Schedule II Financial Information of Registrant

12 Months Ended

Dec. 31, 2019

Condensed Financial Statements Parent Only [Abstract]

Condensed Financial Information of Parent Company Only Disclosure [Text Block]

Condensed Balance Sheet

Parent Company Only

	December 31,
(In thousands, except per-share amounts)	2019			2018
Assets
Investments
Fixed-maturities available for sale—at fair value (amortized cost of $429,999 and $320,746)	$	430,442		$	321,401
Trading securities—at fair value (amortized cost of $0 and $55,948)	—			56,011
Equity securities—at fair value (cost of $13,280 and $29,387)	13,381			29,375
Short-term investments—at fair value	162,363			238,185
Other invested assets—at fair value	1,500			—
Total investments	607,686			644,972
Cash	23,534			32,352
Investment in subsidiaries, at equity in net assets (Note C)	4,413,065			3,927,268
Accounts and notes receivable	100,775			101,072
Federal income taxes recoverable, net—current	—			49,381
Other assets (Note C)	113,917			58,993
Total assets	$	5,258,977		$	4,814,038
Liabilities and Stockholders’ Equity
Senior notes	$	887,110		$	1,030,348
Federal income taxes—deferred (Note A)	253,739			243,341
Other liabilities	69,405			51,634
Total liabilities	1,210,254			1,325,323
Common stockholders’ equity
Common stock: par value $.001 per share; 485,000 shares authorized at December 31, 2019 and 2018; 219,123 and 231,132 shares issued at December 31, 2019 and 2018, respectively; 201,164 and 213,473 shares outstanding at December 31, 2019 and 2018, respectively	219			231
Treasury stock, at cost: 17,959 and 17,660 shares at December 31, 2019 and 2018, respectively	(901,657		)	(894,870		)
Additional paid-in capital	2,449,884			2,724,733
Retained earnings	2,389,789			1,719,541
Accumulated other comprehensive income (loss)	110,488			(60,920		)
Total common stockholders’ equity	4,048,723			3,488,715
Total liabilities and stockholders’ equity	$	5,258,977		$	4,814,038

See Supplemental Notes.

Radian Group Inc.

Schedule II—Financial Information of Registrant

Condensed Statements of Operations

Parent Company Only

	Year Ended December 31,
(In thousands)	2019			2018			2017
Revenues:
Net investment income	$	19,751		$	21,294		$	22,528
Net gains (losses) on investments and other financial instruments	12,863			(470		)	(328		)
Other income	218			—			80
Total revenues	32,832			20,824			22,280
Expenses:
Loss on extinguishment of debt	22,738			—			51,469
Interest expense	—			17,805			18,033
Total expenses (Note B)	22,738			17,805			69,502
Pretax income (loss)	10,094			3,019			(47,222		)
Income tax benefit	(19,997		)	(3,319		)	(141,437		)
Equity in net income of affiliates	642,218			599,673			26,873
Net income	672,309			606,011			121,088
Other comprehensive income (loss), net of tax	171,408			(86,953		)	35,480
Comprehensive income	$	843,717		$	519,058		$	156,568

See Supplemental Notes.

Radian Group Inc.

Schedule II—Financial Information of Registrant

Condensed Statements of Cash Flows

Parent Company Only

	Year Ended December 31,
(In thousands)	2019			2018			2017
Net cash provided by (used in) operating activities (1)	$	143,664		$	254,698		$	(23,654	)
Cash flows from investing activities:
Proceeds from sales of:
Fixed-maturities available for sale	296,171			6,779			58,007
Trading securities	56,787			—			—
Equity securities	16,916			—			—
Proceeds from redemptions of:
Fixed-maturities available for sale	149,767			12,391			60,414
Trading securities	114			—			—
Purchases of:
Fixed-maturities available for sale	(293,284		)	(37,552		)	(134,456		)
Sales, redemptions and (purchases) of :
Short-term investments, net	157,045			(131,164		)	210,529
Other assets, net	(6,958		)	(3,317		)	(1,107		)
Capital distributions from subsidiaries	6,000			—			924
Capital contributions to subsidiaries	(65,879		)	(30,338		)	(21,643		)
(Issuance) repayment of note receivable from affiliate	—			—			(44		)
Net cash provided by (used in) investing activities	316,679			(183,201		)	172,624
Cash flows from financing activities:
Dividends paid	(2,061		)	(2,140		)	(2,154		)
Issuance of senior notes, net	442,439			—			442,163
Repayments and repurchases of senior notes	(610,763		)	—			(593,527		)
Proceeds from termination of capped calls	—			—			4,208
Issuance of common stock	2,416			1,385			7,132
Repurchases of common shares	(300,201		)	(50,053		)	(6		)
Credit facility commitment fees paid	(989		)	(1,510		)	(1,993		)
Net cash provided by (used in) financing activities	(469,159		)	(52,318		)	(144,177		)
Effect of exchange rate changes on cash and restricted cash	(2		)	—			—
Increase (decrease) in cash and restricted cash	(8,818		)	19,179			4,793
Cash and restricted cash, beginning of period	32,352			13,173			8,380
Cash and restricted cash, end of period	$	23,534		$	32,352		$	13,173

