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Fair Value of Financial Instruments
 12 Months Ended
Dec. 31, 2021
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments Fair Value of Financial Instruments
The following tables include a list of assets that are measured at fair value by hierarchy level as of December 31, 2021 and 2020.
Assets carried at fair value by hierarchy level
December 31, 2021
(In thousands)Level ILevel IILevel IIITotal
Investments
Fixed-maturities available for sale
U.S. government and agency securities$192,452 $29,278 $— $221,730 
State and municipal obligations— 177,257 — 177,257 
Corporate bonds and notes— 2,910,231 — 2,910,231 
RMBS— 705,117 — 705,117 
CMBS— 709,203 — 709,203 
CLO— 530,040 — 530,040 
Other ABS— 211,187 — 211,187 
Foreign government and agency securities— 5,296 — 5,296 
Mortgage insurance-linked notes (1)
— 47,017 — 47,017 
Total fixed-maturities available for sale192,452 5,324,626 — 5,517,078 
Trading securities
State and municipal obligations— 94,637 — 94,637 
Corporate bonds and notes— 119,186 — 119,186 
RMBS— 9,438 — 9,438 
CMBS— 33,285 — 33,285 
Total trading securities— 256,546 — 256,546 
Equity securities176,828 7,417 — 184,245 
Short-term investments
U.S. government and agency securities94,665 — — 94,665 
State and municipal obligations— 12,270 — 12,270 
Money market instruments274,535 — — 274,535 
Corporate bonds and notes— 65,191 — 65,191 
CMBS— 3,023 — 3,023 
Other investments (2)
— 101,824 — 101,824 
Total short-term investments369,200 182,308 — 551,508 
Other invested assets (3)
— — 3,000 3,000 
Total investments at fair value (3)
738,480 5,770,897 3,000 6,512,377 
Assets carried at fair value by hierarchy level
December 31, 2021
(In thousands)Level ILevel IILevel IIITotal
Other
Embedded derivatives (4)
— — 4,200 4,200 
Loaned securities (5)
Corporate bonds and notes— 65,994 — 65,994 
Equity securities38,002 — — 38,002 
Total assets at fair value (3)
$776,482 $5,836,891 $7,200 $6,620,573 
(1)Comprises the notes purchased by Radian Group in connection with the Excess-of-Loss Program. See Note 8 for more information about our reinsurance programs.
(2)Comprising short-term certificates of deposit and commercial paper.
(3)Does not include other invested assets of $1.2 million that are primarily invested in limited partnership investments valued using the net asset value as a practical expedient.
(4)Embedded derivatives related to our Excess-of-Loss Program are classified as other assets in our consolidated balance sheets. See Note 8 for more information about our reinsurance programs.
(5)Securities loaned to third-party borrowers under securities lending agreements are classified as other assets in our consolidated balance sheets. See Note 6 for more information.
Assets carried at fair value by hierarchy level
December 31, 2020
(In thousands)Level ILevel IILevel IIITotal
Investments
Fixed-maturities available for sale
U.S. government and agency securities$140,034 $29,189 $— $169,223 
State and municipal obligations— 165,271 — 165,271 
Corporate bonds and notes— 3,047,189 — 3,047,189 
RMBS— 833,939 — 833,939 
CMBS— 681,265 — 681,265 
CLO— 568,558 — 568,558 
Other ABS— 252,457 — 252,457 
Foreign government and agency securities— 5,438 — 5,438 
Total fixed-maturities available for sale140,034 5,583,306 — 5,723,340 
Trading securities
State and municipal obligations— 120,449 — 120,449 
Corporate bonds and notes— 123,142 — 123,142 
RMBS— 13,000 — 13,000 
CMBS— 34,294 — 34,294 
Total trading securities— 290,885 — 290,885 
Equity securities142,761 8,479 — 151,240 
 
Assets carried at fair value by hierarchy level
December 31, 2020
(In thousands)Level ILevel IILevel IIITotal
Short-term investments
State and municipal obligations— 21,819 — 21,819 
Money market instruments268,900 — — 268,900 
Corporate bonds and notes— 30,495 — 30,495 
Other ABS— 219 — 219 
Other investments (1)
— 296,571 — 296,571 
Total short-term investments268,900 349,104 — 618,004 
 
