital profile and overall market cycles. Unrealized investment gains and losses arise primarily from changes in the market value of our investments that are classified as trading. These valuation adjustments may not necessarily result in economic gains or losses.
|
(2)
|
Loss on induced conversion and debt extinguishment.
Gains or losses on early extinguishment of debt or losses incurred to purchase our convertible debt prior to maturity are discretionary activities that are undertaken in order to take advantage of market opportunities to strengthen our financial and capital positions; therefore, these activities are not viewed as part of our operating performance. Such transactions do not reflect expected future operations and do not provide meaningful insight regarding our current or past operating trends. Therefore, these items are excluded from our calculation of adjusted pretax operating income (loss).
|
(3)
|
Acquisition-related expenses.
Acquisition-related expenses represent the costs incurred to effect an acquisition of a business (i.e., a business combination). Because we pursue acquisitions on a strategic and selective basis and not in the ordinary course of our business, we do not view acquisition-related expenses as a consequence of a primary business activity. Therefore, we do not consider these expenses to be part of our operating performance and they are excluded from our calculation of adjusted pretax operating income (loss).
|
(4)
|
Amortization and impairment of intangible assets.
Amortization of intangible assets represents the periodic expense required to amortize the cost of intangible assets over their estimated useful lives. Intangible assets with an indefinite useful life are also periodically reviewed for potential impairment, and impairment adjustments are made whenever appropriate. These charges are not viewed as part of the operating performance of our primary activities and therefore are excluded from our calculation of adjusted pretax operating income (loss).
|
(5)
|
Net impairment losses recognized in earnings.
The recognition of net impairment losses on investments can vary significantly in both size and timing, depending on market credit cycles. We do not view these impairment losses to be indicative of our fundamental operating activities. Therefore, whenever these losses occur, we exclude them from our calculation of adjusted pretax operating income (loss).
|
|
December 31, 2015
|
|
||||||||||
(In thousands)
|
Mortgage Insurance
|
|
Services
|
|
Total
|
|
||||||
Net premiums written—insurance
|
$
|
968,505
|
|
|
$
|
—
|
|
|
$
|
968,505
|
|
|
Increase in unearned premiums
|
(52,597
|
)
|
|
—
|
|
|
(52,597
|
)
|
|
|||
Net premiums earned—insurance
|
915,908
|
|
|
—
|
|
|
915,908
|
|
|
|||
Services revenue
|
—
|
|
|
157,416
|
|
|
157,416
|
|
|
|||
Net investment income
|
81,537
|
|
|
—
|
|
|
81,537
|
|
|
|||
Other income
|
6,300
|
|
|
—
|
|
|
6,300
|
|
|
|||
Total
|
1,003,745
|
|
|
157,416
|
|
(1)
|
1,161,161
|
|
(2)
|
|||
|
|
|
|
|
|
|
||||||
Provision for losses
|
198,433
|
|
|
—
|
|
|
198,433
|
|
|
|||
Policy acquisition costs
|
22,424
|
|
|
—
|
|
|
22,424
|
|
|
|||
Direct cost of services
|
—
|
|
|
93,504
|
|
|
93,504
|
|
|
|||
Other operating expenses before corporate allocations
|
149,941
|
|
|
43,622
|
|
|
193,563
|
|
|
|||
Total
|
370,798
|
|
(1)
|
137,126
|
|
|
507,924
|
|
|
|||
Adjusted pretax operating income before corporate allocations
|
632,947
|
|
|
20,290
|
|
|
653,237
|
|
|
|||
Allocation of corporate operating expenses
|
46,418
|
|
|
4,823
|
|
|
51,241
|
|
|
|||
Allocation of interest expense
|
73,402
|
|
|
17,700
|
|
|
91,102
|
|
|
|||
Adjusted pretax operating income (loss)
|
$
|
513,127
|
|
|
$
|
(2,233
|
)
|
|
$
|
510,894
|
|
|
|
|
|
|
|
|
|
||||||
Total assets
|
$
|
5,281,597
|
|
|
$
|
360,503
|
|
|
$
|
5,642,100
|
|
|
|
|
|
|
|
|
|
||||||
NIW (in millions)
|
$
|
41,411
|
|
|
|
|
|
|
(1)
|
Includes inter-segment expenses and revenues as follows:
|
|
December 31, 2015
|
||||||
(In thousands)
|
Mortgage Insurance
|
|
Services
|
||||
Inter-segment revenues
|
$
|
—
|
|
|
$
|
3,601
|
|
Inter-segment expenses
|
3,601
|
|
|
—
|
|
(2)
|
Excludes net gains on investments and other financial instruments of
$35.7 million
, not included in adjusted pretax operating income.
|
|
December 31, 2014
|
|
||||||||||
(In thousands)
|
Mortgage Insurance
|
|
Services
(1)
|
|
Total
|
|
||||||
Net premiums written—insurance
|
$
|
925,181
|
|
|
$
|
—
|
|
|
$
|
925,181
|
|
|
Increase in unearned premiums
|
(80,653
|
)
|
|
—
|
|
|
(80,653
|
)
|
|
|||
Net premiums earned—insurance
|
844,528
|
|
|
—
|
|
|
844,528
|
|
|
|||
Services revenue
|
—
|
|
|
76,709
|
|
|
76,709
|
|
|
|||
Net investment income
|
65,655
|
|
|
—
|
|
|
65,655
|
|
|
|||
Other income
|
5,321
|
|
|
1,265
|
|
|
6,586
|
|
|
|||
Total
|
915,504
|
|
|
77,974
|
|
(2)
|
993,478
|
|
(3)
|
|||
|
|
|
|
|
|
|
||||||
Provision for losses
|
246,865
|
|
|
—
|
|
|
246,865
|
|
|
|||
Change in expected economic loss or recovery for consolidated VIEs
|
113
|
|
|
—
|
|
|
113
|
|
|
|||
Policy acquisition costs
|
24,446
|
|
|
—
|
|
|
24,446
|
|
|
|||
Direct cost of services
|
—
|
|
|
43,605
|
|
|
43,605
|
|
|
|||
Other operating expenses before corporate allocations
|
170,390
|
|
|
18,915
|
|
|
189,305
|
|
|
|||
Total
|
441,814
|
|
(2)
|
62,520
|
|
|
504,334
|
|
|
|||
Adjusted pretax operating income before corporate allocations
|
473,690
|
|
|
15,454
|
|
|
489,144
|
|
|
|||
Allocation of corporate operating expenses
|
55,154
|
|
|
1,144
|
|
|
56,298
|
|
|
|||
Allocation of interest expense
|
81,600
|
|
|
8,864
|
|
|
90,464
|
|
|
|||
Adjusted pretax operating income
|
$
|
336,936
|
|
|
$
|
5,446
|
|
|
$
|
342,382
|
|
|
|
|
|
|
|
|
|
||||||
Assets held for sale
(4)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,736,444
|
|
|
Total assets
|
4,769,014
|
|
|
336,878
|
|
|
6,842,336
|
|
|
|||
|
|
|
|
|
|
|
||||||
NIW (in millions)
|
$
|
37,349
|
|
|
|
|
|
|
(1)
|
Includes the acquisition of Clayton, effective June 30, 2014.
|
(2)
|
Includes inter-segment expenses and revenues as follows:
|
|
December 31, 2014
|
||||||
(In thousands)
|
Mortgage Insurance
|
|
Services
|
||||
Inter-segment revenues
|
$
|
—
|
|
|
$
|
782
|
|
Inter-segment expenses
|
782
|
|
|
—
|
|
(3)
|
Excludes net gains on investments and other financial instruments of
$80.0 million
, not included in adjusted pretax operating income.
|
(4)
|
Assets held for sale are not part of the Mortgage Insurance or Services segments.
|
|
December 31, 2013
|
||
|
Mortgage Insurance
|
||
(In thousands)
|
|
||
Net premiums written—insurance
|
$
|
950,998
|
|
Increase in unearned premiums
|
(169,578
|
)
|
|
Net premiums earned—insurance
|
781,420
|
|
|
Net investment income
|
68,121
|
|
|
Other income
|
6,255
|
|
|
Total
(1)
|
855,796
|
|
|
|
|
||
Provision for losses
|
562,747
|
|
|
Change in expected economic loss or recovery for consolidated VIEs
|
(21
|
)
|
|
Policy acquisition costs
|
28,485
|
|
|
Other operating expenses before corporate allocations
|
160,327
|
|
|
Total
|
751,538
|
|
|
Adjusted pretax operating income before corporate allocations
|
104,258
|
|
|
Allocation of corporate operating expenses
|
97,075
|
|
|
Allocation of interest expense
|
74,618
|
|
|
Adjusted pretax operating loss
|
$
|
(67,435
|
)
|
|
|
||
Total assets
(2)
|
$
|
3,837,889
|
|
|
|
||
NIW (in millions)
|
$
|
47,255
|
|
(1)
|
Excludes the following revenue items not included in adjusted pretax operating loss: (i) net losses on investments and other financial instruments of
$106.5 million
; (ii) change in fair value of derivative instruments of
$0.6 million
.
|
(2)
|
Does not include assets held for sale of
$1.8 billion
which are not a part of the Mortgage Insurance segment.
|
|
December 31,
|
||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Adjusted pretax operating income (loss):
|
|
|
|
|
|
||||||
Mortgage insurance
(1)
|
$
|
513,127
|
|
|
$
|
336,936
|
|
|
$
|
(67,435
|
)
|
Services
(1)
|
(2,233
|
)
|
|
5,446
|
|
|
—
|
|
|||
Total adjusted pretax operating income (loss)
|
$
|
510,894
|
|
|
$
|
342,382
|
|
|
$
|
(67,435
|
)
|
|
|
|
|
|
|
||||||
Net gains (losses) on investments and other financial instruments
(2)
|
35,693
|
|
|
80,102
|
|
|
(105,911
|
)
|
|||
Loss on induced conversion and debt extinguishment
|
(94,207
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisition-related expenses
|
(1,565
|
)
|
|
(6,680
|
)
|
|
—
|
|
|||
Amortization and impairment of intangible assets
|
(12,986
|
)
|
|
(8,648
|
)
|
|
—
|
|
|||
Consolidated pretax income (loss) from continuing operations
|
$
|
437,829
|
|
|
$
|
407,156
|
|
|
$
|
(173,346
|
)
|
(1)
|
Includes inter-segment expenses and revenues as listed in the notes to the preceding tables.
|
(2)
|
The change in expected economic loss or recovery associated with our previously owned VIEs is included in adjusted pretax operating income above, although it represents amounts that are not included in net income. Therefore, for purposes of this reconciliation, net gains (losses) on investments and other financial instruments has been adjusted by income of
$0.1 million
and
$0.6 million
for the
years ended December 31, 2014
and
2013
, respectively, to reverse this item.
|
|
December 31, 2015
|
||||||||||||||
(In millions)
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||
Assets and Liabilities at Fair Value
|
|
|
|
|
|
|
|
||||||||
Investment Portfolio:
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency securities
|
$
|
670.3
|
|
|
$
|
8.0
|
|
|
$
|
—
|
|
|
$
|
678.3
|
|
State and municipal obligations
|
—
|
|
|
341.9
|
|
|
—
|
|
|
341.9
|
|
||||
Money market instruments
|
443.3
|
|
|
—
|
|
|
—
|
|
|
443.3
|
|
||||
Corporate bonds and notes
|
—
|
|
|
1,383.2
|
|
|
—
|
|
|
1,383.2
|
|
||||
RMBS
|
—
|
|
|
297.1
|
|
|
—
|
|
|
297.1
|
|
||||
CMBS
|
—
|
|
|
544.6
|
|
|
—
|
|
|
544.6
|
|
||||
Other ABS
|
—
|
|
|
371.6
|
|
|
—
|
|
|
371.6
|
|
||||
Foreign government and agency securities
|
—
|
|
|
37.6
|
|
|
—
|
|
|
37.6
|
|
||||
Equity securities
|
74.9
|
|
|
25.0
|
|
|
0.5
|
|
|
100.4
|
|
||||
Other investments
(1)
|
—
|
|
|
99.0
|
|
|
—
|
|
|
99.0
|
|
||||
Total Investments at Fair Value
(2)
|
1,188.5
|
|
|
3,108.0
|
|
|
0.5
|
|
|
4,297.0
|
|
||||
Total Assets at Fair Value
|
$
|
1,188.5
|
|
|
$
|
3,108.0
|
|
|
$
|
0.5
|
|
|
$
|
4,297.0
|
|
(1)
|
Comprising short-term certificates of deposit and commercial paper.
|
(2)
|
Does not include certain other invested assets (
$1.7 million
), primarily invested in limited partnerships, accounted for as cost-method investments and not measured at fair value.
|
|
December 31, 2014
|
||||||||||
(In millions)
|
Level I
|
|
Level II
|
|
Total
|
||||||
Assets and Liabilities at Fair Value
|
|
|
|
|
|
||||||
Investment Portfolio:
|
|
|
|
|
|
||||||
U.S. government and agency securities
|
$
|
836.9
|
|
|
$
|
3.0
|
|
|
$
|
839.9
|
|
State and municipal obligations
|
—
|
|
|
362.8
|
|
|
362.8
|
|
|||
Money market instruments
|
600.3
|
|
|
—
|
|
|
600.3
|
|
|||
Corporate bonds and notes
|
—
|
|
|
992.8
|
|
|
992.8
|
|
|||
RMBS
|
—
|
|
|
132.3
|
|
|
132.3
|
|
|||
CMBS
|
—
|
|
|
246.8
|
|
|
246.8
|
|
|||
Other ABS
|
—
|
|
|
185.5
|
|
|
185.5
|
|
|||
Foreign government and agency securities
|
—
|
|
|
37.7
|
|
|
37.7
|
|
|||
Equity securities
(1)
|
164.0
|
|
|
51.6
|
|
|
215.6
|
|
|||
Other investments
(2)
|
—
|
|
|
1.0
|
|
|
1.0
|
|
|||
Total Investments at Fair Value
(3)
|
1,601.2
|
|
|
2,013.5
|
|
|
3,614.7
|
|
|||
Total Assets at Fair Value
|
$
|
1,601.2
|
|
|
$
|
2,013.5
|
|
|
$
|
3,614.7
|
|
(1)
|
Comprising broadly diversified domestic equity mutual funds and certain common stocks included within Level I and various preferred stocks invested across numerous companies and industries included within Level II.
|
(2)
|
Comprising short-term certificates of deposit.
|
(3)
|
Does not include certain other invested assets (
$14.6 million
), primarily invested in limited partnerships, accounted for as cost-method investments and not measured at fair value. Also excludes investments classified as assets held for sale of
$495.1 million
,
$839.2 million
and
$102.6 million
, with fair values categorized in Level I, Level II and Level III, respectively.