______________________

(1) Includes cash distributions received from subsidiaries of $26.6 million, $55.4 million and $24.3 million in 2019, 2018 and 2017, respectively. Excludes non-cash distributions received from subsidiaries of $362.4 million, $394.6 million and $197.3 million in 2019, 2018 and 2017, respectively.

See Supplemental Notes.

Radian Group Inc.

Schedule II—Financial Information of Registrant

Parent Company Only

Supplemental Notes

Note A

The Radian Group Inc. (the “Parent Company”, “we” or “our”) financial statements represent the stand-alone financial statements of the Parent Company. These financial statements have been prepared on the same basis and using the same accounting policies as described in the consolidated financial statements included herein, except that the Parent Company uses the equity-method of accounting for its majority-owned subsidiaries. These financial statements should be read in conjunction with our consolidated financial statements and the accompanying notes thereto.

See Notes 12 and 14 of Notes to Consolidated Financial Statements for additional information on the Parent Company’s debt obligations and capital stock.

The Parent Company has entered into the following intercompany guarantees with certain of our subsidiaries:

• Radian Group and Radian Mortgage Assurance are parties to a guaranty agreement, which provides that Radian Group will make sufficient funds available to Radian Mortgage Assurance to ensure that Radian Mortgage Assurance has a minimum of $5.0 million of statutory policyholders’ surplus every calendar quarter. Radian Mortgage Assurance had $8.8 million of statutory policyholders’ surplus and no RIF exposure as of December 31, 2019.

• To allow our mortgage insurance customers to comply with applicable securities regulations for issuers of ABS (including mortgage-backed securities), Radian Group has guaranteed two structured transactions for Radian Guaranty with $79.3 million of aggregate remaining credit exposure as of December 31, 2019.

• Radian Group and Radian Guaranty Reinsurance are parties to an Assumption and Indemnification Agreement with regard to obligations under our tax-sharing arrangements. Pursuant to this agreement, Radian Group is required to assume certain obligations that arise as a result of our tax-sharing arrangement.

As of December 31, 2019, Radian Group recorded a net deferred tax liability of $253.7 million. This balance includes liabilities related to certain of our subsidiaries which have incurred federal NOLs that could not be carried-back and utilized on a separate company tax return basis. As a result, we are not currently obligated under our tax-sharing agreement to reimburse these subsidiaries for their separate company federal NOL carryforward. However, if in a future period, one of these subsidiaries utilizes its share of federal NOL carryforwards on a separate entity basis, then Radian Group may be obligated to fund such subsidiary’s share of our consolidated tax liability to the IRS.

Note B

The Parent Company provides certain services to its subsidiaries. The Parent Company allocates to its subsidiaries expenses it incurs in the capacity of supporting those subsidiaries, including operating expenses, which are allocated based on the forecasted annual percentage of total revenue, which approximates the estimated percentage of time spent on certain subsidiaries, and interest expense, which is allocated based on relative capital. These expenses are presented net of allocations in the Statements of Operations. Substantially all operating expenses and interest expense, have been allocated to the subsidiaries for 2019, 2018 and 2017.

Amounts allocated to the subsidiaries for expenses are based on actual cost, without any mark-up. The Parent Company considers these charges fair and reasonable. The subsidiaries generally reimburse the Parent Company for these costs in a timely manner, which has the impact of temporarily improving the cash flows of the Parent Company, if accrued expenses are reimbursed prior to actual payment.

The following table shows the components of our Parent Company expenses that have been allocated to our subsidiaries for the periods indicated:

	Year Ended December 31,
(in thousands)	2019		2018		2017
Allocated operating expenses	$	124,412	$	94,815	$	72,764
Allocated interest expense	53,692		42,195		44,686
Total allocated expenses	$	178,104	$	137,010	$	117,450

Note C

During 2018, the Services segment had not generated sufficient cash flow to reimburse the Parent Company for its share of its direct and allocated operating expenses and interest expense, and therefore the Parent Company effectively contributed $66.1 million to Clayton Group Holdings Inc. to reflect the impairment of the interest receivable on the Clayton Intercompany Note of $17.8 million and the outstanding intercompany receivable balance of $48.3 million representing unreimbursed direct and allocated costs.

See Note 18 of Notes to Consolidated Financial Statements for additional information related to capital transactions between the Parent Company and its consolidated insurance subsidiaries.