Investments

Our held to maturity and available for sale securities within our investment portfolio consisted of the following as of the dates indicated:



	June 30, 2014
(In thousands)	Amortized Cost		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses
Fixed-maturities held to maturity:
State and municipal obligations	$	50	$	50	$	—	$	—
	$	50	$	50	$	—	$	—
Fixed-maturities available for sale:
U.S. government and agency securities	$	41,481	$	41,650	$	183	$	14
State and municipal obligations	26,363		27,460		1,116		19
Corporate bonds and notes	84,012		86,009		2,662		665
RMBS	59,720		61,233		1,513		—
Other ABS	96,665		96,060		103		708
Foreign government and agency securities	19,568		20,082		519		5
Other investments	242		242		—		—
	$	328,051	$	332,736	$	6,096	$	1,411
Equity securities available for sale (1)	$	78,106	$	144,163	$	66,057	$	—
Total debt and equity securities	$	406,207	$	476,949	$	72,153	$	1,411

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(1)	Comprising broadly diversified domestic equity mutual funds ($136.2 million fair value) and various preferred and common stocks invested across numerous companies and industries ($8.0 million fair value).



	December 31, 2013
(In thousands)	Amortized Cost		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses
Fixed-maturities held to maturity:
State and municipal obligations	$	358	$	351	$	—	$	7
	$	358	$	351	$	—	$	7
Fixed-maturities available for sale:
U.S. government and agency securities	$	8,939	$	9,106	$	224	$	57
State and municipal obligations	26,489		25,946		26		569
Corporate bonds and notes	11,951		12,045		578		484
RMBS	72,665		73,115		450		—
Other investments	341		341		—		—
	$	120,385	$	120,553	$	1,278	$	1,110
Equity securities available for sale (1)	$	78,106	$	135,168	$	57,062	$	—
Total debt and equity securities	$	198,849	$	256,072	$	58,340	$	1,117

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(1)	Comprising broadly diversified domestic equity mutual funds ($128.3 million fair value) and various preferred and common stocks invested across numerous companies and industries ($6.9 million fair value).

The trading securities within our investment portfolio, which are recorded at fair value, consisted of the following as of the dates indicated:



(In thousands)	June 30, 2014		December 31, 2013
Trading securities:
U.S. government and agency securities	$	318,407	$	393,815
State and municipal obligations	607,961		595,070
Corporate bonds and notes	977,168		1,024,574
RMBS	235,216		487,239
CMBS	278,582		288,895
Other ABS	155,551		195,816
Foreign government and agency securities	29,153		40,657
Equity securities	88,365		90,604
Other investments	674		759
Total	$	2,691,077	$	3,117,429

For trading securities that were still held at June 30, 2014 and December 31, 2013, we had net unrealized gains during 2014 and net unrealized losses during 2013 associated with those securities in the amount of $97.0 million and $140.9 million, respectively.

Net realized and unrealized gains (losses) on investments consisted of:



	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2014			2013			2014			2013
Net realized (losses) gains:
Fixed-maturities held to maturity	$	—		$	—		$	(9	)	$	2
Fixed-maturities available for sale	(604		)	803			206			869
Equities available for sale	—			349			—			349
Trading securities	184			3,183			(4,452		)	13,016
Short-term investments	—			—			—			2
Other invested assets	—			4,478			—			8,356
Other	(63		)	(4		)	(53		)	23
Net realized (losses) gains on investments	(483		)	8,809			(4,308		)	22,617
Unrealized gains (losses) on trading securities	47,447			(138,658		)	115,528			(156,441		)
Unrealized gains (losses) on other invested assets	255			(405		)	450			(1,935		)
Total gains (losses) on investments	$	47,219		$	(130,254	)	$	111,670		$	(135,759	)

As part of the Freddie Mac Agreement (defined in Note 9), Radian Guaranty had $209 million and $205 million at June 30, 2014 and December 31, 2013, respectively, in a collateral account currently invested primarily in trading securities, which is pledged to cover loss mitigation activity on the loans subject to the agreement. A portion of the funds deposited may be released to Radian Guaranty over time.

As of June 30, 2014 and December 31, 2013, our investment portfolio included no Sovereign or sub-Sovereign (collectively, “Sovereign”) securities of the six European countries (Portugal, Ireland, Italy, Greece, Spain and Hungary) whose Sovereign obligations have been under particular stress due to economic uncertainty, potential restructuring and ratings downgrades, and no securities of any other countries under similar stress.

The following tables show the gross unrealized losses and fair value of our securities deemed “available for sale” and “held to maturity,” aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of the dates indicated:



June 30, 2014: ($ in thousands) Description of Securities	Less Than 12 Months					12 Months or Greater					Total
June 30, 2014: ($ in thousands) Description of Securities	# 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	$	5,455	$	14	—	$	—	$	—	1	$	5,455	$	14
State and municipal obligations	—	—		—		2	5,722		19		2	5,722		19
Corporate bonds and notes	13	11,046		47		2	2,928		618		15	13,974		665
Other ABS	19	80,266		708		—	—		—		19	80,266		708
Foreign government and agency securities	3	1,470		5		—	—		—		3	1,470		5
Total	36	$	98,237	$	774	4	$	8,650	$	637	40	$	106,887	$	1,411



December 31, 2013: ($ 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	$	5,401	$	57	—	$	—	$	—	1	$	5,401	$	57
State and municipal obligations	4	14,502		42		2	5,514		534		6	20,016		576
Corporate bonds and notes	—	—		—		2	2,966		484		2	2,966		484
Total	5	$	19,903	$	99	4	$	8,480	$	1,018	9	$	28,383	$	1,117

During the first six months of 2014 and 2013, there were no credit losses recognized in earnings.

Impairments due to credit deterioration that result in a conclusion that the present value of cash flows expected to be collected will not be sufficient to recover the amortized cost basis of the security are considered other-than-temporary. Other declines in fair value (for example, due to interest rate changes, sector credit rating changes or company-specific rating changes) that result in a conclusion that the present value of cash flows expected to be collected will not be sufficient to recover the amortized cost basis of the security also may serve as a basis to conclude that an other-than-temporary impairment (“OTTI”) has occurred. To the extent we determine that a security is deemed to have had an OTTI, an impairment loss is recognized.

We had securities in an unrealized loss position that we did not consider to be other-than-temporarily impaired as of June 30, 2014. For all investment categories, the unrealized losses of 12 months or greater duration as of June 30, 2014, were generally caused by interest rate or credit spread movements since the purchase date. As of June 30, 2014, we expected the present value of cash flows to be collected from these securities to be sufficient to recover the amortized cost basis of these securities. As of June 30, 2014, we did not have the intent to sell any debt securities in an unrealized loss position, and we determined that it is more likely than not that we will not be required to sell the securities before recovery of their cost basis, which may be at maturity; therefore, we did not consider these investments to be other-than-temporarily impaired at June 30, 2014.

The contractual maturities of fixed-maturity investments are as follows:



	June 30, 2014
	Held to Maturity				Available for Sale
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less (1)	$	50	$	50	$	3,582	$	3,036
Due after one year through five years (1)	—		—		77,618		78,054
Due after five years through ten years (1)	—		—		58,754		60,404
Due after ten years (1)	—		—		91,432		95,182
Other ABS (2)	—		—		96,665		96,060
Total	$	50	$	50	$	328,051	$	332,736

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(1)	Actual maturities may differ as a result of calls before scheduled maturity.


(2)	Other ABS are shown separately, as they are not due at a single maturity date.