|
|
December 31, 2015
|
|
December 31, 2014
|
|
||||||||||||
(In millions)
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Other invested assets
|
$
|
1.7
|
|
|
$
|
4.9
|
|
|
$
|
14.6
|
|
|
$
|
20.5
|
|
(1)
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt
|
1,219.5
|
|
|
1,414.9
|
|
|
1,192.3
|
|
|
1,859.3
|
|
(1)
|
(1)
|
These estimated fair values would be classified in Level II of the fair value hierarchy.
|
|
December 31, 2015
|
||||||||||||||
(In thousands)
|
Amortized
Cost
|
|
Fair Value
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
||||||||
Fixed-maturities available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency securities
|
$
|
13,773
|
|
|
$
|
13,752
|
|
|
$
|
—
|
|
|
$
|
21
|
|
State and municipal obligations
|
36,920
|
|
|
37,900
|
|
|
1,100
|
|
|
120
|
|
||||
Corporate bonds and notes
|
815,024
|
|
|
802,193
|
|
|
4,460
|
|
|
17,291
|
|
||||
RMBS
|
226,744
|
|
|
224,905
|
|
|
625
|
|
|
2,464
|
|
||||
CMBS
|
415,780
|
|
|
406,910
|
|
|
69
|
|
|
8,939
|
|
||||
Other ABS
|
359,452
|
|
|
355,494
|
|
|
16
|
|
|
3,974
|
|
||||
Foreign government and agency securities
|
25,663
|
|
|
24,307
|
|
|
27
|
|
|
1,383
|
|
||||
|
$
|
1,893,356
|
|
|
$
|
1,865,461
|
|
|
$
|
6,297
|
|
|
$
|
34,192
|
|
Equity securities available for sale
(1)
|
$
|
75,538
|
|
|
$
|
75,430
|
|
|
$
|
—
|
|
|
$
|
108
|
|
Total debt and equity securities
|
$
|
1,968,894
|
|
|
$
|
1,940,891
|
|
|
$
|
6,297
|
|
|
$
|
34,300
|
|
(1)
|
Comprising primarily a multi-sector exchange-traded fund.
|
|
December 31, 2014
|
||||||||||||||
(In thousands)
|
Amortized
Cost
|
|
Fair Value
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
||||||||
Fixed-maturities available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency securities
|
$
|
5,709
|
|
|
$
|
5,751
|
|
|
$
|
48
|
|
|
$
|
6
|
|
State and municipal obligations
|
17,727
|
|
|
18,910
|
|
|
1,183
|
|
|
—
|
|
||||
Corporate bonds and notes
|
277,678
|
|
|
284,408
|
|
|
7,288
|
|
|
558
|
|
||||
RMBS
|
41,467
|
|
|
42,520
|
|
|
1,053
|
|
|
—
|
|
||||
CMBS
|
57,358
|
|
|
58,234
|
|
|
876
|
|
|
—
|
|
||||
Other ABS
|
109,420
|
|
|
107,701
|
|
|
8
|
|
|
1,727
|
|
||||
Foreign government and agency securities
|
19,301
|
|
|
19,366
|
|
|
307
|
|
|
242
|
|
||||
|
$
|
528,660
|
|
|
$
|
536,890
|
|
|
$
|
10,763
|
|
|
$
|
2,533
|
|
Equity securities available for sale
(1)
|
$
|
76,900
|
|
|
$
|
143,368
|
|
|
$
|
66,468
|
|
|
$
|
—
|
|
Total debt and equity securities
|
$
|
605,560
|
|
|
$
|
680,258
|
|
|
$
|
77,231
|
|
|
$
|
2,533
|
|
(1)
|
Comprising primarily broadly diversified domestic equity mutual funds.
|
|
December 31,
|
||||||
(In thousands)
|
2015
|
|
2014
|
||||
Trading securities:
|
|
|
|
||||
U.S. government and agency securities
|
$
|
129,913
|
|
|
$
|
134,530
|
|
State and municipal obligations
|
303,946
|
|
|
343,926
|
|
||
Corporate bonds and notes
|
580,993
|
|
|
708,361
|
|
||
RMBS
|
72,192
|
|
|
89,810
|
|
||
CMBS
|
137,678
|
|
|
188,615
|
|
||
Other ABS
|
16,131
|
|
|
77,755
|
|
||
Foreign government and agency securities
|
13,268
|
|
|
18,331
|
|
||
Equity securities
|
25,016
|
|
|
72,256
|
|
||
Total
|
$
|
1,279,137
|
|
|
$
|
1,633,584
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Investment income:
|
|
|
|
|
|
||||||
Fixed-maturities
|
$
|
81,127
|
|
|
$
|
62,352
|
|
|
$
|
66,131
|
|
Equity securities
|
4,539
|
|
|
6,287
|
|
|
6,592
|
|
|||
Short-term investments
|
745
|
|
|
246
|
|
|
255
|
|
|||
Other
|
600
|
|
|
1,848
|
|
|
1,970
|
|
|||
Gross investment income
|
87,011
|
|
|
70,733
|
|
|
74,948
|
|
|||
Investment expenses
|
(5,474
|
)
|
|
(5,078
|
)
|
|
(6,827
|
)
|
|||
Net investment income
|
$
|
81,537
|
|
|
$
|
65,655
|
|
|
$
|
68,121
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Net realized gains (losses) on investments:
|
|
|
|
|
|
||||||
Fixed-maturities held to maturity
|
$
|
—
|
|
|
$
|
(9
|
)
|
|
$
|
2
|
|
Fixed-maturities available for sale
|
(1,176
|
)
|
|
(1,599
|
)
|
|
937
|
|
|||
Equities available for sale
|
69,150
|
|
|
—
|
|
|
349
|
|
|||
Trading securities
|
(9,231
|
)
|
|
(6,996
|
)
|
|
7,997
|
|
|||
Short-term investments
|
(24
|
)
|
|
1
|
|
|
1
|
|
|||
Other invested assets
|
3,267
|
|
|
—
|
|
|
8,841
|
|
|||
Other gains
|
110
|
|
|
246
|
|
|
126
|
|
|||
Net realized gains (losses) on investments
|
62,096
|
|
|
(8,357
|
)
|
|
18,253
|
|
|||
Unrealized (losses) gains on trading securities
|
(27,015
|
)
|
|
92,226
|
|
|
(117,198
|
)
|
|||
Total gains (losses) on investments
|
35,081
|
|
|
83,869
|
|
|
(98,945
|
)
|
|||
Net gains (losses) on other financial instruments
|
612
|
|
|
(3,880
|
)
|
|
(7,580
|
)
|
|||
Net gains (losses) on investments and other financial instruments
|
$
|
35,693
|
|
|
$
|
79,989
|
|
|
$
|
(106,525
|
)
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Fixed-maturities available for sale:
|
|
|
|
|
|
||||||
Proceeds received from redemptions
|
$
|
103,595
|
|
|
$
|
4,985
|
|
|
$
|
538
|
|
Proceeds received from sales
|
20,100
|
|
|
19,672
|
|
|
17,185
|
|
|||
Gross investment gains from sales and redemptions
|
64
|
|
|
99
|
|
|
1,078
|
|
|||
Gross investment losses from sales and redemptions
|
(1,240
|
)
|
|
(1,698
|
)
|
|
(141
|
)
|
|||
Equities available for sale:
|
|
|
|
|
|
|
|
|
|||
Proceeds received from sales and redemptions
|
146,049
|
|
|
—
|
|
|
10,503
|
|
|||
Gross investment gains from sales and redemptions
|
69,150
|
|
|
—
|
|
|
349
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Fixed-maturities:
|
|
|
|
|
|
||||||
Unrealized holding (losses) gains arising during the period, net of tax
|
$
|
(24,246
|
)
|
|
$
|
4,531
|
|
|
$
|
(240
|
)
|
Less reclassification adjustment for net (losses) gains included in net income (loss), net of tax
|
(764
|
)
|
|
(1,039
|
)
|
|
929
|
|
|||
Net unrealized (losses) gains on investments, net of tax
|
$
|
(23,482
|
)
|
|
$
|
5,570
|
|
|
$
|
(1,169
|
)
|
|
|
|
|
|
|
||||||
Equities:
|
|
|
|
|
|
|
|
|
|||
Unrealized holding gains arising during the period, net of tax
|
$
|
1,673
|
|
|
$
|
9,119
|
|
|
$
|
19,389
|
|
Less reclassification adjustment for net gains (losses) included in net income (loss), net of tax
|
44,947
|
|
|
—
|
|
|
(273
|
)
|
|||
Net unrealized (losses) gains on investments, net of tax
|
$
|
(43,274
|
)
|
|
$
|
9,119
|
|
|
$
|
19,662
|
|
|
|
December 31, 2015
|
|||||||||||||||||||||||||||||||
($ in thousands)
Description of Securities
|
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
|||||||||||||||||||||||||||
|
# of
securities
|
|
Fair Value
|
|
Unrealized
Losses
|
|
# of
securities
|
|
Fair Value
|
|
Unrealized
Losses
|
|
# of
securities
|
|
Fair Value
|
|
Unrealized
Losses
|
||||||||||||||||
U.S. government and agency securities
|
|
1
|
|
|
$
|
5,752
|
|
|
$
|
21
|
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
1
|
|
|
$
|
5,752
|
|
|
$
|
21
|
|
State and municipal obligations
|
|
2
|
|
|
11,674
|
|
|
120
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
11,674
|
|
|
120
|
|
||||||
Corporate bonds and notes
|
|
117
|
|
|
510,807
|
|
|
16,773
|
|
|
6
|
|
|
8,700
|
|
|
518
|
|
|
123
|
|
|
519,507
|
|
|
17,291
|
|
||||||
RMBS
|
|
12
|
|
|
168,415
|
|
|
2,464
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
168,415
|
|
|
2,464
|
|
||||||
CMBS
|
|
58
|
|
|
387,268
|
|
|
8,939
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
58
|
|
|
387,268
|
|
|
8,939
|
|
||||||
Other ABS
|
|
96
|
|
|
284,998
|
|
|
2,559
|
|
|
14
|
|
|
43,225
|
|
|
1,415
|
|
|
110
|
|
|
328,223
|
|
|
3,974
|
|
||||||
Foreign government and agency securities
|
|
18
|
|
|
18,733
|
|
|
1,095
|
|
|
3
|
|
|
2,278
|
|
|
288
|
|
|
21
|
|
|
21,011
|
|
|
1,383
|
|
||||||
Equity securities
|
|
1
|
|
|
74,930
|
|
|
108
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
74,930
|
|
|
108
|
|
||||||
Total
|
|
305
|
|
|
$
|
1,462,577
|
|
|
$
|
32,079
|
|
|
23
|
|
|
$
|
54,203
|
|
|
$
|
2,221
|
|
|
328
|
|
|
$
|
1,516,780
|
|
|
$
|
34,300
|
|
|
|
December 31, 2014
|
|||||||||||||||||||||||||||||||
($ in thousands)
Description of Securities |
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
|||||||||||||||||||||||||||
|
# of
securities
|
|
Fair Value
|
|
Unrealized
Losses
|
|
# of
securities
|
|
Fair Value
|
|
Unrealized
Losses
|
|
# of
securities
|
|
Fair Value
|
|
Unrealized
Losses
|
||||||||||||||||
U.S. government and agency securities
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
1
|
|
|
$
|
3,455
|
|
|
$
|
6
|
|
|
1
|
|
|
$
|
3,455
|
|
|
$
|
6
|
|
Corporate bonds and notes
|
|
24
|
|
|
40,917
|
|
|
410
|
|
|
1
|
|
|
1,027
|
|
|
148
|
|
|
25
|
|
|
41,944
|
|
|
558
|
|
||||||
Other ABS
|
|
34
|
|
|
97,356
|
|
|
1,727
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
97,356
|
|
|
1,727
|
|
||||||
Foreign government and agency securities
|
|
4
|
|
|
6,353
|
|
|
242
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
6,353
|
|
|
242
|
|
||||||
Total
|
|
62
|
|
|
$
|
144,626
|
|
|
$
|
2,379
|
|
|
2
|
|
|
$
|
4,482
|
|
|
$
|
154
|
|
|
64
|
|
|
$
|
149,108
|
|
|
$
|
2,533
|
|
|
December 31, 2015
|
||||||
|
Available for Sale
|
||||||
(In thousands)
|
Amortized
Cost
|
|
Fair
Value
|
||||
Due in one year or less
(1)
|
$
|
—
|
|
|
$
|
—
|
|
Due after one year through five years
(1)
|
173,191
|
|
|
172,705
|
|
||
Due after five years through ten years
(1)
|
437,248
|
|
|
430,476
|
|
||
Due after ten years
(1)
|
280,941
|
|
|
274,971
|
|
||
RMBS
(2)
|
226,744
|
|
|
224,905
|
|
||
CMBS
(2)
|
415,780
|
|
|
406,910
|
|
||
Other ABS
(2)
|
359,452
|
|
|
355,494
|
|
||
Total
|
$
|
1,893,356
|
|
|
$
|
1,865,461
|
|
(1)
|
Actual maturities may differ as a result of calls before scheduled maturity.
|
(2)
|
RMBS, CMBS, and Other ABS are shown separately, as they are not due at a single maturity date.
