Note 12 - Other Liabilities (Notes)

3 Months Ended

Mar. 31, 2019

Other Liabilities Disclosure [Text Block]

Other Liabilities

The following table shows the components of other liabilities as of the dates indicated:



(In thousands)	March 31, 2019		December 31, 2018
FHLB advances	$	108,532	$	82,532
Deferred ceding commission	88,110		91,400
Lease liability	70,927		—
Payable for securities (1)	35,981		7,949
Current federal income taxes	25,245		—
Accrued compensation	19,112		61,452
Amount payable on the return of cash collateral under securities lending agreements (2)	6,233		11,699
Other	65,330		78,627
Total other liabilities	$	419,470	$	333,659

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(1)	Represents the payable for purchases of securities that have not yet settled as of the balance sheet date.


(2)	Amounts payable on the return of cash collateral under securities lending agreements are classified as other liabilities in our condensed consolidated balance sheets. See Note 5 for additional information.

FHLB Advances

As of March 31, 2019, Radian Guaranty and Radian Reinsurance had $108.5 million of fixed-rate advances outstanding with a weighted average interest rate of 2.77%. Interest on the FHLB advances is payable quarterly, or at maturity if the term of the advance is less than 90 days. As of March 31, 2019, $86.5 million of the FHLB advances mature in 2019, $3.0 million mature in 2020, $8.0 million mature in 2021, $9.0 million mature in 2023, and $2.0 million mature in 2024 and thereafter. Principal is due at maturity. For obligations with maturities greater than or equal to 90 days, we may prepay the debt at any time, subject to a prepayment fee calculation. See Note 13 of Notes to Consolidated Financial Statements in our 2018 Form 10-K for additional information about our FHLB advances.

Lease Liability

Our lease liability represents the present value of future lease payments over the lease term. Our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate, on a collateralized basis, to discount the lease payments based on information available at lease commencement. Our leases expire periodically through August 2032, and contain provisions for scheduled periodic rent increases. We estimate the incremental borrowing rate based on the yields of several Radian Group corporate bonds, as adjusted to reflect a collateralized borrowing rate, which mature periodically through 2024. While the majority of our lease population expires within one year of one of the corporate bonds,

our more significant leases expire more than one year beyond 2024. For those leases, we adjust the corporate bond rate for both U.S. Treasury rate yields and a corporate spread adjustment determined from recent market data, resulting in discount rates ranging from 4.22% to 7.08%.

The following tables provide additional information related to our leases, including: (i) the components of our total lease cost; (ii) the cash flows arising from our lease transactions; (iii) supplemental balance sheet information; (iv) the weighted-average remaining lease term; (v) the weighted-average discount rate used for our leases; and (vi) the remaining maturities of our lease liabilities, as of and for the periods indicated:



($ in thousands)	Three Months Ended March 31, 2019
Lease cost
Operating lease cost	$	2,319
Short-term lease cost	23
Total lease cost	$	2,342

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(2,637	)



($ in thousands)	March 31, 2019
Operating leases:
Operating lease right-of-use assets (1)	$	47,150
Operating lease liabilities (2)	70,927

Weighted-average remaining lease term - operating leases (in years)	10.4 years

Weighted-average discount rate - operating leases	6.75		%

Remaining maturities of lease liabilities for the remainder of 2019 and thereafter is as follows:
2019	$	7,873
2020	10,428
2021	9,964
2022	10,136
2023	10,275
2024 and thereafter	56,542
Total lease payments	105,218
Less: Imputed interest	(34,291		)
Present value of lease liabilities (2)	$	70,927

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(1)	Classified in other assets in our condensed consolidated balance sheets. See Note 8.


(2)	Classified in other liabilities in our condensed consolidated balance sheets.

Pursuant to the previous lease accounting standard, rent expense for the three months ended March 31, 2018 was $1.2 million. Our commitment for non-cancelable leases in future years as of December 31, 2018 was as follows (in thousands):



2019	$	11,310
2020	10,847
2021	10,165
2022	10,100
2023	10,251
2024 and thereafter	56,317
Total	$	108,990

At December 31, 2018, there were no future minimum receipts expected from sublease rental payments.

Revolving Credit Facility

On October 16, 2017, Radian Group entered into a three-year, $225 million unsecured revolving credit facility with a syndicate of bank lenders. Terms of the credit facility include an accordion feature that allows Radian Group, at its option, to increase the total borrowing capacity during the term of the agreement, subject to our obtaining the necessary increased commitments from lenders (which may include then existing or other lenders), up to a total of $300 million. Effective October 26, 2018, Radian Group exercised its rights under the accordion feature to add another global bank to the existing syndicate of bank lenders and to increase the amount of total commitments under the credit facility by $42.5 million, bringing the aggregate unsecured revolving credit facility to $267.5 million.

Subject to certain limitations, borrowings under the credit facility may be used for working capital and general corporate purposes, including capital contributions to Radian Group’s insurance and reinsurance subsidiaries as well as growth initiatives. The credit facility contains customary representations, warranties, covenants, terms and conditions. Our ability to borrow under the credit facility is conditioned on the satisfaction of certain financial and other covenants, including covenants related to minimum net worth and statutory surplus, a maximum debt-to-capitalization level, limits on certain types of indebtedness and liens, minimum liquidity levels and Radian Guaranty’s eligibility as a private mortgage insurer with the GSEs. See Note 13 of Notes to Consolidated Financial Statements in our 2018 Form 10-K. At March 31, 2019, Radian Group was in compliance with all the covenants and there were no amounts outstanding under this revolving credit facility.