Note 5 - Fair Value of Financial Instruments Level 3 (Tables)

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

The following is a list of those assets and liabilities that are measured at fair value by hierarchy level as of December 31, 2013:

(In millions)	Level I		Level II		Level III		Total
Assets and Liabilities at Fair Value
Investment Portfolio:
U.S. government and agency securities	$	755.0	$	402.9	$	—	$	1,157.9
State and municipal obligations	—		602.3		18.7		621.0
Money market instruments	672.6		—		—		672.6
Corporate bonds and notes	—		1,036.6		—		1,036.6
Residential mortgage-backed securities (“RMBS”)	—		560.4		—		560.4
CMBS	—		288.9		—		288.9
Other ABS	—		194.9		0.9		195.8
Foreign government and agency securities	—		40.7		—		40.7
Equity securities (1)	128.3		97.1		0.4		225.8
Other investments (2)	—		2.2		81.5		83.7
Total Investments at Fair Value (3)	1,555.9		3,226.0		101.5		4,883.4
Derivative assets	—		10.3		6.3		16.6
Other assets (4)	—		—		91.9		91.9
Total Assets at Fair Value	$	1,555.9	$	3,236.3	$	199.7	$	4,991.9
Derivative liabilities	$	—	$	—	$	307.2	$	307.2
VIE debt (5)	—		—		94.6		94.6
Total Liabilities at Fair Value	$	—	$	—	$	401.8	$	401.8

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(1) Comprising broadly diversified domestic equity mutual funds included within Level I and various preferred and common stocks invested across numerous companies and industries included within Levels II and III.

(2) Comprising TruPs ($0.6 million) and short-term CDs ($1.6 million) included within Level II and lottery annuities ($0.3 million), TruPs ($0.2 million), and a guaranteed investment contract held by a consolidated VIE ($81.0 million) within Level III.

(3) Does not include fixed-maturities held to maturity ($0.4 million) and certain other invested assets ($47.4 million), primarily invested in limited partnerships, accounted for as cost-method investments and not measured at fair value.

(4) Primarily comprising manufactured housing loan collateral related to two consolidated financial guaranty VIEs.

(5) Comprising consolidated debt related to NIMS VIEs ($2.8 million) and amounts related to financial guaranty VIEs ($91.8 million).

At December 31, 2013, our total Level III assets were approximately 4.0% of total assets measured at fair value and total Level III liabilities accounted for 100% of total liabilities measured at fair value. Realized and unrealized gains and losses on Level III assets and liabilities in the rollforward represent gains and losses for the periods in which they were classified as Level III.

The following is a list of those assets and liabilities that are measured at fair value by hierarchy level as of December 31, 2012:

(In millions)	Level I		Level II		Level III		Total
Assets and Liabilities at Fair Value
Investment Portfolio:
U.S. government and agency securities	$	137.8	$	433.8	$	—	$	571.6
State and municipal obligations	—		669.0		19.0		688.0
Money market instruments	638.0		—		—		638.0
Corporate bonds and notes	—		1,373.6		—		1,373.6
RMBS	—		663.4		—		663.4
CMBS	—		237.3		—		237.3
Other ABS	—		252.4		1.7		254.1
Foreign government and agency securities	—		117.7		—		117.7
Hybrid securities	—		211.9		—		211.9
Equity securities (1)	98.9		166.0		1.0		265.9
Other investments (2)	—		2.5		79.0		81.5
Total Investments at Fair Value (3)	874.7		4,127.6		100.7		5,103.0
Derivative assets	—		—		13.6		13.6
Other assets (4)	—		—		99.2		99.2
Total Assets at Fair Value	$	874.7	$	4,127.6	$	213.5	$	5,215.8
Derivative liabilities	$	—	$	—	$	266.9	$	266.9
VIE debt (5)	—		—		108.9		108.9
Total Liabilities at Fair Value	$	—	$	—	$	375.8	$	375.8

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(1) Comprising broadly diversified domestic equity mutual funds included within Level I and various preferred and common stocks invested across numerous companies and industries included within Levels II and III.