|
(In thousands)
|
Goodwill
|
|
Accumulated Impairment Losses
|
|
Net
|
||||||
Balance at December 31, 2013
|
$
|
2,095
|
|
|
$
|
—
|
|
|
$
|
2,095
|
|
Goodwill acquired
|
191,932
|
|
|
—
|
|
|
191,932
|
|
|||
Impairment losses
|
—
|
|
|
(2,095
|
)
|
|
(2,095
|
)
|
|||
Balance at December 31, 2014
|
194,027
|
|
|
(2,095
|
)
|
|
191,932
|
|
|||
Goodwill acquired
|
3,238
|
|
|
—
|
|
|
3,238
|
|
|||
Impairment losses
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance at December 31, 2015
|
$
|
197,265
|
|
|
$
|
(2,095
|
)
|
|
$
|
195,170
|
|
|
December 31, 2015
|
||||||||||
(In thousands)
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
Customer relationships
|
$
|
83,471
|
|
|
$
|
(11,038
|
)
|
|
$
|
72,433
|
|
Technology
|
15,100
|
|
|
(2,949
|
)
|
|
12,151
|
|
|||
Trade name and trademarks
|
8,340
|
|
|
(1,243
|
)
|
|
7,097
|
|
|||
Client backlog
|
6,680
|
|
|
(4,184
|
)
|
|
2,496
|
|
|||
Non-competition agreements
|
185
|
|
|
(115
|
)
|
|
70
|
|
|||
Total
|
$
|
113,776
|
|
|
$
|
(19,529
|
)
|
|
$
|
94,247
|
|
|
|
|
|
|
|
||||||
|
December 31, 2014
|
||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
Customer relationships
|
$
|
79,203
|
|
|
$
|
(2,917
|
)
|
|
$
|
76,286
|
|
Technology
|
8,970
|
|
|
(797
|
)
|
|
8,173
|
|
|||
Trade name and trademarks
|
7,860
|
|
|
(393
|
)
|
|
7,467
|
|
|||
Client backlog
|
6,680
|
|
|
(2,406
|
)
|
|
4,274
|
|
|||
Non-competition agreements
|
145
|
|
|
(37
|
)
|
|
108
|
|
|||
Total
|
$
|
102,858
|
|
|
$
|
(6,550
|
)
|
|
$
|
96,308
|
|
|
Estimated Useful Life
|
||
Client relationships
|
3 years
|
-
|
15 years
|
Technology
|
3 years
|
-
|
8 years
|
Trademark
|
|
|
10 years
|
Client backlog
|
3 years
|
-
|
5 years
|
Non-competition agreements
|
2 years
|
-
|
3 years
|
2016
|
$
|
13,138
|
|
2017
|
12,492
|
|
|
2018
|
11,845
|
|
|
2019
|
10,609
|
|
|
2020
|
9,058
|
|
|
Thereafter
|
37,105
|
|
|
Total
|
$
|
94,247
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Net premiums written-insurance:
|
|
|
|
|
|
||||||
Direct
|
$
|
1,009,409
|
|
|
$
|
982,976
|
|
|
$
|
1,033,323
|
|
Assumed
|
104
|
|
|
(882
|
)
|
|
(904
|
)
|
|||
Ceded
|
(41,008
|
)
|
|
(56,913
|
)
|
|
(81,421
|
)
|
|||
Net premiums written-insurance
|
$
|
968,505
|
|
|
$
|
925,181
|
|
|
$
|
950,998
|
|
Net premiums earned-insurance:
|
|
|
|
|
|
||||||
Direct
|
$
|
973,645
|
|
|
$
|
905,502
|
|
|
$
|
848,655
|
|
Assumed
|
43
|
|
|
43
|
|
|
56
|
|
|||
Ceded
|
(57,780
|
)
|
|
(61,017
|
)
|
|
(67,291
|
)
|
|||
Net premiums earned-insurance
|
$
|
915,908
|
|
|
$
|
844,528
|
|
|
$
|
781,420
|
|
|
Initial QSR Transaction
|
|
Second QSR Transaction
|
||||||||||||||||||||
|
Year Ended December 31,
|
|
Year Ended December 31,
|
||||||||||||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2013
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||
Ceded premiums written
|
$
|
14,471
|
|
|
$
|
10,217
|
|
|
$
|
23,047
|
|
|
$
|
15,742
|
|
|
$
|
33,751
|
|
|
$
|
40,225
|
|
Ceded premiums earned
|
22,157
|
|
|
17,319
|
|
|
29,746
|
|
|
24,818
|
|
|
29,820
|
|
|
18,356
|
|
||||||
Ceding commissions written
|
3,134
|
|
|
4,862
|
|
|
5,762
|
|
|
8,309
|
|
|
11,813
|
|
|
14,079
|
|
|
Year Ended December 31,
|
||||
(In thousands)
|
2015
|
|
2014
|
||
RIF ceded under captive reinsurance arrangements
|
71,359
|
|
|
129,795
|
|
Ceded losses recoverable related to captives
|
7,293
|
|
|
24,711
|
|
|
Year Ended December 31,
|
|||||||
(In thousands)
|
2015
|
|
2014
|
|
2013
|
|||
Ceded premiums written related to captives
|
9,950
|
|
|
12,948
|
|
|
17,812
|
|
Ceded premiums earned related to captives
|
9,959
|
|
|
12,958
|
|
|
17,853
|
|
Ceded recoveries, excluding amounts received upon terminations of captive reinsurance transactions
|
20,950
|
|
|
21,213
|
|
|
47,151
|
|
|
December 31,
|
||||||
(In thousands)
|
2015
|
|
2014
|
||||
Deposit with the IRS (Note 13)
|
$
|
88,557
|
|
|
$
|
88,557
|
|
Corporate-owned life insurance
|
82,543
|
|
|
80,755
|
|
||
Property and equipment
(1)
|
46,802
|
|
|
27,248
|
|
||
Prepaid reinsurance premiums
|
40,491
|
|
|
57,291
|
|
||
Accrued investment income
|
25,620
|
|
|
20,022
|
|
||
Deferred policy acquisition costs
|
14,267
|
|
|
12,003
|
|
||
Reinsurance recoverables
|
11,044
|
|
|
28,119
|
|
||
Other
|
45,096
|
|
|
43,869
|
|
||
Total other assets
|
$
|
354,420
|
|
|
$
|
357,864
|
|
(1)
|
Property and equipment, at cost less accumulated depreciation of
$106.9 million
and
$100.2 million
at December 31, 2015
and
2014
, respectively.
|
|
Year Ended December 31,
|
||||||
(In thousands)
|
2015
|
|
2014
|
||||
Reserves for losses by category:
|
|
|
|
||||
Prime
|
$
|
480,481
|
|
|
$
|
700,174
|
|
Alt-A
|
203,706
|
|
|
292,293
|
|
||
A minus and below
|
129,352
|
|
|
179,103
|
|
||
IBNR and other
|
83,066
|
|
(1)
|
223,114
|
|
||
LAE
|
26,108
|
|
|
56,164
|
|
||
Reinsurance recoverable
(2)
|
8,286
|
|
|
26,665
|
|
||
Total primary reserves
|
930,999
|
|
|
1,477,513
|
|
||
Pool
|
42,084
|
|
|
75,785
|
|
||
IBNR and other
|
1,118
|
|
|
1,775
|
|
||
LAE
|
1,335
|
|
|
3,542
|
|
||
Total pool reserves
|
44,537
|
|
|
81,102
|
|
||
Total first-lien reserves
|
975,536
|
|
|
1,558,615
|
|
||
Second-lien and other
(3)
|
863
|
|
|
1,417
|
|
||
Total reserve for losses
|
$
|
976,399
|
|
|
$
|
1,560,032
|
|
(1)
|
Primarily related to expected payments under the Freddie Mac Agreement.
|
(2)
|
Primarily represents ceded losses on captive transactions and the QSR Transactions.
|
(3)
|
Does not include our Second-lien PDR that is included in other liabilities.
|
|
Year Ended December 31,
|
|||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2013
|
|
||||||
Mortgage Insurance
|
|
|
|
|
|
|
||||||
Balance at January 1
|
$
|
1,560,032
|
|
|
$
|
2,164,353
|
|
|
$
|
3,083,608
|
|
|
Less reinsurance recoverables
(1)
|
26,665
|
|
|
38,363
|
|
|
83,238
|
|
|
|||
Balance at January 1, net of reinsurance recoverables
|
1,533,367
|
|
|
2,125,990
|
|
|
3,000,370
|
|
|
|||
Add losses and LAE incurred in respect of default notices reported and unreported in:
|
|
|
|
|
|
|
||||||
Current year
(2)
|
229,061
|
|
|
351,184
|
|
(3)
|
519,188
|
|
(3)
|
|||
Prior years
|
(29,647
|
)
|
|
(105,545
|
)
|
|
45,460
|
|
|
|||
Total incurred
|
199,414
|
|
|
245,639
|
|
|
564,648
|
|
|
|||
Deduct paid claims and LAE related to:
|
|
|
|
|
|
|
||||||
Current year
(2)
|
10,837
|
|
|
13,562
|
|
|
35,108
|
|
|
|||
Prior years
|
753,831
|
|
|
824,700
|
|
|
1,403,920
|
|
|
|||
Total paid
|
764,668
|
|
|
838,262
|
|
|
1,439,028
|
|
|
|||
Balance at end of period, net of reinsurance recoverables
|
968,113
|
|
|
1,533,367
|
|
|
2,125,990
|
|
|
|||
Add reinsurance recoverables
(1)
|
8,286
|
|
|
26,665
|
|
|
38,363
|
|
|
|||
Balance at December 31
|
$
|
976,399
|
|
|
$
|
1,560,032
|
|
|
$
|
2,164,353
|
|
|
(1)
|
Related to ceded losses on captive reinsurance transactions and the QSR Transactions. See Note 8 for additional information.
|
(2)
|
Related to underlying defaulted loans with a most recent default notice dated in the year indicated. For example, if a loan had defaulted in a prior year, but then subsequently cured and later re-defaulted in the current year, that default would be considered a current year default.
|
(3)
|
Amounts previously reported for losses and LAE incurred in respect of default notices reported and unreported in current year and prior years have been reclassified to correct an error. There was no net change to total incurred losses in any period as a result of these reclassifications. For the years ended December 31, 2014 and 2013, the amounts previously reported for losses and LAE incurred in respect of default notices reported and unreported in current year have been revised downward by approximately
$71.8 million
and
$65.0 million
, respectively, with equal and offsetting adjustments to the amount previously reported for default notices reported and unreported in prior years.
|
|
|
December 31, 2014
|
||||||||||
(In thousands)
|
|
As Previously Reported
|
|
Adjustment
|
|
As Adjusted
|
||||||
9.000%
|
Senior Notes due 2017
|
$
|
192,605
|
|
|
$
|
(2,360
|
)
|
|
$
|
190,245
|
|
3.000%
|
Convertible Senior Notes due 2017
|
375,310
|
|
|
(3,974
|
)
|
|
371,336
|
|
|||
2.250%
|
Convertible Senior Notes due 2019
|
342,011
|
|
|
(5,878
|
)
|
|
336,133
|
|
|||
5.500%
|
Senior Notes due 2019
|
300,000
|
|
|
(5,415
|
)
|
|
294,585
|
|
|||
|
Total long-term debt
|
$
|
1,209,926
|
|
|
$
|
(17,627
|
)
|
|
$
|
1,192,299
|
|
|
|
December 31,
|
||||||
($ in thousands)
|
|
2015
|
|
2014
|
||||
9.000%
|
Senior Notes due 2017
|
$
|
192,261
|
|
|
$
|
190,245
|
|
3.000%
|
Convertible Senior Notes due 2017
|
46,115
|
|
|
371,336
|
|
||
2.250%
|
Convertible Senior Notes due 2019
|
341,214
|
|
|
336,133
|
|
||
5.500%
|
Senior Notes due 2019
|
295,751
|
|
|
294,585
|
|
||
5.250%
|
Senior Notes due 2020
|
344,113
|
|
|
—
|
|
||
|
Total long-term debt
|
$
|
1,219,454
|
|
|
$
|
1,192,299
|
|
•
|
the
$35.5 million
market premium representing the consideration paid to the sellers of the Convertible Senior Notes due 2017 in excess of the conversion value of the purchased Convertible Senior Notes due 2017;
|
•
|
the
$52.3 million
difference between the fair value and the carrying value of the liability component of the purchased Convertible Senior Notes due 2017; and
|
•
|
the
$4.1 million
net impact of transaction costs and unamortized debt issuance costs on the purchased Convertible Senior Notes due 2017.
|
1.
|
During any calendar quarter after December 31, 2010 (and only during such calendar quarter), if the last reported sale price of our common stock for each of at least
20
trading days (whether or not consecutive) during the
30
consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter, is greater than or equal to
130%
of the applicable conversion price on each applicable trading day;
|
2.
|
During the
five
business day period after any
five
consecutive trading day period in which the trading price per
$1,000
principal amount of the notes (for each trading day during that measurement period) was less than
98%
of the product of the last reported sale price of the common stock and the applicable conversion rate on such trading day; or
|
3.
|
Upon the occurrence of specified corporate events as described in the indenture for the notes.
|
1.
|
During any calendar quarter commencing after March 31, 2013 (and only during such calendar quarter), if the last reported sale price of our common stock for each of at least
20
trading days (whether or not consecutive) during the
30
consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter, is greater than or equal to
130%
of the applicable conversion price on each applicable trading day.
|
2.
|
During the
five
business day period after any
five
consecutive trading day period in which the trading price per
$1,000
principal amount of the notes (for each trading day during that
five
day measurement period) was less than
98%
of the product of the last reported sale price of the common stock and the applicable conversion rate on such trading day;
|
3.
|
Any time prior to the close of business on the business day prior to the redemption date if we call the notes for redemption; or
|
4.
|
Upon the occurrence of specified corporate events as described in the indenture for the notes.
|
|
Convertible Senior Notes due 2017
|
|
Convertible Senior Notes due 2019
|
|
||||||||||||
|
December 31,
|
|
December 31,
|
|
||||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
||||||||
Liability component:
|
|
|
|
|
|
|
|
|
||||||||
Principal
|
$
|
52,370
|
|
|
$
|
450,000
|
|
|
$
|
389,992
|
|
|
$
|
400,000
|
|
|
Debt discount, net
(1)
|
(5,941
|
)
|
|
(74,690
|
)
|
|
(44,313
|
)
|
|
(57,989
|
)
|
|
||||
Debt issuance costs
(1)
|
(314
|
)
|
|
(3,974
|
)
|
|
(4,465
|
)
|
|
(5,878
|
)
|
|
||||
Net carrying amount
|
$
|
46,115
|
|
|
$
|
371,336
|
|
|
$
|
341,214
|
|
|
$
|
336,133
|
|
|
(1)
|
Included within long-term debt and is being amortized over the life of the convertible notes.
