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Note 5 - Investments (Notes)
3 Months Ended
Mar. 31, 2015
Investments [Abstract]  
Investments
Investments
Our available for sale securities within our investment portfolio consisted of the following as of the dates indicated:
 
March 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
$
5,727

 
$
5,783

 
$
56

 
$

State and municipal obligations
17,698

 
18,971

 
1,273

 

Corporate bonds and notes
402,308

 
415,333

 
13,636

 
611

RMBS
40,334

 
41,845

 
1,511

 

CMBS
67,194

 
69,373

 
2,181

 
2

Other ABS
122,605

 
122,237

 
559

 
927

Foreign government and agency securities
21,174

 
21,543

 
576

 
207

 
677,040

 
695,085

 
19,792

 
1,747

Equity securities available for sale (1)
76,900

 
143,533

 
66,633

 

Total debt and equity securities
$
753,940

 
$
838,618

 
$
86,425

 
$
1,747

______________________
(1)
Comprising broadly diversified domestic equity mutual funds ($143.1 million fair value) and a preferred stock investment in Freddie Mac ($0.4 million fair value).
 
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 broadly diversified domestic equity mutual funds ($143.0 million fair value) and a preferred stock investment in Freddie Mac ($0.4 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)
March 31,
2015
 
December 31,
2014
Trading securities:
 
 
 
U.S. government and agency securities
$
135,801

 
$
134,530

State and municipal obligations
334,052

 
343,926

Corporate bonds and notes
699,621

 
708,361

RMBS
86,294

 
89,810

CMBS
178,563

 
188,615

Other ABS
55,386

 
77,755

Foreign government and agency securities
13,731

 
18,331

Equity securities
71,347

 
72,256

Total
$
1,574,795

 
$
1,633,584


For trading securities held at March 31, 2015 and December 31, 2014, we had net unrealized gains during the three months ended March 31, 2015 and the year ended December 31, 2014 associated with those securities of $18.8 million and $65.7 million, respectively.
For the three months ended March 31, 2015, we did not transfer any securities from the available for sale or trading categories.
Net realized and unrealized gains (losses) on investments and other financial instruments consisted of:
 
Three Months Ended March 31,
(In thousands)
2015
 
2014
Net realized gains (losses):
 
 
 
Fixed-maturities held to maturity
$

 
$
(9
)
Fixed-maturities available for sale
(51
)
 
5

Trading securities
(4,568
)
 
(4,351
)
Other
105

 
10

Net realized losses on investments
(4,514
)
 
(4,345
)
Unrealized gains on trading securities
20,701

 
47,631

Total net gains on investments
16,187

 
43,286

Net gains (losses) on other financial instruments
592

 
(318
)
Net gains on investments and other financial instruments
$
16,779

 
$
42,968


The following tables show the gross unrealized losses and fair value of our securities deemed “available for sale” aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of the dates indicated:
March 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
Corporate bonds and notes
 
22

 
$
41,307

 
$
445

 
1

 
$
1,024

 
$
166

 
23

 
$
42,331

 
$
611

CMBS
 
1

 
2,057

 
2

 

 

 

 
1

 
2,057

 
2

Other ABS
 
21

 
54,604

 
817

 
2

 
8,418

 
110

 
23

 
63,022

 
927

Foreign government and agency securities
 
5

 
4,706

 
207

 

 

 

 
5

 
4,706

 
207

Total
 
49

 
$
102,674

 
$
1,471

 
3

 
$
9,442

 
$
276

 
52

 
$
112,116

 
$
1,747


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

During the first three months of 2015 and 2014, we did not recognize in earnings any impairment losses related to credit deterioration.
Although we held securities in an unrealized loss position as of March 31, 2015, we did not consider them to be other-than-temporarily impaired as of such date. For all investment categories, the unrealized losses of 12 months or greater duration as of March 31, 2015, were generally caused by interest rate or credit spread movements since the purchase date. As of March 31, 2015, we estimated that the present value of cash flows expected to be collected from these securities would be sufficient to recover the amortized cost basis of these securities. As of March 31, 2015, 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 March 31, 2015.
The contractual maturities of fixed-maturity investments are as follows:
        
 
March 31, 2015
 
Available for Sale
(In thousands)
Amortized
Cost
 
Fair
Value
Due in one year or less (1)
$
2,262

 
$
2,297

Due after one year through five years (1)
44,413

 
44,741

Due after five years through ten years (1)
257,586

 
263,269

Due after ten years (1)
142,646

 
151,323

RMBS (2)
40,334

 
41,845

CMBS (2)
67,194

 
69,373

Other ABS (2)
122,605

 
122,237

Total
$
677,040

 
$
695,085

______________________
(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.
At March 31, 2015 and December 31, 2014, Radian Guaranty had $210.3 million and $209.3 million, respectively, in a collateral account pursuant to the Freddie Mac Agreement. These investments, which are primarily invested in trading securities, are pledged to cover Loss Mitigation Activity on the loans subject to that agreement. Subject to certain conditions in the Freddie Mac Agreement, amounts in the collateral account may be released to Radian Guaranty over time to the extent that Loss Mitigation Activity becomes final in accordance with the terms of the Freddie Mac Agreement. However, if the amount of Loss Mitigation Activity that becomes final in accordance with the Freddie Mac Agreement is less than $205 million prior to the termination of the Freddie Mac Agreement, then any shortfall will be paid to Freddie Mac from the funds in the collateral account. From the time the collateral account was established through March 31, 2015, approximately $122 million of Loss Mitigation Activity had become final in accordance with the Freddie Mac Agreement and approximately $18 million of submitted claims had been rescinded, denied, curtailed or cancelled, but were not yet considered final in accordance with the Freddie Mac Agreement.