(2) Comprising TruPs ($0.9 million) and short-term CDs ($1.6 million ) included within Level II and lottery annuities ($1.0 million) and guaranteed investment contract held by a consolidated VIE ($78.0 million) within Level III.

(3) Does not include fixed-maturities held to maturity ($0.7 million) and certain other invested assets ($48.7 million), primarily invested in limited partnerships, accounted for as cost-method investments and not measured at fair value.

(4) Primarily comprising manufactured housing loan collateral related to two consolidated financial guaranty VIEs.

(5) Comprising consolidated debt related to NIMS VIEs ($9.9 million) and amounts related to financial guaranty VIEs ($99.0 million).

Impact of Non-Performance Risk Fair Value Disclosure [Table Text Block]

The following table quantifies the impact of our non-performance risk on our derivative assets and liabilities (in aggregate by type) and VIE liabilities presented in our consolidated balance sheets. Radian Group’s five-year CDS spread is presented as an illustration of the market’s view of our non-performance risk; the CDS spread actually used in the valuation of specific fair value liabilities is typically based on the estimated remaining term of the instrument, rather than five years.

	December 31,
(In basis points)	2013	2012	2011	2010
Radian Group’s five-year CDS spread	323	913	2,732	465

(In millions)	Fair Value Liability before Consideration of Radian Non-Performance Risk December 31, 2013		Impact of Radian Non-Performance Risk December 31, 2013		Fair Value Liability Recorded December 31, 2013
Product
Corporate CDOs	$	30.4	$	29.0	$	1.4
Non-Corporate CDO-related (1)	409.7		178.7		231.0
NIMS-related (2)	5.0		2.2		2.8
Total	$	445.1	$	209.9	$	235.2

(In millions)	Fair Value Liability before Consideration of Radian Non-Performance Risk December 31, 2012		Impact of Radian Non-Performance Risk December 31, 2012		Fair Value (Asset)Liability Recorded December 31, 2012
Product
Corporate CDOs	$	98.8	$	101.6	$	(2.8	)
Non-Corporate CDO-related (1)	689.1		509.3		179.8
NIMS-related (2)	13.0		4.7		8.3
Total	$	800.9	$	615.6	$	185.3

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(1) Includes the net fair value liability recorded within derivative assets and derivative liabilities and the net fair value liabilities included in our consolidated VIEs.

(2) Includes NIMS VIE debt and NIMS derivative assets.

Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

The following is a rollforward of Level III assets and liabilities measured at fair value for the year ended December 31, 2013:

(In millions)	Beginning Balance at January 1, 2013		Realized and Unrealized Gains (Losses) Recorded in Earnings (1)			Purchases		Sales		Issuances		Settlements			Transfers Into (Out of) Level III (2)			Ending Balance at December 31, 2013
Investments:
State and municipal obligations	$	19.0	$	1.1		$	—	$	—	$	—	$	1.4		$	—		$	18.7
Corporate bonds and notes	—		(0.1		)	2.7		—		—		—			(2.6		)	—
CMBS	—		—			3.1		3.1		—		—			—			—
Other ABS	1.7		—			—		—		—		0.8			—			0.9
Equity securities	1.0		—			—		0.6		—		—			—			0.4
Other investments	79.0		1.2			1.7		0.1		—		0.5			0.2			81.5
Total Level III Investments	100.7		2.2			7.5		3.8		—		2.7			(2.4		)	101.5
NIMS derivative assets	1.6		0.6			—		—		—		2.2			—			—
Other assets	99.2		15.2			—		—		—		22.5			—			91.9
Total Level III Assets	$	201.5	$	18.0		$	7.5	$	3.8	$	—	$	27.4		$	(2.4	)	$	193.4
Derivative liabilities, net	$	254.9	$	(29.6	)	$	—	$	—	$	—	$	(16.4	)	$	—		$	300.9
VIE debt	108.9		(12.3		)	—		—		—		26.6			—			94.6
Total Level III Liabilities, net	$	363.8	$	(41.9	)	$	—	$	—	$	—	$	10.2		$	—		$	395.5

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(1) Includes unrealized gains (losses) relating to assets and liabilities still held as of December 31, 2013 as follows: $1.2 million for investments, $5.8 million for other assets, $(47.4) million for derivative liabilities and $(8.5) million for VIE debt.