|
|
Convertible Senior Notes due 2017
|
|
Convertible Senior Notes due 2019
|
||||||||||||
|
December 31,
|
|
December 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
(In thousands)
|
|
|
|
|
|
|
|
||||||||
Contractual interest expense
|
$
|
7,359
|
|
|
$
|
13,500
|
|
|
$
|
8,925
|
|
|
$
|
9,000
|
|
Amortization of debt issuance costs
|
696
|
|
|
1,226
|
|
|
1,292
|
|
|
1,282
|
|
||||
Amortization of debt discount
|
12,621
|
|
|
21,512
|
|
|
12,487
|
|
|
11,829
|
|
||||
Total interest expense
|
$
|
20,676
|
|
|
$
|
36,238
|
|
|
$
|
22,704
|
|
|
$
|
22,111
|
|
|
Year Ended December 31, 2015
|
|
||||||||||
(In thousands)
|
Before Tax
|
|
Tax Effect
|
|
Net of Tax
|
|
||||||
Balance at beginning of period
|
$
|
79,208
|
|
|
$
|
27,723
|
|
|
$
|
51,485
|
|
|
OCI:
|
|
|
|
|
|
|
||||||
Net foreign currency translation adjustments
|
(333
|
)
|
|
(116
|
)
|
|
(217
|
)
|
|
|||
Unrealized losses on investments:
|
|
|
|
|
|
|
||||||
Unrealized holding losses arising during the period
|
(34,728
|
)
|
|
(12,155
|
)
|
|
(22,573
|
)
|
|
|||
Less: Reclassification adjustment for net gains included in net income
(1)
|
67,974
|
|
|
23,791
|
|
|
44,183
|
|
|
|||
Net unrealized losses on investments
|
(102,702
|
)
|
|
(35,946
|
)
|
|
(66,756
|
)
|
|
|||
Activity related to investments recorded as assets held for sale
(2)
|
(5,006
|
)
|
|
(1,752
|
)
|
|
(3,254
|
)
|
|
|||
OCI
|
(108,041
|
)
|
|
(37,814
|
)
|
|
(70,227
|
)
|
|
|||
Actuarial gain
|
408
|
|
|
143
|
|
|
265
|
|
|
|||
Balance at end of period
|
$
|
(28,425
|
)
|
|
$
|
(9,948
|
)
|
|
$
|
(18,477
|
)
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2014
|
|
||||||||||
(In thousands)
|
Before Tax
|
|
Tax Effect
|
|
Net of Tax
|
|
||||||
Balance at beginning of period
|
$
|
57,345
|
|
|
$
|
19,962
|
|
|
$
|
37,383
|
|
|
OCI:
|
|
|
|
|
|
|
||||||
Net foreign currency translation adjustments
|
(326
|
)
|
|
(100
|
)
|
|
(226
|
)
|
|
|||
Unrealized gains on investments:
|
|
|
|
|
|
|
||||||
Unrealized holding gains arising during the period
|
21,204
|
|
|
7,554
|
|
|
13,650
|
|
|
|||
Less: Reclassification adjustment for net loss included in net loss
(1)
|
(1,599
|
)
|
|
(560
|
)
|
|
(1,039
|
)
|
|
|||
Net unrealized gains on investments
|
22,803
|
|
|
8,114
|
|
|
14,689
|
|
|
|||
Activity related to investments recorded as assets held for sale
(3)
|
(329
|
)
|
|
(27
|
)
|
|
(302
|
)
|
|
|||
OCI
|
22,148
|
|
|
7,987
|
|
|
14,161
|
|
|
|||
Actuarial loss
|
(285
|
)
|
|
(226
|
)
|
|
(59
|
)
|
|
|||
Balance at end of period
|
$
|
79,208
|
|
|
$
|
27,723
|
|
|
$
|
51,485
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
|
Year Ended December 31, 2013
|
|
||||||||||
(In thousands)
|
Before Tax
|
|
Tax Effect
|
|
Net of Tax
|
|
||||||
Balance at beginning of period
|
$
|
24,904
|
|
|
$
|
8,809
|
|
|
$
|
16,095
|
|
|
OCI:
|
|
|
|
|
|
|
||||||
Unrealized gains on investments:
|
|
|
|
|
|
|
||||||
Unrealized holding gains arising during the period
|
29,460
|
|
|
10,311
|
|
|
19,149
|
|
|
|||
Less: Reclassification adjustment for net gains included in net loss
(1)
|
1,285
|
|
|
629
|
|
|
656
|
|
|
|||
Net unrealized gains on investments
|
28,175
|
|
|
9,682
|
|
|
18,493
|
|
|
|||
Activity related to investments recorded as assets held for sale
(3)
|
3,961
|
|
|
1,364
|
|
|
2,597
|
|
|
|||
OCI
|
32,136
|
|
|
11,046
|
|
|
21,090
|
|
|
|||
Net actuarial loss
|
305
|
|
|
107
|
|
|
198
|
|
|
|||
Balance at end of period
|
$
|
57,345
|
|
|
$
|
19,962
|
|
|
$
|
37,383
|
|
|
(1)
|
Included in net gains (losses) on investments on our consolidated statements of operations.
|
(2)
|
For 2015, this amount represents the recognition of investment gains included in income from discontinued operations, net of tax, as a result of the completion of the sale of Radian Asset Assurance on April 1, 2015. Previously, pursuant to accounting standards, such investment gains had been deferred and recorded in AOCI.
|
(3)
|
Represents the unrealized holding gains (losses) arising during the period on investments recorded as assets held for sale, net of reclassification adjustments for net gains (losses) included in net income from discontinued operations.
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Current provision (benefit)
|
$
|
120
|
|
|
$
|
(26,575
|
)
|
|
$
|
352
|
|
Deferred provision (benefit)
|
156,170
|
|
|
(825,843
|
)
|
|
(31,847
|
)
|
|||
Total income tax provision (benefit)
|
$
|
156,290
|
|
|
$
|
(852,418
|
)
|
|
$
|
(31,495
|
)
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Provision (benefit) for income taxes computed at the statutory tax rate
|
$
|
153,240
|
|
|
$
|
142,504
|
|
|
$
|
(60,671
|
)
|
Change in tax resulting from:
|
|
|
|
|
|
|
|
|
|||
Tax-exempt municipal bond interest and dividends received deduction (net of proration)
|
(1,085
|
)
|
|
(1,286
|
)
|
|
(1,494
|
)
|
|||
Repurchase premium on convertible notes
|
(6,674
|
)
|
|
—
|
|
|
—
|
|
|||
Foreign tax expense (benefit)
|
357
|
|
|
270
|
|
|
(1
|
)
|
|||
State tax (benefit) expense
|
(7,619
|
)
|
|
(451
|
)
|
|
949
|
|
|||
Unrecognized tax expense
|
5,233
|
|
|
407
|
|
|
1,696
|
|
|||
Valuation allowance
|
11,931
|
|
|
(995,008
|
)
|
|
24,546
|
|
|||
Other, net
|
907
|
|
|
1,146
|
|
|
3,480
|
|
|||
Provision (benefit) for income taxes
|
$
|
156,290
|
|
|
$
|
(852,418
|
)
|
|
$
|
(31,495
|
)
|
|
December 31,
|
||||||
(In thousands)
|
2015
|
|
2014
|
||||
DTAs:
|
|
|
|
||||
Accrued expenses
|
$
|
38,456
|
|
|
$
|
60,858
|
|
Unearned premiums
|
87,609
|
|
|
82,800
|
|
||
NOL
|
342,002
|
|
|
475,095
|
|
||
Differences in fair value of financial instruments
|
7,767
|
|
|
—
|
|
||
Net unrealized loss on investments
|
9,801
|
|
|
—
|
|
||
State and Local NOL Carryforwards
|
46,914
|
|
|
34,851
|
|
||
Partnership investments
|
74,309
|
|
|
74,179
|
|
||
Loss reserves
|
4,720
|
|
|
6,362
|
|
||
Outside basis difference of investment in subsidiary
|
—
|
|
|
14,084
|
|
||
Alternative minimum tax credit carryforward
|
5,923
|
|
|
2,286
|
|
||
Other
|
34,241
|
|
|
47,991
|
|
||
Total DTAs
|
651,742
|
|
|
798,506
|
|
||
DTLs:
|
|
|
|
|
|
||
Convertible and other long-term debt
|
16,654
|
|
|
38,750
|
|
||
Net unrealized gain on investments
|
—
|
|
|
26,145
|
|
||
Depreciation
|
6,397
|
|
|
—
|
|
||
Other
|
14,516
|
|
|
15,536
|
|
||
Total DTLs
|
37,567
|
|
|
80,431
|
|
||
Less:
Valuation allowance
|
36,230
|
|
|
17,874
|
|
||
Net DTA
|
$
|
577,945
|
|
|
$
|
700,201
|
|
|
Year Ended December 31,
|
||||||
(In thousands)
|
2015
|
|
2014
|
||||
Balance at beginning of period
|
$
|
120,223
|
|
|
$
|
119,236
|
|
Tax positions related to the current year:
|
|
|
|
|
|
||
Increases
|
6,461
|
|
|
2,352
|
|
||
Decreases
|
(336
|
)
|
|
—
|
|
||
Tax positions related to prior years:
|
|
|
|
|
|
||
Increases
|
22,734
|
|
|
24,361
|
|
||
Decreases
|
(2,102
|
)
|
|
(1,546
|
)
|
||
Lapses of applicable statute of limitation
|
(22,734
|
)
|
|
(24,180
|
)
|
||
Balance at end of period
|
$
|
124,246
|
|
|
$
|
120,223
|
|
U.S. Federal Corporation Income Tax
(1)
|
2000 - 2007, 2012 - 2014
|
Significant State and Local Jurisdictions
(2)
|
1999 - 2014
|
(1)
|
For the 2000 through 2007 calendar tax years, we petitioned the U.S. Tax Court to litigate the IRS Notices of Deficiency resulting from the examination of our 2000 through 2007 consolidated federal income tax returns. This litigation relates to the recognition of certain tax benefits associated with our investment in a portfolio of non-economic REMIC residual interests.
|
(2)
|
Arizona, California, Florida, Georgia, New York, Ohio, Pennsylvania and New York City.
|
|
December 31,
|
||||||||||
(In millions)
|
2015
|
|
2014
|
|
2013
|
||||||
Statutory net income (loss)
|
$
|
754.8
|
|
|
$
|
273.7
|
|
|
$
|
(23.8
|
)
|
Statutory policyholders’ surplus
|
1,686.5
|
|
|
1,325.2
|
|
|
1,317.8
|
|
|||
Contingency reserve
|
860.9
|
|
|
389.4
|
|
|
23.0
|
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
($ in millions)
|
|
|
|
||||
RIF, net
(1)
|
$
|
36,396.1
|
|
|
$
|
30,615.7
|
|
|
|
|
|
||||
Statutory policyholders’ surplus
|
$
|
1,686.5
|
|
|
$
|
1,325.2
|
|
Contingency reserve
|
860.9
|
|
|
389.4
|
|
||
Statutory capital
|
$
|
2,547.4
|
|
|
$
|
1,714.6
|
|
|
|
|
|
||||
Risk-to-capital
|
14.3:1
|
|
|
17.9:1
|
(1)
|
Excludes risk ceded through reinsurance contracts (to third parties and affiliates) and RIF on defaulted loans.
|
•
|
Radian Guaranty may redeem
50%
of the Surplus Note balance on or after June 30, 2016.
|
•
|
On or after June 30, 2016, and prior to May 31, 2017, in addition to amounts paid above, Radian Guaranty may redeem the note balance up to the amount by which Available Assets then exceed Minimum Required Assets, less
$150 million
.
|
•
|
On or after May 31, 2017, Radian Guaranty may redeem any remaining note balance.
|
|
December 31,
|
||
(In millions)
|
2015
|
||
Statutory net loss
|
$
|
(1.0
|
)
|
Statutory policyholders’ surplus
|
138.7
|
|
|
Contingency reserve
|
128.8
|
|
|
December 31,
|
||||||||||
(In millions)
|
2015
|
|
2014
|
|
2013
|
||||||
Statutory net income
|
$
|
92.9
|
|
|
$
|
112.9
|
|
|
$
|
99.6
|
|
Statutory policyholders’ surplus
|
55.0
|
|
|
473.7
|
|
|
406.1
|
|
|||
Contingency reserve
|
1.1
|
|
|
140.7
|
|
|
80.9
|
|
(a)
|
Under SAP, mortgage guaranty insurance companies are required each year to establish a contingency reserve equal to
50%
of premiums earned in such year. Such amount must be maintained in the contingency reserve for
10
years, after which time it is released to unassigned surplus. Prior to
10
years, the contingency reserve may be reduced with regulatory approval to the extent that losses in any calendar year exceed
35%
of earned premiums for such year.
|
(b)
|
Under SAP, insurance policy acquisition costs are charged against operations in the year incurred. Under GAAP, such costs, other than those incurred in connection with the origination of derivative contracts, are deferred and amortized.
|
(c)
|
Under SAP, income tax expense is calculated on the basis of amounts currently payable. Generally, DTAs are recorded under both SAP and GAAP when it is more likely than not that the DTA will be realized. However, SAP standards impose additional admissibility requirements whereby DTAs are only recorded to the extent they are expected to be recovered within a one- to three-year period subject to a capital and surplus limitation. Changes in DTAs and DTLs are recognized as a direct benefit or charge to unassigned surplus, whereas under GAAP changes in DTAs and DTLs, except for changes in unrealized gains and losses on available-for-sale securities, are recorded as a component of income tax expense.
|
(d)
|
Under SAP, investment grade fixed-maturity investments are valued at amortized cost and below-investment grade securities are carried at the lower of amortized cost or market value. Under GAAP, those investments that the statutory insurance entities do not have the ability or intent to hold to maturity are considered to be either available for sale or trading securities and are recorded at fair value, with the unrealized gain or loss recognized, net of tax, as an increase or decrease to stockholders’ equity or current operations, as applicable.
|
(e)
|
Under SAP, certain assets, designated as non-admitted assets, are charged directly against statutory surplus. Such assets are reflected on our GAAP financial statements.
|
(f)
|
Prior to January 1, 2013, under SAP, the accounting standard regarding share-based payments was not applicable, with regard to the recognition and measurement of stock option issuances. However, effective January 1, 2013, the NAIC adopted SSAP No. 104,
Share-Based Payments
(“SSAP 104”), on a prospective basis. Therefore, expenses related to stock options granted subsequent to the date of adoption of SSAP 104 are recognized under SAP but expenses related to stock options granted prior to the date of adoption continue to not be recognized under SAP. Expenses related to stock options, regardless of the date of grant, are reflected on our GAAP financial statements in accordance with this standard.
|
(g)
|
Under SAP, premiums written on a multi-year basis are initially deferred as unearned premiums. A portion of the premium written, which corresponds to the insurance policy acquisition costs, is earned immediately and the remaining premiums written are earned over the policy term. Under GAAP, these premiums written on a multi-year basis are initially deferred as unearned premiums and are earned over the policy term.
|
(h)
|
Under SAP, capital contributions satisfied by receipt of cash or readily marketable securities subsequent to the balance sheet date but prior to the filing of the statutory financial statement are treated as a recognized subsequent event and, as such, are considered an admitted asset based on the evidence of collection and approval of the domiciliary commissioner. Under GAAP, such capital contributions are treated as a non-recognized subsequent event.
|
•
|
Generally, all awards require the grantee to remain in service with us through the vesting period, except in the event of the grantee’s death, disability, retirement or upon a change of control.
|
•
|
Generally, the awards vest upon a grantee’s death, disability or retirement.
