Note 3 - Discontinued Operations (Notes)

12 Months Ended

Dec. 31, 2015

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Discontinued Operations

On April 1, 2015, Radian Guaranty completed the sale of 100% of the issued and outstanding shares of Radian Asset Assurance for a purchase price of approximately $810 million, pursuant to the Radian Asset Assurance Stock Purchase Agreement.

Radian Asset Assurance provided direct insurance and reinsurance on credit-based risks. As a result, the assets and liabilities associated with the discontinued operations had historically been a source of significant volatility to Radian’s results of operations, due to various factors including fluctuations in fair value and credit risk. The divestiture was intended to better position Radian Guaranty to comply with the PMIERs (which are discussed in Note 1) and to support Radian’s strategic focus on the mortgage and real estate industries. After closing costs and other adjustments, Radian Guaranty received net proceeds of $789 million.

Based upon the applicable terms of the Radian Asset Assurance Stock Purchase Agreement, we determined that Radian Asset Assurance met the criteria for held for sale and discontinued operations accounting at December 31, 2014. As a result, we recognized a pre-tax impairment charge of $467.5 million for the year ended December 31, 2014 and an additional pre-tax impairment charge of $14.3 million through April 1, 2015, when the sale was completed. We recorded total net income from discontinued operations of $5.4 million related to this sale in 2015, consisting primarily of the recognition of investment gains previously deferred and recorded in accumulated other comprehensive income and recognized as a result of the completion of the sale of Radian Asset Assurance to Assured on April 1, 2015, as well as adjustments to estimated transaction costs and taxes. The operating results of Radian Asset Assurance are classified as discontinued operations for all periods presented in our Consolidated Statements of Operations. No general corporate overhead or interest expense was allocated to discontinued operations.

Previously, Radian Asset Assurance comprised substantially all of the financial guaranty segment and, as a result, we no longer present a financial guaranty segment. Certain corporate income and expenses that were previously allocated to the financial guaranty segment but were not reclassified to discontinued operations, such as investment income, interest expense and corporate overhead expenses, were reallocated to the Mortgage Insurance segment for those periods in which discontinued operations are presented.

The income (loss) from discontinued operations consisted of the following components for the periods indicated:

	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	)

The assets and liabilities associated with the discontinued operations have been segregated in the consolidated balance sheets. The following table summarizes the major components of Radian Asset Assurance’s assets and liabilities held for sale on the Consolidated Balance Sheets as of December 31, 2015 and 2014:

	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