Investments

Available for Sale Securities

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



	September 30, 2016
(In thousands)	Amortized Cost		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses
Fixed-maturities available for sale:
U.S. government and agency securities	$	42,213	$	45,035	$	2,846	$	24
State and municipal obligations	68,520		75,320		6,800		—
Corporate bonds and notes	1,249,233		1,315,525		66,683		391
RMBS	384,867		391,701		7,054		220
CMBS	446,102		462,750		17,090		442
Other ABS	435,695		437,026		2,335		1,004
Foreign government and agency securities	27,161		28,151		1,041		51
Other investments	2,000		2,000		—		—
Total fixed-maturities available for sale	2,655,791		2,757,508		103,849		2,132
Equity securities available for sale (1)	1,330		1,330		—		—
Total debt and equity securities	$	2,657,121	$	2,758,838	$	103,849	$	2,132

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(1)	Comprised primarily of investments in Federal Home Loan Bank stock required in connection with the memberships of Radian Guaranty and Radian Reinsurance in the Federal Home Loan Bank of Pittsburgh.



	December 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	$	13,773	$	13,752	$	—	$	21
State and municipal obligations	36,920		37,900		1,100		120
Corporate bonds and notes	815,024		802,193		4,460		17,291
RMBS	226,744		224,905		625		2,464
CMBS	415,780		406,910		69		8,939
Other ABS	359,452		355,494		16		3,974
Foreign government and agency securities	25,663		24,307		27		1,383
Total fixed-maturities available for sale	1,893,356		1,865,461		6,297		34,192
Equity securities available for sale (1)	75,538		75,430		—		108
Total debt and equity securities	$	1,968,894	$	1,940,891	$	6,297	$	34,300

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(1)	Comprised primarily of a multi-sector exchange-traded fund.

Gross Unrealized Losses and Fair Value of Available for Sale Securities

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:



September 30, 2016: ($ 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	4	$	3,536	$	24	—	$	—	$	—	4	$	3,536	$	24
Corporate bonds and notes	14	29,166		115		6	18,271		276		20	47,437		391
RMBS	9	92,845		220		—	—		—		9	92,845		220
CMBS	19	54,676		442		—	—		—		19	54,676		442
Other ABS	28	60,953		147		30	79,609		857		58	140,562		1,004
Foreign government and agency securities	1	254		—		3	3,601		51		4	3,855		51
Total	75	$	241,430	$	948	39	$	101,481	$	1,184	114	$	342,911	$	2,132



December 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
U.S. government and agency securities	1	$	5,752	$	21	—	$	—	$	—	1	$	5,752	$	21
State and municipal obligations	2	11,674		120		—	—		—		2	11,674		120
Corporate bonds and notes	117	510,807		16,773		6	8,700		518		123	519,507		17,291
RMBS	12	168,415		2,464		—	—		—		12	168,415		2,464
CMBS	58	387,268		8,939		—	—		—		58	387,268		8,939
Other ABS	96	284,998		2,559		14	43,225		1,415		110	328,223		3,974
Foreign government and agency securities	18	18,733		1,095		3	2,278		288		21	21,011		1,383
Equity securities	1	74,930		108		—	—		—		1	74,930		108
Total	305	$	1,462,577	$	32,079	23	$	54,203	$	2,221	328	$	1,516,780	$	34,300

During the first nine months of 2016 and 2015, we did not recognize in earnings any impairment losses related to credit deterioration.

Although we held securities in an unrealized loss position as of September 30, 2016, 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 September 30, 2016, were generally caused by interest rate or credit spread movements since the purchase date. As of September 30, 2016, 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 September 30, 2016, 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 September 30, 2016.

Trading Securities

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



(In thousands)	September 30, 2016		December 31, 2015
Trading securities:
U.S. government and agency securities	$	33,781	$	129,913
State and municipal obligations	273,564		303,946
Corporate bonds and notes	504,335		580,993
RMBS	41,773		72,192
CMBS	91,981		137,678
Other ABS	10,747		16,131
Foreign government and agency securities	13,476		13,268
Equity securities	—		25,016
Total	$	969,657	$	1,279,137

For trading securities held at September 30, 2016 and December 31, 2015, we had net unrealized gains of $53.7 million during the nine months ended September 30, 2016 and net unrealized losses of $25.2 million during the year ended December 31, 2015 associated with those securities.

For the nine months ended September 30, 2016, we did not transfer any securities from the available for sale or trading categories.

Net Gains (Losses) on Investments and Other Financial Instruments

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



	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2016			2015			2016			2015
Net realized gains (losses):
Fixed-maturities available for sale	$	5,685		$	(343	)	$	3,703		$	(402	)
Equity securities available for sale	—			—			(170		)	68,723
Trading securities	1,524			(1		)	(295		)	(12,860		)
Short-term investments	38			(27		)	(1		)	(23		)
Other invested assets	631			2,794			631			2,794
Other gains (losses)	15			—			33			106
Net realized gains (losses) on investments	7,893			2,423			3,901			58,338			(1)
Unrealized gains (losses) on trading securities	(47		)	1,810			62,862			(9,127		)
Total net gains (losses) on investments	7,846			4,233			66,763			49,211
Net gains (losses) on other financial instruments	(135		)	(365		)	2,761			(116		)
Net gains (losses) on investments and other financial instruments	$	7,711		$	3,868		$	69,524		$	49,095

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(1)	During the second quarter of 2015, we sold equity securities in our portfolio and reinvested the proceeds in assets that qualify as PMIERs-compliant Available Assets, recognizing pretax gains of $68.7 million.

Contractual Maturities

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



	September 30, 2016
	Available for Sale
(In thousands)	Amortized Cost		Fair Value
Due in one year or less (1)	$	32,821	$	32,764
Due after one year through five years (1)	267,312		274,014
Due after five years through ten years (1)	701,735		732,458
Due after ten years (1)	387,259		426,795
RMBS (2)	384,867		391,701
CMBS (2)	446,102		462,750
Other ABS (2)	435,695		437,026
Total	$	2,655,791	$	2,757,508

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(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.

Other

At September 30, 2016 and December 31, 2015, Radian Guaranty had $75.8 million and $74.7 million, respectively, in a collateral account pursuant to the Freddie Mac Agreement. This collateral account, which contains investments primarily invested in and classified as part of our trading securities, is pledged to cover Loss Mitigation Activity on the loans subject to the Freddie Mac 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 that agreement. See Note 10 for additional information.