|
•
|
Awards granted under the Equity Plans provide for “double trigger” vesting in the event of a change of control, meaning that awards will vest in connection with a change of control only in the event the grantee’s employment is terminated by us without cause or the grantee terminates employment for “good reason,” in each case within
90 days
before or
one year
after the change of control.
|
|
|
December 31,
|
||||||||||||||||||||||
($ in thousands)
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||||||||
Share-Based Compensation Programs
|
|
Liability
Recorded/
Equity
Instruments
Outstanding
|
|
Compensation
Cost
Recognized
(1)
|
|
Liability
Recorded/
Equity
Instruments
Outstanding
|
|
Compensation
Cost
Recognized
(1)
|
|
Liability
Recorded/
Equity
Instruments
Outstanding
|
|
Compensation
Cost
Recognized
(1)
|
||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
RSUs
—
Cash-Settled
|
|
$
|
3,595
|
|
|
$
|
10,244
|
|
|
$
|
65,157
|
|
|
$
|
31,834
|
|
|
$
|
104,114
|
|
|
$
|
79,322
|
|
SARs
—
Cash-Settled
|
|
—
|
|
|
159
|
|
|
595
|
|
|
915
|
|
|
8,195
|
|
|
8,544
|
|
||||||
Liabilities
|
|
$
|
3,595
|
|
|
10,403
|
|
|
$
|
65,752
|
|
|
32,749
|
|
|
$
|
112,309
|
|
|
87,866
|
|
|||
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Stock Options
|
|
2,692,457
|
|
|
2,984
|
|
|
3,029,348
|
|
|
2,531
|
|
|
3,989,641
|
|
|
2,488
|
|
||||||
Phantom Stock
|
|
230,196
|
|
|
2
|
|
|
284,645
|
|
|
3
|
|
|
284,645
|
|
|
3
|
|
||||||
RSUs
—
Equity Settled
|
|
2,472,861
|
|
|
9,243
|
|
|
2,056,596
|
|
|
7,461
|
|
|
1,273,556
|
|
|
4,336
|
|
||||||
Restricted Stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
||||||
ESPP
|
|
|
|
396
|
|
|
|
|
267
|
|
|
|
|
267
|
|
|||||||||
Equity
|
|
|
|
12,625
|
|
|
|
|
10,262
|
|
|
|
|
7,115
|
|
|||||||||
Total all share-based plans
|
|
|
|
$
|
23,028
|
|
|
|
|
$
|
43,011
|
|
|
|
|
$
|
94,981
|
|
(1)
|
For purposes of calculating compensation cost recognized, we generally consider time-vested awards effectively vested (and we recognize the full compensation costs) when grantees become retirement eligible. However, under the terms of our stock option awards granted in
2015
,
2014
, and
2013
, legal vesting for retirement occurs when the grantee actually separates from service, with the exception of certain senior executives for whom vesting remains dependent on the stock price hurdle being met regardless of when the executive separates from service. Performance-based RSU awards granted in
2015
,
2014
, and
2013
provide that vesting remains dependent on the Company’s performance for the full term of the awards notwithstanding the grantee’s earlier retirement.
|
|
Year Ended December 31,
|
||||||||||
($ in thousands except per-share amounts)
|
2015
|
|
2014
|
|
2013
|
||||||
Total compensation cost recognized
|
$
|
23,028
|
|
|
$
|
43,011
|
|
|
$
|
94,981
|
|
Less: Costs deferred as acquisition costs
|
500
|
|
|
1,047
|
|
|
1,769
|
|
|||
Stock-based compensation expense
|
$
|
22,528
|
|
|
$
|
41,964
|
|
|
$
|
93,212
|
|
($ in millions, except share and per share amounts)
|
Outstanding and
Exercisable
|
||
Number of options vested
|
1,435,232
|
|
|
Fair value of options vested during the year
|
$
|
3.4
|
|
Weighted-average exercise price per share
|
$
|
4.44
|
|
Aggregate intrinsic value (excess market price over exercise price)
|
$
|
12.9
|
|
Weighted-average remaining contractual term of options (in years)
|
4.1 years
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Range of Exercise Prices
|
Number
Outstanding
|
|
Weighted Average
Remaining
Contractual Life
(Years)
|
|
Weighted Average
Exercise Price
|
|
Number
Exercisable
|
|
Weighted Average
Exercise Price
|
||||||
$2.45 - $3.58
|
1,718,010
|
|
|
5.2
|
|
$
|
2.80
|
|
|
1,153,515
|
|
|
$
|
2.98
|
|
$5.76 - $7.06
|
47,967
|
|
|
2.2
|
|
6.92
|
|
|
47,967
|
|
|
6.92
|
|
||
$10.42 - $15.44
|
718,790
|
|
|
6.1
|
|
13.53
|
|
|
225,580
|
|
|
10.91
|
|
||
$18.42
|
207,690
|
|
|
3.0
|
|
18.42
|
|
|
8,170
|
|
|
18.42
|
|
||
|
2,692,457
|
|
|
4.3
|
|
|
|
1,435,232
|
|
|
|
|
Year Ended December 31,
|
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
Derived service period (years)
|
3.02 - 4.00
|
|
|
2.99 - 3.96
|
|
|
3.02 - 4.00
|
|
Risk-free interest rate
(1)
|
2.32
|
%
|
|
2.57
|
%
|
|
1.96
|
%
|
Volatility
(2)
|
93.70
|
%
|
|
94.26
|
%
|
|
94.63
|
%
|
Dividend yield
|
0.05
|
%
|
|
0.07
|
%
|
|
0.07
|
%
|
(1)
|
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant.
|
(2)
|
Volatility is determined at the date of grant using historical share price volatility and expected life of each award.
|
|
2015
|
|
2014
|
|
2013
|
|||
Expected life
|
3 years
|
|
|
3 years
|
|
|
3 years
|
|
Risk-free interest rate
|
1.0
|
%
|
|
1.0
|
%
|
|
0.4
|
%
|
Volatility
|
40.6
|
%
|
|
71.9
|
%
|
|
81.8
|
%
|
Dividend yield
|
0.05
|
%
|
|
0.06
|
%
|
|
0.07
|
%
|
|
January 1, 2015
|
|
July 1, 2015
|
||
Expected life
|
6 months
|
|
|
6 months
|
|
Risk-free interest rate
|
0.36
|
%
|
|
0.44
|
%
|
Volatility
|
35.03
|
%
|
|
26.83
|
%
|
Dividend yield
|
0.03
|
%
|
|
0.03
|
%
|
•
|
allows for the immediate eligibility of new hire participation and provides for the automatic enrollment of eligible employees;
|
•
|
provides for the immediate vesting of matching contributions (including existing unvested matching contributions attributable to prior periods) and the elimination of all restrictions (other than Radian Group’s Policy Regarding Securities Trading) on a participant’s ability to diversify his/her position in matching contributions;
|
•
|
permits Radian Group to make discretionary, pro rata (based on eligible pay) cash allocations to each eligible participant’s account, with vesting upon completion of
three years
of service with us.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
(In thousands, except share and per-share amounts)
|
|
|
|
|
|
||||||
Net income (loss) from continuing operations:
|
|
|
|
|
|
||||||
Net income (loss) from continuing operations - basic
|
$
|
281,539
|
|
|
$
|
1,259,574
|
|
|
$
|
(141,851
|
)
|
Adjustment for dilutive Convertible Senior Notes due 2019, net of tax
(1)
|
14,758
|
|
|
14,372
|
|
|
—
|
|
|||
Net income (loss) from continuing operations - diluted
|
$
|
296,297
|
|
|
$
|
1,273,946
|
|
|
$
|
(141,851
|
)
|
|
|
|
|
|
|
||||||
Net income (loss):
|
|
|
|
|
|
||||||
Net income (loss) from continuing operations - basic
|
$
|
281,539
|
|
|
$
|
1,259,574
|
|
|
$
|
(141,851
|
)
|
Income (loss) from discontinued operations, net of tax
|
5,385
|
|
|
(300,057
|
)
|
|
(55,134
|
)
|
|||
Net income (loss) - basic
|
286,924
|
|
|
959,517
|
|
|
(196,985
|
)
|
|||
Adjustment for dilutive Convertible Senior Notes due 2019, net of tax
(1)
|
14,758
|
|
|
14,372
|
|
|
—
|
|
|||
Net income (loss) - diluted
|
$
|
301,682
|
|
|
$
|
973,889
|
|
|
$
|
(196,985
|
)
|
|
|
|
|
|
|
||||||
Average common shares outstanding-basic
|
199,910
|
|
|
184,551
|
|
|
166,366
|
|
|||
Dilutive effect of Convertible Senior Notes due 2017
|
6,293
|
|
|
8,465
|
|
|
—
|
|
|||
Dilutive effect of Convertible Senior Notes due 2019
|
37,736
|
|
|
37,736
|
|
|
—
|
|
|||
Dilutive effect of stock-based compensation arrangements
(2)
|
2,393
|
|
|
3,150
|
|
|
—
|
|
|||
Adjusted average common shares outstanding—diluted
|
246,332
|
|
|
233,902
|
|
|
166,366
|
|
|||
|
|
|
|
|
|
||||||
Net income (loss) per share:
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Basic:
|
|
|
|
|
|
||||||
Net income (loss) from continuing operations
|
$
|
1.41
|
|
|
$
|
6.83
|
|
|
$
|
(0.85
|
)
|
Income (loss) from discontinued operations
|
0.03
|
|
|
(1.63
|
)
|
|
(0.33
|
)
|
|||
Net income (loss)
|
$
|
1.44
|
|
|
$
|
5.20
|
|
|
$
|
(1.18
|
)
|
|
|
|
|
|
|
||||||
Diluted:
|
|
|
|
|
|
||||||
Net income (loss) from continuing operations
|
$
|
1.20
|
|
|
$
|
5.44
|
|
|
$
|
(0.85
|
)
|
Income (loss) from discontinued operations
|
0.02
|
|
|
(1.28
|
)
|
|
(0.33
|
)
|
|||
Net income (loss)
|
$
|
1.22
|
|
|
$
|
4.16
|
|
|
$
|
(1.18
|
)
|
|
|
|
|
|
|
(1)
|
As applicable, includes coupon interest, amortization of discount and fees, and other changes in income or loss that would result from the assumed conversion.
|
(2)
|
The following number of shares of our common stock equivalents issued under our stock-based compensation arrangements were not included in the calculation of net income (loss) per share because they were anti-dilutive:
|
|
Year Ended December 31,
|
|||||||
(in thousands)
|
2015
|
|
2014
|
|
2013
|
|||
Shares of common stock equivalents
|
728
|
|
|
542
|
|
|
43,288
|
|
(In thousands, except per share information)
|
2015 Quarters
|
||||||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Year
|
||||||||||
Net premiums earned—insurance
|
$
|
224,595
|
|
|
$
|
237,437
|
|
|
$
|
227,433
|
|
|
$
|
226,443
|
|
|
$
|
915,908
|
|
Services revenue
(1)
|
30,630
|
|
|
43,503
|
|
|
42,189
|
|
|
37,493
|
|
|
153,815
|
|
|||||
Net investment income
|
17,328
|
|
|
19,285
|
|
|
22,091
|
|
|
22,833
|
|
|
81,537
|
|
|||||
Net gains (losses) on investments and other financial instruments
(2)
|
16,779
|
|
|
28,448
|
|
|
3,868
|
|
|
(13,402
|
)
|
|
35,693
|
|
|||||
Provision for losses
|
45,028
|
|
|
32,560
|
|
|
64,192
|
|
|
56,805
|
|
|
198,585
|
|
|||||
Policy acquisition
|
7,750
|
|
|
6,963
|
|
|
2,880
|
|
|
4,831
|
|
|
22,424
|
|
|||||
Direct cost of services
|
19,253
|
|
|
23,520
|
|
|
24,949
|
|
|
22,241
|
|
|
89,963
|
|
|||||
Other operating expenses
|
53,774
|
|
|
67,731
|
|
|
65,082
|
|
|
59,570
|
|
|
246,157
|
|
|||||
Loss on induced conversion and debt extinguishment
|
—
|
|
|
91,876
|
|
|
11
|
|
|
2,320
|
|
|
94,207
|
|
|||||
Amortization and impairment of intangible assets
|
3,023
|
|
|
3,281
|
|
|
3,273
|
|
|
3,409
|
|
|
12,986
|
|
|||||
Net income from continuing operations
|
91,727
|
|
|
45,193
|
|
|
70,091
|
|
|
74,528
|
|
|
281,539
|
|
|||||
Income from discontinued operations, net of tax
(3)
|
530
|
|
|
4,855
|
|
|
—
|
|
|
—
|
|
|
5,385
|
|
|||||
Net income
|
92,257
|
|
|
50,048
|
|
|
70,091
|
|
|
74,528
|
|
|
286,924
|
|
|||||
Diluted net income per share
(4)(5)
|
$
|
0.39
|
|
|
$
|
0.22
|
|
|
$
|
0.29
|
|
|
$
|
0.32
|
|
|
$
|
1.22
|
|
Weighted average shares outstanding-diluted
(4)
|
243,048
|
|
|
246,650
|
|
|
250,795
|
|
|
247,981
|
|
|
246,332
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
2014 Quarters
|
||||||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Year
|
||||||||||
Net premiums earned—insurance
|
$
|
198,762
|
|
|
$
|
203,646
|
|
|
$
|
217,827
|
|
|
$
|
224,293
|
|
|
$
|
844,528
|
|
Services revenue
|
—
|
|
|
—
|
|
|
42,243
|
|
|
34,450
|
|
|
76,693
|
|
|||||
Net investment income
|
15,318
|
|
|
16,663
|
|
|
17,143
|
|
|
16,531
|
|
|
65,655
|
|
|||||
Net gains (losses) on investments and other financial instruments
(2)
|
42,968
|
|
|
25,332
|
|
|
(6,294
|
)
|
|
17,983
|
|
|
79,989
|
|
|||||
Provision for losses
|
49,626
|
|
|
64,648
|
|
|
48,942
|
|
|
82,867
|
|
|
246,083
|
|
|||||
Policy acquisition
|
7,017
|
|
|
6,746
|
|
|
4,240
|
|
|
6,443
|
|
|
24,446
|
|
|||||
Direct cost of services
|
—
|
|
|
—
|
|
|
23,896
|
|
|
19,709
|
|
|
43,605
|
|
|||||
Other operating expenses
|
54,507
|
|
|
60,751
|
|
|
51,225
|
|
|
85,800
|
|
|
252,283
|
|
|||||
Amortization and impairment of intangible assets
|
—
|
|
|
—
|
|
|
3,294
|
|
|
5,354
|
|
|
8,648
|
|
|||||
Net income (loss) from continuing operations
(6)
|
145,980
|
|
|
103,537
|
|
|
132,031
|
|
|
878,026
|
|
|
1,259,574
|
|
|||||
Income (loss) from discontinued operations, net of tax
(3)(7)
|
56,779
|
|
|
71,296
|
|
|
21,559
|
|
|
(449,691
|
)
|
|
(300,057
|
)
|
|||||
Net income
|
202,759
|
|
|
174,833
|
|
|
153,590
|
|
|
428,335
|
|
|
959,517
|
|
|||||
Diluted net income per share
(4)(5)
|
$
|
0.94
|
|
|
$
|
0.78
|
|
|
$
|
0.67
|
|
|
$
|
1.78
|
|
|
$
|
4.16
|
|
Weighted average shares outstanding-diluted
(4)
|
222,668
|
|
|
230,779
|
|
|
238,067
|
|
|
242,801
|
|
|
233,902
|
|
(1)
|
Services revenue for the first quarter includes
$101 thousand
that had previously been included in other income.