(2) Transfers are recognized at the end of the period as the availability of market observed inputs change from period to period.

The following is a rollforward of Level III assets and liabilities measured at fair value for the year ended December 31, 2012:

(In millions)	Beginning Balance at January 1, 2012		Realized and Unrealized Gains(Losses) Recorded in Earnings (1)			Purchases		Sales		Issuances		Settlements			Transfers Into (Out of) Level III  (2)			Ending Balance at December 31, 2012
Investments:
State and municipal obligations	$	62.5	$	(3.4	)	$	—	$	—	$	—	$	12.3		$	(27.8	)	$	19.0
RMBS	45.5		6.1			—		—		—		51.6			—			—
CMBS	35.4		(11.4		)	—		—		—		24.0			—			—
CDO	5.5		0.8			—		—		—		6.3			—			—
Other ABS	2.9		0.8			5.2		—		—		4.6			(2.6		)	1.7
Hybrid securities	4.8		0.1			0.1		4.9		—		—			(0.1		)	—
Equity securities	0.8		0.1			—		0.6		—		—			0.7			1.0
Other investments	6.8		2.5			76.3		0.6		—		6.0			—			79.0
Total Level III Investments	164.2		(4.4		)	81.6		6.1		—		104.8			(29.8		)	100.7
NIMS derivative assets	1.6		(0.3		)	0.3		—		—		—			—			1.6
Other assets	104.0		20.3			—		—		—		25.1			—			99.2
Total Level III Assets	$	269.8	$	15.6		$	81.9	$	6.1	$	—	$	129.9		$	(29.8	)	$	201.5
Derivative liabilities, net	$	110.6	$	(143.7	)	$	—	$	—	$	—	$	(0.6	)	$	—		$	254.9
VIE debt	228.2		(115.3		)	—		—		—		234.6			—			108.9
Total Level III Liabilities, net	$	338.8	$	(259.0	)	$	—	$	—	$	—	$	234.0		$	—		$	363.8

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(1) Includes unrealized gains (losses) relating to assets and liabilities still held as of December 31, 2012 as follows: $1.4 million for investments, $9.5 million for other assets, $(189.7) million for derivative liabilities and $(16.0) million for VIE debt.

(2) Transfers are recognized at the end of the period as the availability of market observed inputs change from period to period.

Schedule of Significant Unobservable Inputs for Level III Fair Value Measurement [Table Text Block]

The following table summarizes the significant unobservable inputs used in our recurring Level III fair value measurements as of December 31, 2013:

(In millions)	Fair Value Net Asset (Liability) December 31, 2013 (1)			Valuation Technique	Unobservable Input	Range/ Weighted Average
Level III Assets/Liabilities:
State and municipal obligations	$	18.7		Discounted cash flow	Discount rate				12.3	%
					Expected loss				11.1	%
Other investments	81.0			Discounted cash flow	Discount rate				1.2	%
Corporate CDOs	(1.4		)	Base correlation model	Radian correlation to corporate index				85.0	%
					Average credit spread	0.1	%	-	0.9	%
					Own credit spread (2)	0.8	%	-	4.3	%
CDOs of CMBS	(67.8		)	Discounted cash flow	Radian correlation to CMBS transaction index	72.0	%	-	85.0	%
					Own credit spread (2)	0.8	%	-	4.3	%
TruPs CDOs	(43.9		)	Discounted cash flow	Principal recovery				75.0	%
					Principal recovery (stressed)				65.0	%
					Probability of conditional liquidity payment	1.1	%	-	12.4	%
					Own credit spread (2)	0.8	%	-	4.3	%
TruPs - related VIE	(68.4		)	Discounted cash flow	Discount rate				13.1	%
Other non-corporate CDOs and derivative transactions	(119.4		)	Risk-based model	Average life (in years)	<1		-	20
					Own credit spread (2)	0.8	%	-	4.3	%
NIMS VIE	(2.8		)	Discounted cash flow	NIMS credit spread				43.8	%
					Own credit spread				7.9	%

