Note 16 - Statutory Information (Note)

9 Months Ended

Sep. 30, 2021

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

Our insurance subsidiaries’ statutory net income for the year-to-date periods ended September 30, 2021 and 2020 and statutory policyholders’ surplus as of September 30, 2021 and December 31, 2020 were as follows.


Statutory net income

	Nine Months Ended September 30,
(In thousands)	2021		2020
Radian Guaranty	$	516,866	$	260,175
Radian Reinsurance	8,765		30,358
Other Mortgage Subsidiaries	777		929
Radian Title Insurance	4,777		1,399

Statutory policyholders’ surplus

(In thousands)	September 30, 2021		December 31, 2020
Radian Guaranty	$	646,923	$	481,484
Radian Reinsurance	328,430		360,704
Other Mortgage Subsidiaries	42,715		41,327
Radian Title Insurance	34,342		28,849

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, 2021, the amount of restricted net assets held by our consolidated insurance subsidiaries (which represents our equity investment in those insurance subsidiaries) totaled $4.6 billion of our consolidated net assets.

In light of Radian Guaranty’s negative unassigned surplus related to operating losses in prior periods and the ongoing need to set aside contingency reserves, which totaled $3.8 billion as of September 30, 2021, we do not anticipate that Radian Guaranty will be permitted under applicable insurance laws to pay ordinary dividends or other distributions to Radian Group for the foreseeable future without the prior approval from the Pennsylvania Insurance Department.

Radian Reinsurance had positive unassigned surplus at December 31, 2020, and as a result, Radian Reinsurance paid an ordinary dividend of $36 million to Radian Group on September 22, 2021.

Under state insurance regulations, Radian Guaranty is required to maintain minimum surplus levels and, in certain states, a maximum ratio of net RIF relative to statutory capital, or Risk-to-capital. There are 16 RBC States that currently impose a Statutory RBC Requirement. The most common Statutory RBC Requirement is that a mortgage insurer’s Risk-to-capital may not exceed 25 to 1. In certain of the RBC States, a mortgage insurer must satisfy a MPP Requirement. Radian Guaranty was in compliance with all applicable Statutory RBC Requirements and MPP Requirements in each of the RBC States as of September 30, 2021. Radian Guaranty’s Risk-to-capital was 11.4:1 and 12.7:1 as of September 30, 2021 and December 31, 2020, respectively. 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. Our other mortgage insurance and title insurance subsidiaries were also in compliance with all statutory and counterparty capital requirements as of September 30, 2021.

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, 2021, Radian Guaranty is an approved mortgage insurer under the PMIERs and is in compliance with the current PMIERs financial requirements. Under the PMIERs there are increased financial requirements for loans in default, including as a result of natural disasters and pandemics. As a result, increases in defaults related to the COVID-19 pandemic have subjected Radian Guaranty to an increase in Minimum Required Assets under the PMIERs, and if these continue or increase, would continue to negatively impact our results of operations and could impact our compliance with the PMIERs. See Note 1 for discussion about the elevated risks and uncertainties associated with the COVID-19 pandemic and Note 16 of Notes to Consolidated Financial Statements in our 2020 Form 10-K for additional information regarding the PMIERs, including the benefit provided by the Disaster Related Capital Charge.

Effective April 1, 2021, the Pennsylvania Insurance Department approved the termination of the 2020 Surplus Note via a conversion to Radian Guaranty’s gross paid-in and contributed surplus account. This conversion had no effect on Radian Guaranty’s total statutory policyholders’ surplus, Risk-to-capital or PMIERs Cushion.

For a description of our compliance with statutory and other regulations for our mortgage insurance and title insurance businesses, including statutory capital requirements and divided restrictions, see Note 16 of Notes to Consolidated Financial Statements in our 2020 Form 10-K.