|
(2)
|
The
2015
and
2014
amounts reflect primarily unrealized (losses) gains, respectively, on our trading securities.
|
(3)
|
Radian completed the sale of Radian Asset Assurance to Assured on April 1, 2015, pursuant to the Radian Asset Assurance Stock Purchase Agreement dated as of December 22, 2014. Until the April 1, 2015 sale date, the operating results of Radian Asset Assurance were classified as discontinued operations for all periods presented in our consolidated statements of operations. See Note 3 for additional information.
|
(4)
|
Diluted net income per share and average shares outstanding per the accounting standard regarding earnings per share.
|
(5)
|
Diluted net income per share is computed independently for each period presented. Consequently, the sum of the quarters may not equal the total net income per share for the year. For all calculations, the determination of whether potential common shares are dilutive or anti-dilutive is based on net income from continuing operations.
|
(6)
|
This amount reflects a reversal of substantially all of our tax valuation allowance in the fourth quarter of 2014.
|
(7)
|
Reflects a
$468 million
loss on reclassification of Radian Asset Assurance as assets held for sale in the fourth quarter of 2014.
|
Item 9A.
|
Controls and Procedures.
|
Item 9B.
|
Other Information.
|
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
Item 11.
|
Executive Compensation.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Plan Category
(1)
|
(a)
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
|
|
(b)
Weighted-average
exercise price of
outstanding
options,
warrants and rights
|
|
(c)
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column(a))
|
|
||||
Equity compensation plans approved by stockholders
(2)
|
5,395,514
|
|
(3)
|
$
|
3.47
|
|
(4)
|
3,963,480
|
|
(5)
|
Equity compensation plans not approved by stockholders
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
5,395,514
|
|
(3)
|
$
|
3.47
|
|
(4)
|
3,963,480
|
|
(5)
|
(1)
|
The table does not include information for equity compensation plans assumed by us in mergers, under which we do not grant additional awards.
|
(2)
|
These plans consist of our 1995 Equity Plan, 2008 Equity Plan, 2014 Equity Plan and our 2008 ESPP Plan.
|
(3)
|
Represents
2,692,457
non-qualified stock options and
230,196
shares of phantom stock issued under our 1995 Equity Plan and our 2008 Equity Plan and
2,472,861
RSUs issued under our 2008 Equity Plan. Of the RSUs included herein,
1,117,310
are performance-based stock-settled RSUs that could potentially pay out between 0% and 200% of this represented target.
|
(4)
|
The shares of phantom stock and RSUs were granted at full value, and therefore, have a weighted average exercise price of $0. Excluding shares of phantom stock and RSUs from this calculation, the weighted average exercise price of outstanding non-qualified stock options was
$6.94
at December 31, 2015
.
|
(5)
|
Includes
2,803,988
shares available for issuance under our 2014 Equity Plan and
1,159,492
shares available for issuance under our 2008 ESPP Plan, in each case
as of December 31, 2015
. In January 2016, we issued
52,890
shares available for issuance under our 2008 ESPP Plan. As a result,
1,106,602
shares currently remain available for issuance under the 2008 ESPP Plan. When we obtained stockholder approval for our 2014 Equity Plan, we stated that we would not issue any additional shares under our 2008 Equity Plan.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
Item 14.
|
Principal Accountant Fees and Services.
|
Item 15.
|
Exhibits and Financial Statement Schedules.
|
1.
|
Financial Statements—See the “Index to Consolidated Financial Statements” included in Item 8 of this report for a list of the financial statements filed as part of this report.
|
Radian Group Inc.
|
|
|
|
By:
|
/s/
SANFORD A. IBRAHIM
|
|
Sanford A. Ibrahim,
Chief Executive Officer
|
Name
|
|
Title
|
/s/ S
ANFORD
A. I
BRAHIM
|
|
Chief Executive Officer (Principal Executive Officer) and Director
|
Sanford A. Ibrahim
|
|
|
|
|
|
/s/ J
.
F
RANKLIN
H
ALL
|
|
Executive Vice President, Chief Financial Officer (Principal Financial Officer)
|
J. Franklin Hall
|
|
|
|
|
|
/s/ C
ATHERINE
M
.
J
ACKSON
|
|
Senior Vice President, Controller
(Principal Accounting Officer)
|
Catherine M. Jackson
|
|
|
|
|
|
/s/ H
ERBERT
W
ENDER
|
|
Non-Executive Chairman of the Board
|
Herbert Wender
|
|
|
|
|
|
/s/ D
AVID
C. C
ARNEY
|
|
Director
|
David C. Carney
|
|
|
|
|
|
/s/ H
OWARD
B. C
ULANG
|
|
Director
|
Howard B. Culang
|
|
|
|
|
|
/s/ L
ISA
W. H
ESS
|
|
Director
|
Lisa W. Hess
|
|
|
|
|
|
/s/ S
TEPHEN
T. H
OPKINS
|
|
Director
|
Stephen T. Hopkins
|
|
|
|
|
|
/s/ B
RIAN
D. M
ONTGOMERY
|
|
Director
|
Brian D. Montgomery
|
|
|
|
|
|
/s/ G
AETANO
M
UZIO
|
|
Director
|
Gaetano Muzio
|
|
|
|
|
|
/s/ G
REGORY
V. S
ERIO
|
|
Director
|
Gregory V. Serio
|
|
|
|
|
|
/s/ N
OEL
J. S
PIEGEL
|
|
Director
|
Noel J. Spiegel
|
|
|
INDEX TO FINANCIAL STATEMENT SCHEDULES
|
|
|
Page
|
Financial Statement Schedules
|
|
Type of Investment
|
Amortized
Cost
|
|
Fair Value
|
|
Amount Reflected on the
Balance Sheet
|
||||||
(In thousands)
|
|
||||||||||
Fixed-Maturities:
|
|
|
|
|
|
||||||
Bonds:
|
|
|
|
|
|
||||||
U.S. government and agency securities
|
$
|
13,773
|
|
|
$
|
13,752
|
|
|
$
|
13,752
|
|
State and municipal obligations
(1)
|
36,920
|
|
|
37,900
|
|
|
37,900
|
|
|||
Corporate bonds and notes
|
815,024
|
|
|
802,193
|
|
|
802,193
|
|
|||
RMBS
|
226,744
|
|
|
224,905
|
|
|
224,905
|
|
|||
CMBS
|
415,780
|
|
|
406,910
|
|
|
406,910
|
|
|||
Other ABS
|
359,452
|
|
|
355,494
|
|
|
355,494
|
|
|||
Foreign government and agency securities
|
25,663
|
|
|
24,307
|
|
|
24,307
|
|
|||
Total fixed-maturities
|
1,893,356
|
|
|
1,865,461
|
|
|
1,865,461
|
|
|||
Trading securities
(2)
|
1,301,187
|
|
|
1,279,137
|
|
|
1,279,137
|
|
|||
Equity securities available for sale:
|
|
|
|
|
|
||||||
Common stocks
|
75,038
|
|
|
74,930
|
|
|
74,930
|
|
|||
Nonredeemable preferred stocks
|
500
|
|
|
500
|
|
|
500
|
|
|||
Total equity securities available for sale
|
75,538
|
|
|
75,430
|
|
|
75,430
|
|
|||
Short-term investments
|
1,077,087
|
|
|
1,076,944
|
|
|
1,076,944
|
|
|||
Other invested assets
|
1,714
|
|
|
4,900
|
|
|
1,714
|
|
|||
Total investments other than investments in related parties
|
$
|
4,348,882
|
|
|
$
|
4,301,872
|
|
|
$
|
4,298,686
|
|
(1)
|
Available for sale.
|
(2)
|
Includes foreign government and agency securities.
|
|
December 31,
|
||||||
(In thousands, except share and per-share amounts)
|
2015
|
|
2014
|
||||
Assets
|
|
|
|
||||
Investments
|
|
|
|
||||
Fixed-maturities available for sale—at fair value
|
$
|
41,176
|
|
|
$
|
—
|
|
Equity securities available for sale—at fair value
|
25,510
|
|
|
—
|
|
||
Trading securities—at fair value
|
5,482
|
|
|
5,447
|
|
||
Short-term investments—at fair value
|
158,658
|
|
|
631,934
|
|
||
Total investments
|
230,826
|
|
|
637,381
|
|
||
Cash
|
3,301
|
|
|
1,951
|
|
||
Restricted cash (Note B)
|
124
|
|
|
124
|
|
||
Investment in subsidiaries, at equity in net assets
|
3,001,846
|
|
|
2,746,915
|
|
||
Accounts and notes receivable (Note G)
|
631,636
|
|
|
305,856
|
|
||
Other assets (Note H)
|
124,983
|
|
|
31,394
|
|
||
Assets held for sale (Note A)
|
—
|
|
|
18,027
|
|
||
Total assets
|
$
|
3,992,716
|
|
|
$
|
3,741,648
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Long-term debt (Note E)
|
$
|
1,219,454
|
|
|
$
|
1,192,299
|
|
Federal income taxes—current and deferred
|
229,939
|
|
|
262,583
|
|
||
Other liabilities
|
46,392
|
|
|
96,989
|
|
||
Liabilities held for sale (Note A)
|
—
|
|
|
18,027
|
|
||
Total liabilities
|
1,495,785
|
|
|
1,569,898
|
|
||
|
|
|
|
||||
Equity component of currently redeemable convertible senior notes
|
—
|
|
|
74,690
|
|
||
Common stockholders’ equity
|
|
|
|
||||
Common stock: par value $.001 per share; 485,000,000 shares authorized at December 31, 2015 and 2014; 224,432,465 and 208,601,020 shares issued at December 31, 2015 and 2014, respectively; 206,871,768 and 191,053,530 shares outstanding at December 31, 2015 and 2014, respectively
|
224
|
|
|
209
|
|
||
Treasury stock, at cost: 17,560,697 and 17,547,490 shares at December 31, 2015 and 2014, respectively
|
(893,176
|
)
|
|
(892,961
|
)
|
||
Additional paid-in capital
|
2,716,618
|
|
|
2,531,513
|
|
||
Retained earnings
|
691,742
|
|
|
406,814
|
|
||
Accumulated other comprehensive (loss) income
|
(18,477
|
)
|
|
51,485
|
|
||
Total common stockholders’ equity
|
2,496,931
|
|
|
2,097,060
|
|
||
Total liabilities and stockholders’ equity
|
$
|
3,992,716
|
|
|
$
|
3,741,648
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Net investment income
|
$
|
17,917
|
|
|
$
|
9,515
|
|
|
$
|
4,300
|
|
Net gains (losses) on investments and other financial instruments
|
2,975
|
|
|
(2,732
|
)
|
|
(6,956
|
)
|
|||
Other income
|
—
|
|
|
7
|
|
|
—
|
|
|||
Total revenues
|
20,892
|
|
|
6,790
|
|
|
(2,656
|
)
|
|||
Expenses:
|
|
|
|
|
|
||||||
Loss on induced conversion and debt extinguishment
|
94,207
|
|
|
—
|
|
|
—
|
|
|||
Interest expense
|
55,768
|
|
|
57,366
|
|
|
37,087
|
|
|||
Total expenses
|
149,975
|
|
|
57,366
|
|
|
37,087
|
|
|||
Pretax loss from continuing operations
|
(129,083
|
)
|
|
(50,576
|
)
|
|
(39,743
|
)
|
|||
Income tax (benefit) provision
|
(43,854
|
)
|
|
143,912
|
|
|
9,234
|
|
|||
Equity in net income (loss) of affiliates
|
371,949
|
|
|
1,172,032
|
|
|
(148,008
|
)
|
|||
Net income (loss) from continuing operations
|
286,720
|
|
|
977,544
|
|
|
(196,985
|
)
|
|||
Income (loss) from discontinued operations, net of taxes
|
204
|
|
|
(18,027
|
)
|
|
—
|
|
|||
Net income (loss)
|
286,924
|
|
|
959,517
|
|
|
(196,985
|
)
|
|||
Other comprehensive (loss) income, net of tax
|
(70,227
|
)
|
|
14,161
|
|
|
21,090
|
|
|||
Comprehensive income (loss)
|
$
|
216,697
|
|
|
$
|
973,678
|
|
|
$
|
(175,895
|
)
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2015
|
|
2014
|
|
2013
|
||||||
Net cash (used in) provided by operating activities, continuing operations
|
$
|
(128,879
|
)
|
|
$
|
(27,153
|
)
|
|
$
|
105,681
|
|
Net cash used in operating activities, discontinued operations
|
—
|
|
|
(18,027
|
)
|
|
—
|
|
|||
Net cash (used in) provided by operating activities
|
(128,879
|
)
|
|
(45,180
|
)
|
|
105,681
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Proceeds from redemptions of trading securities
|
—
|
|
|
—
|
|
|
9,000
|
|
|||
Purchases of fixed-maturities available for sale
|
(39,667
|
)
|
|
—
|
|
|
—
|
|
|||
Purchases of equity securities available for sale
|
(25,545
|
)
|
|
—
|
|
|
—
|
|
|||
Sales, redemptions (purchases) of short-term investments, net
|
473,350
|
|
|
1,372
|
|
|
(496,979
|
)
|
|||
Sales of other assets and other invested assets, net
|
—
|
|
|
—
|
|
|
21,473
|
|
|||
Other, net
|
(688
|
)
|
|
(1,351
|
)
|
|
(647
|
)
|
|||
Capital distributions from subsidiaries and affiliates
|
113,784
|
|
|
—
|
|
|
—
|
|
|||
Capital contributions to subsidiaries and affiliates
|
(182,307
|
)
|
|
(139,103
|
)
|
|
(233,391
|
)
|
|||
Issuance of note receivable from affiliate (Note G)
|
(208,527
|
)
|
|
(300,000
|
)
|
|
—
|
|
|||
Net cash provided by (used in) investing activities
|
130,400
|
|
|
(439,082
|
)
|
|
(700,544
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Dividends paid
|
(1,996
|
)
|
|
(1,865
|
)
|
|
(1,632
|
)
|
|||
Issuance of long-term debt, net
|
343,334
|
|
|
293,809
|
|
|
377,783
|
|
|||
Purchases and redemptions of long-term debt
|
(156,172
|
)
|
|
(57,223
|
)
|
|
(79,372
|
)
|
|||
Proceeds from termination of capped calls
|
13,150
|
|
|
—
|
|
|
—
|
|
|||
Issuance of common stock
|
1,285
|
|
|
247,188
|
|
|
299,410
|
|
|||
Purchase of shares under ASR
|
(202,000
|
)
|
|
—
|
|
|
—
|
|
|||
Excess tax benefits from stock-based awards
|
2,228
|
|
|
—
|
|
|
—
|
|
|||
Net cash (used in) provided by financing activities
|
(171
|
)
|
|
481,909
|
|
|
596,189
|
|
|||
Increase (decrease) in cash
|
1,350
|
|
|
(2,353
|
)
|
|
1,326
|
|
|||
Cash, beginning of year
|
1,951
|
|
|
4,304
|
|
|
2,978
|
|
|||
Cash, end of year
|
$
|
3,301
|
|
|
$
|
1,951
|
|
|
$
|
4,304
|
|
•
|
Radian Group and RMAI are parties to a guaranty agreement, which provides that Radian Group will make sufficient funds available to RMAI to ensure that RMAI has a minimum of
$5 million
of statutory policyholders’ surplus every calendar quarter. RMAI had
$8.1 million
of statutory policyholders’ surplus and
no
RIF exposure as of December 31, 2015.
