Note 7 - Reinsurance

9 Months Ended

Sep. 30, 2015

Reinsurance Disclosures [Abstract]

Reinsurance

Reinsurance

The effect of reinsurance on net premiums written and earned is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2015			2014			2015			2014
Net premiums written-insurance:
Direct	$	253,262		$	262,826		$	766,708		$	730,685
Assumed	7			(219		)	62			(668		)
Ceded	(11,101		)	(16,832		)	(31,612		)	(49,342		)
Net premiums written-insurance	$	242,168		$	245,775		$	735,158		$	680,675
Net premiums earned-insurance:
Direct	$	242,260		$	235,406		$	734,221		$	672,453
Assumed	10			11			33			35
Ceded	(14,837		)	(17,590		)	(44,789		)	(52,253		)
Net premiums earned-insurance	$	227,433		$	217,827		$	689,465		$	620,235

In 2012, Radian Guaranty entered into two separate QSR agreements with a third-party reinsurance provider. As of September 30, 2015, RIF ceded under the Initial QSR Transaction and the Second QSR Transaction was approximately $0.9 billion and $1.4 billion, respectively.

The Second QSR Transaction provides that, effective December 31, 2015, Radian Guaranty will have the ability, at its option, to recapture half of the reinsurance ceded with respect to conventional GSE loans, which would result in Radian Guaranty reassuming the related RIF in exchange for an expected payment of a profit commission amount from the reinsurer. Our results for the three and nine months ended September 30, 2015 include accruals of $0.7 million and $6.5 million, respectively, for this expected profit commission, based on experience to date for the Second QSR Transaction and our current expectation to exercise our option to recapture half of the ceded RIF on December 31, 2015.

The following tables show the amounts related to the QSR Transactions for the periods indicated:

	Initial QSR Transaction
	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2015		2014		2015		2014
Ceded premiums written	$	3,437	$	4,668	$	11,326	$	15,018
Ceded premiums earned	5,068		6,578		17,510		20,188
Ceding commissions written	745		1,166		2,453		3,754

	Second QSR Transaction
	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2015		2014		2015		2014
Ceded premiums written	$	5,029	$	9,082	$	11,953	$	24,447
Ceded premiums earned	7,135		7,699		18,942		21,481
Ceding commissions written	1,998		3,179		6,437		8,557

Radian Guaranty has ceded the maximum amount permitted under the QSR Transactions (up to $1.6 billion of ceded RIF for each); therefore, Radian Guaranty is no longer ceding NIW under these transactions. Effective January 1, 2015, the ceding commission was reduced from 25% to 20% for two-thirds of the reinsurance ceded under the Initial QSR Transaction. Ceded losses to date under the QSR Transactions have been immaterial.