Schedule II Financial Information of Registrant

12 Months Ended

Dec. 31, 2020

Condensed Financial Statements Parent Only [Abstract]

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

Condensed Balance Sheet
Parent Company Only

(In thousands, except per-share amounts)	December 31, 2020		December 31, 2019
Assets
Investments
Fixed-maturities available for sale—at fair value (amortized cost of $836,191 and $429,999)	$	844,393	$	430,442
Equity securities—at fair value (cost of $— and $13,280)	—		13,381
Short-term investments—at fair value	233,569		162,363
Other invested assets—at fair value	3,000		1,500
Total investments	1,080,962		607,686
Cash	20,141		23,534
Investment in subsidiaries, at equity in net assets (Note C)	4,545,508		4,413,065
Accounts and notes receivable	300,656		100,775
Other assets (Note C)	75,305		113,917
Total assets	$	6,022,572	$	5,258,977
Liabilities and Stockholders’ Equity
Liabilities:
Senior notes	$	1,405,674	$	887,110
Net deferred tax liability (Note A)	272,868		253,739
Other liabilities	59,677		69,405
Total liabilities	1,738,219		1,210,254
Common stockholders’ equity
Common stock: par value $0.001 per share; 485,000 shares authorized at December 31, 2020 and 2019; 210,130 and 219,123 shares issued at December 31, 2020 and 2019, respectively; 191,606 and 201,164 shares outstanding at December 31, 2020 and 2019, respectively	210		219
Treasury stock, at cost: 18,524 and 17,959 shares at December 31, 2020 and 2019, respectively	(910,115)		(901,657)
Additional paid-in capital	2,245,897		2,449,884
Retained earnings	2,684,636		2,389,789
Accumulated other comprehensive income (loss)	263,725		110,488
Total common stockholders’ equity	4,284,353		4,048,723
Total liabilities and stockholders’ equity	$	6,022,572	$	5,258,977

Radian Group Inc.
Schedule II—Financial Information of Registrant
Condensed Statements of Operations
Parent Company Only

	Year Ended December 31,
(In thousands)	2020		2019		2018
Revenues:
Net investment income	$	19,459	$	19,751	$	21,294
Net gains (losses) on investments and other financial instruments	5,682		12,863		(470)
Other income	101		218		—
Total revenues	25,242		32,832		20,824
Expenses:
Loss on extinguishment of debt	—		22,738		—
Interest expense	—		—		17,805
Other operating expenses	2,619		—		—
Total expenses (Note B)	2,619		22,738		17,805
Pretax income	22,623		10,094		3,019
Income tax benefit	(3,165)		(19,997)		(3,319)
Equity in net income of affiliates	367,838		642,218		599,673
Net income	393,626		672,309		606,011
Other comprehensive income (loss), net of tax	153,237		171,408		(86,953)
Comprehensive income	$	546,863	$	843,717	$	519,058

Radian Group Inc.
Schedule II—Financial Information of Registrant
Condensed Statements of Cash Flows
Parent Company Only

	Year Ended December 31,
(In thousands)	2020		2019		2018
Cash flows from operating activities:
Net cash provided by (used in) operating activities (1)	$	(13,741)	$	143,664	$	254,698
Cash flows from investing activities:
Proceeds from sales of:
Fixed-maturities available for sale	304,737		296,171		6,779
Trading securities	—		56,787		—
Equity securities	13,401		16,916		—
Proceeds from redemptions of:
Fixed-maturities available for sale	238,161		149,767		12,391
Trading securities	—		114		—
Purchases of:
Fixed-maturities available for sale	(691,874)		(293,284)		(37,552)
Sales, redemptions and (purchases) of :
Short-term investments, net	(53,024)		157,045		(131,164)
Other assets, net	(6,068)		(6,958)		(3,317)
Capital distributions from subsidiaries	19,000		6,000		—
Capital contributions to subsidiaries	(5,050)		(65,879)		(30,338)
Net cash provided by (used in) investing activities	(180,717)		316,679		(183,201)
Cash flows from financing activities:
Dividends paid	(97,458)		(2,061)		(2,140)
Issuance of senior notes, net	515,567		442,439		—
Repayments and repurchases of senior notes	—		(610,763)		—
Issuance of common stock	1,553		2,416		1,385
Repurchases of common shares	(226,305)		(300,201)		(50,053)
Credit facility commitment fees paid	(2,292)		(989)		(1,510)
Net cash provided by (used in) financing activities	191,065		(469,159)		(52,318)
Effect of exchange rate changes on cash and restricted cash	—		(2)		—
Increase (decrease) in cash and restricted cash	(3,393)		(8,818)		19,179
Cash and restricted cash, beginning of period	23,534		32,352		13,173
Cash and restricted cash, end of period	$	20,141	$	23,534	$	32,352

(1)Includes cash distributions received from subsidiaries of $1.7 million, $26.6 million and $55.4 million in 2020, 2019 and 2018, respectively. Excludes non-cash distributions received from subsidiaries of $484.1 million, $362.4 million and $394.6 million in 2020, 2019 and 2018, respectively.

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 $8.7 million of statutory policyholders’ surplus and no RIF exposure as of December 31, 2020.

■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 $73.2 million of aggregate remaining credit exposure as of December 31, 2020.

As of December 31, 2020, Radian Group recorded a net deferred tax liability of $272.9 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 2020, 2019 and 2018.

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)	2020		2019		2018
Allocated operating expenses	$	129,870	$	124,412	$	94,815
Allocated interest expense	68,938		53,692		42,195
Total allocated expenses	$	198,808	$	178,104	$	137,010

Note C

During 2020, certain non-insurance subsidiaries had not generated sufficient cash flow to reimburse the Parent Company for its share of its direct and allocated operating expenses, and therefore the Parent Company effectively contributed a total of $116.8 million to these subsidiaries to reflect the impairment of the intercompany receivables representing unreimbursed direct and allocated costs.

See Note 16 of Notes to Consolidated Financial Statements for additional information related to capital transactions between the Parent Company and its consolidated insurance subsidiaries.