|
•
|
Radian Group and Radian Mortgage Insurance, a subsidiary of Radian Guaranty, are parties to a guaranty agreement in which Radian Group has agreed for the benefit of Radian Mortgage Insurance’s creditors to make funds available on demand for the full and complete payment of all due but unpaid liabilities. Radian Mortgage Insurance had
$2.8 million
of statutory policyholders’ surplus at December 31, 2015.
|
•
|
To allow our mortgage insurance customers to comply with applicable securities regulations for issuers of ABS (including MBS), we have been required, depending on the amount of credit enhancement we were providing, to provide: (1) audited financial statements for the insurance subsidiary participating in these transactions; or (2) a full and unconditional holding-company level guarantee for our insurance subsidiaries’ obligations in such transactions. Radian Group has guaranteed
two
Structured Transactions for Radian Guaranty with approximately
$119.2 million
of aggregate remaining credit exposure as of December 31, 2015.
|
•
|
Radian Group and RGRI are parties to an Assumption and Indemnification Agreement with regard to RGRI’s portion of the Deficiency Amounts relating to the IRS litigation. This indemnification agreement was made in lieu of an immediate capital contribution to RGRI that otherwise would have been required for RGRI to maintain its minimum statutory policyholders’ surplus requirements in light of the remeasurement as of December 31, 2011 of uncertain tax positions related to the portfolio of REMIC residual interests. See Note H for additional information.
|
($ in thousands)
|
Gross
Amount
|
|
|
Ceded to
Other
Companies
|
|
|
Assumed
from
Other
Companies
|
|
|
Net Amount
|
|
|
Assumed
Premiums as a
Percentage
of Net
Premiums
|
|
||||
2015
|
$
|
973,645
|
|
|
$
|
57,780
|
|
|
$
|
43
|
|
|
$
|
915,908
|
|
|
0.00
|
%
|
2014
|
$
|
905,502
|
|
|
$
|
61,017
|
|
|
$
|
43
|
|
|
$
|
844,528
|
|
|
0.01
|
%
|
2013
|
$
|
848,655
|
|
|
$
|
67,291
|
|
|
$
|
56
|
|
|
$
|
781,420
|
|
|
0.01
|
%
|
Exhibit
Number
|
Exhibit
|
2.1
|
Unit Purchase Agreement, dated as of May 6, 2014, by and among (i) the Registrant, (ii) Clayton Holdings LLC and (iii) Cobra Green LLC, a Delaware limited liability company, and Paul T. Bossidy (incorporated by reference to Exhibit 2 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended March 31, 2014)
|
|
|
2.2
|
Stock Purchase Agreement dated as of December 22, 2014, between Radian Guaranty Inc. and Assured Guaranty Corp. (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated December 23, 2014, and filed on December 23, 2014)
|
|
|
3.1
|
Third Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated May 11, 2004 and filed on May 12, 2004)
|
|
|
3.2
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated May 22, 2008 and filed on May 29, 2008)
|
|
|
3.3
|
Second Amendment to the Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated May 12, 2010 and filed on May 18, 2010)
|
|
|
3.4
|
Certificate of Amendment of Certificate of Incorporation of the Registrant effective as of May 15, 2013 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated May 14, 2013 and filed on May 20, 2013)
|
|
|
3.5
|
Certificate of Change of Registered Agent and Registered Office of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated November 10, 2010 and filed on November 16, 2010)
|
|
|
3.6
|
Certificate of Designation of Series A Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated October 9, 2009 and filed on October 13, 2009)
|
|
|
3.7
|
Amended and Restated By-Laws of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated November 12, 2014 and filed on November 18, 2014)
|
|
|
4.1
|
Specimen certificate for Common Stock (incorporated by reference to Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 1999)
|
|
|
4.2
|
Amended and Restated Tax Benefit Preservation Plan, dated as of February 12, 2010, between the Registrant and The Bank of New York Mellon (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated February 12, 2010 and filed on February 17, 2010)
|
|
|
4.3
|
First Amendment to the Amended and Restated Tax Benefit Preservation Plan, dated as of May 3, 2010, between the Registrant and The Bank of New York Mellon (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated May 3, 2010 and filed on May 4, 2010)
|
|
|
4.4
|
Senior Indenture, dated as of June 7, 2005, between the Registrant and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated June 2, 2005 and filed on June 7, 2005)
|
|
|
4.5
|
Senior Indenture, dated as of November 15, 2010, between the Registrant and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated November 10, 2010 and filed on November 16, 2010)
|
|
|
4.6
|
First Supplemental Indenture, dated as of November 15, 2010, between the Registrant and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated November 10, 2010 and filed on November 16, 2010)
|
|
|
Exhibit
Number
|
Exhibit
|
4.7
|
Form of 3.00% Convertible Senior Notes Due 2017 (included within Exhibit 4.6)
|
|
|
4.8
|
Officers’ Certificate, dated as of January 4, 2013, including the terms of the Registrant’s 9.000% Senior Notes due 2017, as Attachment A, and including the form of the Notes as Exhibit A-1 to Attachment A (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated January 4, 2013 and filed on January 7, 2013)
|
|
|
4.9
|
Form of 9.000% Senior Notes Due 2017 (included within Exhibit 4.8)
|
|
|
4.10
|
Registration Rights Agreement, dated as of January 4, 2013, between the Registrant and Morgan Stanley & Co. LLC (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated January 4, 2013 and filed on January 7, 2013)
|
|
|
4.11
|
Senior Indenture dated as of March 4, 2013 between the Registrant and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated February 27, 2013 and filed on March 4, 2013)
|
|
|
4.12
|
First Supplemental Indenture dated as of March 4, 2013 between the Registrant and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated February 27, 2013 and filed on March 4, 2013)
|
|
|
4.13
|
Form of 2.25% Convertible Senior Notes due 2019 (included within Exhibit 4.12)
|
|
|
4.14
|
Second Supplemental Indenture, dated as of May 13, 2014, between the Registrant and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated May 7, 2014, and filed on May 13, 2014)
|
|
|
4.15
|
Form of 5.500% Senior Note due 2019 (included within Exhibit 4.14)
|
|
|
4.16
|
Officers’ Certificate, dated as of February 28, 2013, including the terms of the Registrant’s 9.000% Senior Notes due 2017, as Attachment A, and including the form of the Registered Notes as Exhibit A-1 to Attachment A (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated February 28, 2013 and filed on March 6, 2013)
|
|
|
4.17
|
Form of 9.000% Senior Notes due 2017 (included within exhibit 4.16)
|
|
|
4.18
|
Third Supplemental Indenture dated as of June 19, 2015 between the Registrant and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated June 16, 2015 and filed on June 19, 2015)
|
|
|
4.19
|
Form of 5.250% Senior Notes due 2020 (included within Exhibit 4.18)
|
|
|
+10.1
|
Employment Agreement between the Registrant and Sanford A. Ibrahim, dated as of November 12, 2014(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated November 12, 2014 and filed on November 18, 2014)
|
|
|
+10.2
|
Stock Appreciation Right Agreement under 2008 Equity Compensation Plan, dated as of May 13, 2009, between the Registrant and Sanford A. Ibrahim (incorporated by reference to Exhibit 10.25 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2009)
|
|
|
+10.3
|
Restricted Stock Award Agreement under 2008 Equity Compensation Plan, dated as of May 13, 2009, between the Registrant and Sanford A. Ibrahim (incorporated by reference to Exhibit 10.26 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2009)
|
|
|
+10.4
|
Restricted Stock Award Agreement under 2008 Equity Compensation Plan, dated as of May 16, 2009, between the Registrant and Sanford A. Ibrahim (incorporated by reference to Exhibit 10.27 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2009)
|
|
|
+10.5
|
Amendments to Restricted Stock and Stock Option Grants between the Registrant and Sanford A. Ibrahim, dated as of February 10, 2010 (incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2009)
|
|
|
Exhibit
Number
|
Exhibit
|
+10.6
|
2010 Performance-Based Restricted Stock Unit Agreement under the 2008 Equity Compensation Plan, dated May 12, 2010 between the Registrant and Sanford A. Ibrahim (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2010)
|
|
|
+10.7
|
2010 Stock Option Agreement under the 2008 Equity Compensation Plan, dated May 12, 2010 between the Registrant and Sanford A. Ibrahim (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2010)
|
|
|
+10.8
|
Form of Severance Agreement (including for Richard I. Altman, Derek Brummer, Edward J. Hoffman, C. Robert Quint and H. Scott Theobald) (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated December 30, 2010 and filed on January 6, 2011)
|
|
|
+10.9
|
Radian Group Inc. Amended and Restated Benefit Restoration Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated November 6, 2007 and filed on November 13, 2007)
|
|
|
+10.10
|
Amendment No. 1 to the Radian Group Inc. Amended and Restated Benefit Restoration Plan, effective January 1, 2008 (incorporated by reference to Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2008)
|
|
|
+10.11
|
Radian Group Inc. Savings Incentive Plan (Amended and Restated Effective January 1, 2010 incorporating all amendments through December 31, 2012) (incorporated by reference to Exhibit 10.13 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2013)
|
|
|
+10.12
|
Amendment No. 1 to the Radian Group Inc. Savings Incentive Plan (Amended and Restated Effective January 1, 2010), effective May 22, 2013 (incorporated by reference to Exhibit 10.14 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2013)
|
|
|
+10.13
|
Radian Group Inc. 1995 Equity Compensation Plan (Amended and Restated May 9, 2006) (incorporated by reference to Appendix A to the Registrant’s Definitive Proxy Statement for the 2006 Annual Meeting of Stockholders (file no. 1-11356), as filed with the Securities and Exchange Commission on April 18, 2006).
|
|
|
+10.14
|
Amendment to Radian Group Inc. 1995 Equity Compensation Plan (Amended and Restated May 9, 2006) dated February 5, 2007 (incorporated by reference to Exhibit 10.17 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2006)
|
|
|
+10.15
|
Amendment No. 2 to Radian Group Inc. 1995 Equity Compensation Plan, dated November 6, 2007 (incorporated by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2007)
|
|
|
+10.16
|
Form of Stock Option Grant Letter under 1995 Equity Compensation Plan (incorporated by reference to Exhibit 10 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended September 30, 2004)
|
|
|
+10.17
|
Form of Restricted Stock Award Agreement for awards granted before February 5, 2007 under 1995 Equity Compensation Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2005)
|
|
|
+10.18
|
Form of Restricted Stock Award Agreement for awards granted on or after February 5, 2007 under 1995 Equity Compensation Plan (incorporated by reference to Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2006)
|
|
|
+10.19
|
Form of Phantom Stock Agreement for Non-Employee Directors under 1995 Equity Compensation Plan (incorporated by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated February 8, 2005 and filed on February 14, 2005)
|
|
|
+10.20
|
Radian Group Inc. Amended and Restated 2008 Equity Compensation Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-8 (file no. 333-174428) filed on May 23, 2011)
|
|
|
+10.21
|
Form of Stock Option Grant Letter under 2008 Equity Compensation Plan (incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended September 30, 2008)
|
|
|
Exhibit
Number
|
Exhibit
|
+10.22
|
Form of Restricted Stock Award Agreement under 2008 Equity (file no. 1-11356) Compensation Plan (incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q for the period ended September 30, 2008)
|
|
|
+10.23
|
Form of Phantom Stock Agreement for Non-Employee Directors under 2008 Equity Compensation Plan (incorporated by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended September 30, 2008)
|
|
|
+10.24
|
Amendment to Form of 2008 Phantom Stock Agreement for Non-Employee Directors under the 2008 Equity Compensation Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2009)
|
|
|
+10.25
|
Form of 2009 Restricted Stock Award Agreement under the 2008 Equity Compensation Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2009)
|
|
|
+10.26
|
Form of 2009 Stock Appreciation Right Agreement under the 2008 Equity Compensation Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2009)
|
|
|
+10.27
|
Form of Restricted Stock Unit Award Agreement for Employees under the 2008 Equity Compensation Plan (incorporated by reference to Exhibit 10.34 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2010)
|
|
|
+10.28
|
Form of 2009 Restricted Stock Unit Award Agreement for Non-Employee Directors under the 2008 Equity Compensation Plan (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2009)
|
|
|
+10.29
|
Amended and Restated Radian Group Inc. 2008 Executive Long-Term Incentive Cash Plan (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended March 31, 2011)
|
|
|
+10.30
|
Form of 2010 Performance-Based Restricted Stock Unit Agreement under the 2008 Equity Compensation Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2010)
|
|
|
+10.31
|
Form of 2010 Stock Option Agreement under the 2008 Equity Compensation Plan (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2010)
|
|
|
+10.32
|
Form of 2010 Executive Long-Term Incentive Cash Plan Award (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2010)
|
|
|
+10.33
|
Radian Group Inc. Amended and Restated Performance Share Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Amended Current Report on Form 8-K (file no. 1-11356) dated February 8, 2005 and filed on February 14, 2005)
|
|
|
+10.34
|
Amended and Restated Radian Group Inc. Voluntary Deferred Compensation Plan for Directors (incorporated by reference to Exhibit 10.34 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2014)
|
|
|
+10.35
|
Amended and Restated Radian Voluntary Deferred Compensation Plan for Officers (incorporated by reference to Exhibit 10.35 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2014)
|
|
|
+10.36
|
Radian Group Inc. 2008 Employee Stock Purchase Plan, as amended and restated on December 11, 2012 (incorporated by reference to Exhibit 10.42 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2012)
|
|
|
+10.37
|
Radian Group Inc. STI/MTI Incentive Plan for Executive Employees (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated November 12, 2009 and filed on November 18, 2009)
|
|
|
Exhibit
Number
|
Exhibit
|
+10.38
|
Radian Group Inc. STI Incentive Plan For Financial Guaranty Employees (incorporated by reference to Exhibit 10.42 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2013)
|
|
|
+10.39
|
Enhance Financial Services Group Inc. 1997 Long-Term Incentive Plan for Key Employees (As Amended Through June 3, 1999) (incorporated by reference to Exhibit 10.2.2 to the Quarterly Report on Form 10-Q (file no. 1-10967) for the period ended June 30, 1999, of Enhance Financial Services Group Inc.)