Other invested assets (2)
— — 3,000 3,000 
 
Total investments at fair value (2)
551,695 6,231,774 3,000 6,786,469 
 
Other
Embedded derivatives (3)
— — 5,513 5,513 
Loaned securities (4)
U.S. government and agency securities4,876 — — 4,876 
Corporate bonds and notes— 31,324 — 31,324 
Equity securities21,299 — — 21,299 
Total assets at fair value (2)
$577,870 $6,263,098 $8,513 $6,849,481 
(1)Comprising short-term certificates of deposit and commercial paper.
(2)Does not include other invested assets of $2.0 million that are primarily invested in limited partnership investments valued using the net asset value as a practical expedient.
(3)Embedded derivatives related to our Excess-of-Loss Program are classified as other assets in our consolidated balance sheets. See Note 8 for more information about our reinsurance programs.
(4)Securities loaned to third-party borrowers under securities lending agreements are classified as other assets in our consolidated balance sheets. See Note 6 for more information.
There were no transfers to or from Level III for the years ended December 31, 2021 and 2020. Activity related to Level III assets and liabilities (including realized and unrealized gains and losses, purchases, sales, issuances, settlements and transfers) was immaterial for the years ended December 31, 2021 and 2020.
Valuation Methodologies for Assets Measured at Fair Value
We are responsible for the determination of the value of all investments carried at fair value and the supporting methodologies and assumptions. To assist us in this responsibility, we utilize independent third-party valuation service providers to gather, analyze and interpret market information and estimate fair values based upon relevant methodologies and assumptions for various asset classes and individual securities.
We perform monthly quantitative and qualitative analyses on the prices received from third parties to determine whether the prices are reasonable estimates of fair value. Our analysis includes: (i) a review of the methodology used by third-party pricing services; (ii) a comparison of pricing services’ valuations to other independent sources; (iii) a review of month-to-month price fluctuations; and (iv) a comparison of actual purchase and sale transactions with valuations received from third parties. These processes are designed to ensure that our investment values are accurately recorded, that the data inputs and valuation techniques utilized are appropriate and consistently applied and that the assumptions are reasonable and consistent with the objective of determining fair value.
The following are descriptions of our valuation methodologies for financial assets measured at fair value.
U.S. Government and Agency Securities. The fair value of U.S. government and agency securities is estimated using observed market transactions, including broker-dealer quotes and actual trade activity as a basis for valuation. U.S. government and agency securities are categorized in either Level I or Level II of the fair value hierarchy.
State and Municipal Obligations. The fair value of state and municipal obligations is estimated using recent transaction activity, including market observations. Valuation models are used, which incorporate bond structure, yield curve, credit spreads and other factors. These securities are generally categorized in Level II of the fair value hierarchy or in Level III when market-based transaction activity is unavailable.
Money Market Instruments. The fair value of money market instruments is based on daily prices, which are published and available to all potential investors and market participants. As such, these securities are categorized in Level I of the fair value hierarchy.
Corporate Bonds and Notes. The fair value of corporate bonds and notes is estimated using recent transaction activity, including market observations. Spread models are used that incorporate issuer and structure characteristics, such as credit risk and early redemption features, where applicable. These securities are generally categorized in Level II of the fair value hierarchy or in Level III when market-based transaction activity is unavailable.
Asset-backed and Mortgage-backed Securities. The fair value of these instruments, which include RMBS, CMBS, CLO, Other ABS and mortgage insurance-linked notes, is estimated based on prices of comparable securities and spreads and observable prepayment speeds. These securities are generally categorized in Level II of the fair value hierarchy or in Level III when market-based transaction activity is unavailable. The fair value of any Level III securities is generally estimated by discounting estimated future cash flows.
Foreign Government and Agency Securities. The fair value of foreign government and agency securities is estimated using observed market yields used to create a maturity curve and observed credit spreads from market makers and broker-dealers. These securities are categorized in Level II of the fair value hierarchy.
Equity Securities. The fair value of these securities is generally estimated using observable market data in active markets or bid prices from market makers and broker-dealers. Generally, these securities are categorized in Level I or II of the fair value hierarchy, as observable market data are readily available. From time to time, certain equity securities may be categorized in Level III of the fair value hierarchy due to a lack of market-based transaction data or the use of model-based valuations.
Other Investments. These securities primarily consist of commercial paper and short-term certificates of deposit, which are categorized in Level II of the fair value hierarchy. The fair value of these investments is estimated using market data for comparable instruments of similar maturity and average yield.
Other Invested Assets. These assets consist of interests in private debt or equity investments. The estimated fair value of these other invested assets is primarily based on the private company’s performance, as well as the terms of the instrument and general market benchmarks. As such, these investments are categorized in Level III of the fair value hierarchy.
Embedded Derivatives. The estimated fair value related to our embedded derivatives generally reflects the present value impact of the variation in investment income on the assets held by the reinsurance trusts and the contractual reference rate used to calculate the reinsurance premiums we will pay. These assets are categorized in Level III of the fair value hierarchy.
Other Fair Value Disclosure
The carrying value and estimated fair value of other selected liabilities not carried at fair value in our consolidated balance sheets were as follows as of the dates indicated.
Financial liabilities not carried at fair value
December 31, 2021December 31, 2020
(In thousands)Carrying
Amount		Estimated
Fair Value		Carrying
Amount		Estimated
Fair Value
Senior notes$1,409,473 $1,534,378 $1,405,674 $1,563,503 
FHLB advances150,983 152,117 176,483 179,578 
The fair value of our senior notes is estimated based on quoted market prices. The fair value of our FHLB advances is estimated based on expected cash flows for similar borrowings. These liabilities are categorized in Level II of the fair value hierarchy. See Note 12 for further information about these borrowings.