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(1) Excludes certain assets and liabilities for which we do not develop quantitative unobservable inputs. The fair value estimates for these assets and liabilities are developed using third-party pricing information, generally without adjustment.

(2) Represents the range of our CDS spread that a typical market participant might use in the valuation analysis based on the remaining term of the investment.

The following table summarizes the significant unobservable inputs used in our recurring Level III fair value measurements as of December 31, 2012:

(In millions)	Fair Value Net Asset (Liability) December 31, 2012 (1)			Valuation Technique	Unobservable Input	Range/ Weighted Average
Level III Assets/Liabilities:
State and municipal obligations	$	19.0		Discounted cash flow	Discount rate				8.8	%
					Expected loss				19.0	%
Other investments	78.0			Discounted cash flow	Discount rate				1.9	%
Corporate CDOs	2.8			Base correlation model	Radian correlation to corporate index				85.0	%
					Average credit spread	<0.1%		-	2.7	%
					Own credit spread (2)	8.0	%	-	9.1	%
NIMS derivatives	1.6			Discounted cash flow	NIMS credit spread				44.0	%
					Own credit spread (2)				8.5	%
CDOs of CMBS	(74.7		)	Discounted cash flow	Radian correlation to CMBS transaction index	72.0	%	-	85.0	%
					Own credit spread (2)	8.0	%	-	9.1	%
TruPs CDOs	(11.1		)	Discounted cash flow	Principal recovery				65.0	%
					Principal recovery (stressed)				60.0	%
					Probability of conditional liquidity payment	0.8	%	-	36.7	%
					Own credit spread (2)	8.0	%	-	9.1	%
TruPs - related VIE	(70.4		)	Discounted cash flow	Discount rate				13.4	%
Other non-corporate CDOs and derivative transactions	(101.4		)	Risk-based model	Average life (in years)	<1		-	20
					Own credit spread (2)	8.0	%	-	9.1	%
NIMS VIE	(9.9		)	Discounted cash flow	NIMS credit spread				43.7	%
					Own credit spread (2)	8.5	%	-	10.9	%

________________

(1) Excludes certain assets and liabilities for which we do not develop quantitative unobservable inputs. The fair value estimates for these assets and liabilities are developed using third-party pricing information, generally without adjustment.

(2) Represents the range of our CDS spread that a typical market participant might use in the valuation analysis based on the remaining term of the investment.

Fair Value, by Balance Sheet Grouping [Table Text Block]

The carrying value and estimated fair value of other selected assets and liabilities not carried at fair value on our consolidated balance sheets were as follows as of the dates indicated:

	December 31, 2013					December 31, 2012
(In millions)	Carrying Amount		Estimated Fair Value			Carrying Amount		Estimated Fair Value
Assets:
Fixed-maturities held to maturity	$	0.4	$	0.4	(1)	$	0.7	$	0.7	(1)
Other invested assets	47.4		54.3		(1)	48.7		57.4		(1)
Liabilities:
Long-term debt	930.1		1,502.7		(1)	663.6		704.8		(1)
Non-derivative financial guaranty liabilities	144.7		189.1		(2)	232.9		308.1		(2)

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(1) These estimated fair values would be classified in Level II of the fair value hierarchy.

(2) These estimated fair values would be classified in Level III of the fair value hierarchy.