|
|
|
+10.40
|
Enhance Reinsurance Company Supplemental Pension Plan (incorporated by reference to Exhibit 10.4 to the Annual Report on Form 10-K (file no. 1-10967) for the year ended December 31, 1999, of Enhance Financial Services Group Inc.)
|
|
|
+10.41
|
Amendment to Enhance Reinsurance Company Supplemental Pension Plan, effective January 1, 2008 (incorporated by reference to Exhibit 10.40 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2008)
|
|
|
+10.42
|
Certain Compensation Arrangements with Directors (Effective May, 2008) (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2008)
|
|
|
10.43
|
Net Worth and Liquidity Maintenance Agreement, dated as of October 10, 2000, between Radian Guaranty Inc. and Radian Insurance Inc. (incorporated by reference to Exhibit 10.26 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2002)
|
|
|
10.44
|
Form of Expense Allocation and Services Agreement between the Registrant and each of Radian Guaranty Inc., Radian Insurance Inc., Radian Asset Assurance Inc. and Amerin Guaranty Corporation (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2005)
|
|
|
10.45
|
Form Amendment to Expense Allocation and Services Agreement between the Registrant and each of Radian Guaranty Inc. Radian Insurance Inc., Radian Asset Assurance Inc. and Amerin Guaranty Corporation (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on form 10-Q (file no. 1-11356) for the period ended March 31, 2009)
|
|
|
10.46
|
Radian Group Inc. Allocation of Consolidated Tax Liability Agreement between the Registrant and each of its subsidiaries, dated January 1, 2002, including Addendums 1 through 6 dated between January 1, 2002 and July 10, 2008 (incorporated by reference to Exhibit 10.49 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2008)
|
|
|
10.47
|
Capped Call Confirmation (Reference No. 99AMQGZY8) dated as of November 8, 2010 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated November 8, 2010 and filed on November 10, 2010)
|
|
|
10.48
|
Capped Call Confirmation (Reference No. 99AMQM627) dated as of November 10, 2010 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated November 8, 2010 and filed on November 10, 2010)
|
|
|
10.49
|
Securities Purchase Agreement, dated as of May 3, 2010, by and between Radian Guaranty Inc. and Sherman Financial Group LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated April 30, 2010 and filed on May 4, 2010)
|
|
|
+10.50
|
Amendment to Incentive Awards under 2008 Executive Long-Term Incentive Cash Plan, dated April 5, 2011 (incorporated by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated April 5, 2011 and filed on April 7, 2011)
|
|
|
+10.51
|
Form of 2011 Performance Based Restricted Stock Unit Agreement under the 2008 Equity Compensation Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2011)
|
|
|
+10.52
|
Form of 2011 Stock Option Agreement under the 2008 Equity Compensation Plan (incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2011)
|
|
|
Exhibit
Number
|
Exhibit
|
+10.53
|
2011 Performance Based Restricted Stock Unit Agreement under the 2008 Equity Compensation Plan, dated June 9, 2011, between the Registrant and Sanford A. Ibrahim (incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2011)
|
|
|
+10.54
|
2011 Performance Based Restricted Stock Unit Agreement under the 2008 Equity Compensation Plan, dated June 9, 2011, between the Registrant and C. Robert Quint (incorporated by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2011)
|
|
|
+10.55
|
2011 Stock Option Agreement under the 2008 Equity Compensation Plan, dated June 9, 2011, between the Registrant and Sanford A. Ibrahim (incorporated by reference to Exhibit 10.9 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2011)
|
|
|
+10.56
|
2011 Stock Option Agreement under the 2008 Equity Compensation Plan, dated June 9, 2011, between the Registrant and C. Robert Quint (incorporated by reference to Exhibit 10.10 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2011)
|
|
|
+10.57
|
Severance Agreement, dated December 23, 2011, between Teresa Bryce Bazemore and the Registrant (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) filed December 29, 2011)
|
|
|
+10.58
|
Transfer Letter Agreement between the Registrant and Derek Brummer, dated April 3, 2013 (incorporated by reference to Exhibit 10.63 to the Registrant’s Annual Report on Form 10-K (file no. 1-11356) for the year ended December 31, 2013)
|
|
|
10.59
|
Commutation, Reassumption and Release Agreement, effective as of January 1, 2012 (signed January 24, 2012), between Assured Guaranty Municipal Corp. (formerly Financial Security Assurance Inc.), Assured Guaranty (Europe) Ltd. (formerly Financial Security Assurance (U.K.) Limited), and Radian Asset Assurance Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated January 30, 2012 and filed on January 30, 2012)
|
|
|
+10.60
|
Form of 2012 Performance Based Restricted Stock Unit Agreement under the 2008 Equity Compensation Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2012)
|
|
|
+10.61
|
Form of 2012 Stock Option Agreement under the 2008 Equity Compensation Plan (incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2012)
|
|
|
+10.62
|
2012 Performance Based Restricted Stock Unit Grant Letter under the 2008 Equity Compensation Plan, dated as of June 6, 2012, between the Registrant and Sanford A. Ibrahim (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2012)
|
|
|
+10.63
|
2012 Performance Based Restricted Stock Unit Grant Letter under the 2008 Equity Compensation Plan, dated as of June 6, 2012, between the Registrant and C. Robert Quint (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2012)
|
|
|
+10.64
|
2012 Stock Option Agreement under the 2008 Equity Compensation Plan, dated as of June 6, 2012, between the Registrant and Sanford A. Ibrahim (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2012)
|
|
|
+10.65
|
2012 Stock Option Agreement under the 2008 Equity Compensation Plan, dated as of June 6, 2012, between the Registrant and C. Robert Quint (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2012)
|
|
|
+10.66
|
Waiver Letter, dated May 30, 2012, under Employment Agreement between the Registrant and S.A. Ibrahim, dated April 5, 2011 (incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2012)
|
|
|
+10.67
|
Letter Agreement, dated May 16, 2013, between the Registrant and S.A. Ibrahim (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated May 14, 2013 and filed on May 20, 2013)
|
|
|
Exhibit
Number
|
Exhibit
|
+10.68
|
2013 Performance-Based Restricted Stock Unit Grant Letter under the 2008 Equity Compensation Plan, dated as of May 14, 2013, between the Registrant and Sanford A. Ibrahim (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2013)
|
|
|
+10.69
|
2013 Stock Option Agreement under the 2008 Equity Compensation Plan, dated as of May 14, 2013, between the Registrant and Sanford A. Ibrahim (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2013)
|
|
|
+10.70
|
2013 Performance-Based Restricted Stock Unit Grant Letter under the 2008 Equity Compensation Plan, dated as of May 14, 2013, between the Registrant and C. Robert Quint (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2013)
|
|
|
+10.71
|
2013 Stock Option Agreement under the 2008 Equity Compensation Plan, dated as of May 14, 2013, between the Registrant and C. Robert Quint (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2013)
|
|
|
+10.72
|
Form of 2013 Performance-Based Restricted Stock Unit Agreement under the 2008 Equity Compensation Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2013)
|
|
|
+10.73
|
Form of 2013 Stock Option Agreement under the 2008 Equity Compensation Plan (incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2013)
|
|
|
10.74
|
Master Transaction Agreement, dated as of August 29, 2013, by and between Radian Guaranty Inc. and Federal Home Loan Mortgage Corporation (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated August 29, 2013 and filed on August 30, 2013)
|
|
|
+10.75
|
2014 Performance-Based Restricted Stock Unit Grant Letter under the 2014 Equity Compensation Plan, dated as of June 17, 2014, between the Registrant and Sanford A. Ibrahim (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2014)
|
|
|
+10.76
|
2014 Stock Option Agreement under the 2014 Equity Compensation Plan, dated as of June 17, 2014, between the Registrant and Sanford A. Ibrahim (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2014)
|
|
|
+10.77
|
2014 Performance-Based Restricted Stock Unit Grant Letter under the 2014 Equity Compensation Plan, dated as of June 17, 2014, between the Registrant and C. Robert Quint (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2014)
|
|
|
+10.78
|
2014 Stock Option Agreement under the 2014 Equity Compensation Plan, dated as of June 17, 2014, between the Registrant and C. Robert Quint (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2014)
|
|
|
+10.79
|
Form of 2014 Performance-Based Restricted Stock Unit Grant Letter under the 2014 Equity Compensation Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2014)
|
|
|
+10.80
|
Form of 2014 Stock Option Agreement under the 2014 Equity Compensation Plan (incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2014)
|
|
|
+10.81
|
Employment Agreement between the Registrant and Paul T. Bossidy, dated as of May 1, 2014 (incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q (file no. 1-11356) for the period ended June 30, 2014)
|
|
|
10.82
|
Confidential Settlement Agreement and Release, dated as of September 16, 2014, by and among Radian Guaranty Inc., Countrywide Home Loans, Inc., and Bank of America, N.A., as a successor to BofA Home Loans Servicing f/k/a Countrywide Home Loans Servicing LP on its own behalf and as successor in interest by de jure merger to Countrywide Bank FSB, formerly Treasury Bank (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated September 16, 2014, and filed on September 19, 2014)
|
|
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
+
|
Management contract, compensatory plan or arrangement.
|
1.
|
The second paragraph of Section 5 of each Grant Letter is amended to read as follows:
|
1.
|
Grant of Restricted Stock Units.
|
2.
|
Vesting.
|
Vesting Date
|
Vested Restricted Stock Units
|
2nd Anniversary of the Grant Date
|
100% of the awarded Restricted Stock Units
|
(d)
|
Change of Control
.
|
3.
|
Restricted Stock Units Account
.
|
4.
|
Conversion of Restricted Stock Units.
|
5.
|
Certain Corporate Changes.
|
6.
|
No Stockholder Rights.
|
7.
|
Retention Rights.
|
8.
|
Restrictive Covenants.
|
9.
|
Cancellation or Amendment.
|
10.
|
Notice.
|
11.
|
Incorporation of Plan by Reference.
|
12.
|
Income Taxes; Withholding Taxes.
|
13.
|
Governing Law.
|
14.
|
Grant Subject to Applicable Laws and Company Policies.
|
15.
|
Assignment.
|
16.
|
Section 409A.
|
By:
|
/s/ ANITA SCOTT
|
Name:
|
Anita Scott
|
Title:
|
SVP, Chief Human Resources Officer
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Net earnings (loss) from continuing operations
|
$
|
281,539
|
|
|
$
|
1,259,574
|
|
|
$
|
(141,851
|
)
|
|
$
|
(224,105
|
)
|
|
$
|
(446,790
|
)
|
Federal and state income tax provision (benefit)
|
156,290
|
|
|
(852,418
|
)
|
|
(31,495
|
)
|
|
(48,323
|
)
|
|
(138,238
|
)
|
|||||
Earnings (loss) before income taxes
|
437,829
|
|
|
407,156
|
|
|
(173,346
|
)
|
|
(272,428
|
)
|
|
(585,028
|
)
|
|||||
Equity in net income of affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Distributed income from equity investees
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net earnings (loss)
|
437,829
|
|
|
407,156
|
|
|
(173,346
|
)
|
|
(272,428
|
)
|
|
(585,028
|
)
|
|||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest
|
91,102
|
|
|
90,464
|
|
|
74,618
|
|
|
51,832
|
|
|
61,394
|
|
|||||
One-Third of all rentals
|
1,656
|
|
|
1,308
|
|
|
1,020
|
|
|
1,269
|
|
|
1,060
|
|
|||||
Fixed charges
|
92,758
|
|
|
91,772
|
|
|
75,638
|
|
|
53,101
|
|
|
62,454
|
|
|||||
Preferred dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Fixed charges and preferred dividends
|
92,758
|
|
|
91,772
|
|
|
75,638
|
|
|
53,101
|
|
|
62,454
|
|
|||||
Net earnings (loss) and fixed charges
|
$
|
530,587
|
|
|
$
|
498,928
|
|
|
$
|
(97,708
|
)
|
|
$
|
(219,327
|
)
|
|
$
|
(522,574
|
)
|
Net earnings (loss), fixed charges and preferred dividends
|
$
|
530,587
|
|
|
$
|
498,928
|
|
|
$
|
(97,708
|
)
|
|
$
|
(219,327
|
)
|
|
$
|
(522,574
|
)
|
Ratio of net earnings (loss) and fixed charges to fixed charges
|
5.7x
|
|
5.4x
|
|
(1)
|
|
(1)
|
|
(1)
|
||||||||||
Ratio of net earnings (loss), fixed charges and preferred stock dividends to fixed charges and preferred stock dividends (2)
|
5.7x
|
|
5.4x
|
|
(1)
|
|
(1)
|
|
(1)
|
1.
|
I have reviewed this Annual Report on Form 10-K of Radian Group Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
|
Date: February 26, 2016
|
/s/ S
ANFORD
A. I
BRAHIM
|
|
Sanford A. Ibrahim
Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of Radian Group Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
|
Date: February 26, 2016
|
/s/ J. Franklin Hall
|
|
J. Franklin Hall
Chief Financial Officer
|
|
|
Date: February 26, 2016
|
/s/ S. A. I
BRAHIM
|
|
Sanford A. Ibrahim
Chief Executive Officer
|
|
|
|
/s/ J. Franklin Hall
|
|
J. Franklin Hall
Chief Financial Officer
|