Note 15 - Statutory Information

9 Months Ended

Sep. 30, 2019

SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Abstract]

State insurance regulations include various capital requirements and dividend restrictions based on our insurance subsidiaries’ statutory financial position and results of operations, as described below. As of September 30, 2019, the amount of restricted net assets held by our consolidated insurance subsidiaries (which represents our equity investment in those insurance subsidiaries) totaled $4.0 billion of our consolidated net assets.

Under state insurance regulations, our mortgage insurance subsidiaries are required to maintain minimum surplus levels. In certain RBC States, mortgage insurers licensed in those states must also satisfy a Statutory RBC Requirement that is a minimum ratio of statutory capital relative to the level of net RIF, or Risk-to-capital. Other RBC States require mortgage

insurers licensed in those states to satisfy a MPP Requirement that is calculated on both risk and surplus levels. Our mortgage insurance subsidiaries were in compliance with the Statutory RBC Requirements or MPP Requirements, to the extent applicable, in each of the RBC States as of September 30, 2019.

In addition, in order to be eligible to insure loans purchased by the GSEs, mortgage insurers such as Radian Guaranty must meet the GSEs’ eligibility requirements, or PMIERs. At September 30, 2019, Radian Guaranty is an approved mortgage insurer under the PMIERs and is in compliance with the current PMIERs financial requirements. See Note 1 of Notes to Consolidated Financial Statements in our 2018 Form 10-K for additional information regarding the PMIERs.

Radian Guaranty’s Risk-to-capital calculation appears in the table below. For purposes of the Risk-to-capital requirements imposed by certain states, statutory capital is defined as the sum of statutory policyholders’ surplus plus statutory contingency reserves.



	September 30, 2019			December 31, 2018
($ in millions)
RIF, net (1)	$	43,484.8		$	40,711.3

Common stock and paid-in capital	$	1,041.0		$	1,416.0
Surplus Note	100.0			100.0
Unassigned earnings (deficit)	(553.5		)	(701.9		)
Statutory policyholders’ surplus	587.5			814.1
Contingency reserve	2,475.9			2,109.9
Statutory capital	$	3,063.4		$	2,924.0

Risk-to-capital	14.2:1			13.9:1

______________________


(1)	Excludes risk ceded through all reinsurance programs (including with affiliates) and RIF on defaulted loans.

Radian Guaranty’s statutory capital increased by $139.4 million in the first nine months of 2019, primarily due to Radian Guaranty’s statutory net income of $525.5 million during this period, partially offset by the effect of an Extraordinary Distribution paid to Radian Group, as described below. The net increase in Radian Guaranty’s Risk-to-capital in the first nine months of 2019 was primarily due to the increase in RIF, partially offset by the increase in overall statutory capital.

The Risk-to-capital ratio for our combined mortgage insurance operations was 12.9 to 1 as of September 30, 2019, compared to 12.8 to 1 as of December 31, 2018.

In April 2019, the Pennsylvania Insurance Department approved a $375 million Extraordinary Distribution from Radian Guaranty to Radian Group, which was paid on April 30, 2019 in the form of cash and marketable securities, resulting in a $375 million decrease in Radian Guaranty’s statutory policyholders’ surplus.

For a description of our statutory compliance with regulations for our mortgage insurance and title services businesses, see Note 19 of Notes to Consolidated Financial Statements in our 2018 Form 10-K.