Schedule II Financial Information of Registrant

12 Months Ended

Dec. 31, 2021

Condensed Financial Information Disclosure [Abstract]

Schedule II—Financial Information of Registrant

Condensed Balance Sheet
Parent Company Only

(In thousands, except per-share amounts)	December 31, 2021		December 31, 2020
Assets
Investments
Fixed-maturities available for sale—at fair value (amortized cost of $485,727 and $836,191)	$	481,659	$	844,393
Short-term investments—at fair value	120,601		233,569
Other invested assets—at fair value	3,511		3,000
Total investments	605,771		1,080,962
Cash	38,846		20,141
Investment in subsidiaries, at equity in net assets (Note C)	5,210,917		4,545,508
Accounts and notes receivable	100,002		300,656
Other assets (Note C)	65,923		75,305
Total assets	$	6,021,459	$	6,022,572
Liabilities and Stockholders’ Equity
Liabilities
Senior notes	$	1,409,473	$	1,405,674
Net deferred tax liability (Note A)	283,585		272,868
Other liabilities	69,605		59,677
Total liabilities	1,762,663		1,738,219
Common stockholders’ equity
Common stock: par value $0.001 per share; 485,000 shares authorized at December 31, 2021 and 2020; 194,408 and 210,130 shares issued at December 31, 2021 and 2020, respectively; 175,421 and 191,606 shares outstanding at December 31, 2021 and 2020, respectively	194		210
Treasury stock, at cost: 18,987 and 18,524 shares at December 31, 2021 and 2020, respectively	(920,798)		(910,115)
Additional paid-in capital	1,878,372		2,245,897
Retained earnings	3,180,935		2,684,636
Accumulated other comprehensive income (loss)	120,093		263,725
Total common stockholders’ equity	4,258,796		4,284,353
Total liabilities and stockholders’ equity	$	6,021,459	$	6,022,572

Schedule II—Financial Information of Registrant
Condensed Statements of Operations
Parent Company Only

	Years Ended December 31,
(In thousands)	2021		2020		2019
Revenues
Net investment income	$	7,540	$	19,459	$	19,751
Net gains on investments and other financial instruments	980		5,682		12,863
Other income	11		101		218
Total revenues	8,531		25,242		32,832
Expenses
Loss on extinguishment of debt	—		—		22,738
Other operating expenses	3,163		2,619		—
Total expenses (Note B)	3,163		2,619		22,738
Pretax income	5,368		22,623		10,094
Income tax provision (benefit)	1,167		(3,165)		(19,997)
Equity in net income of affiliates	596,470		367,838		642,218
Net income	600,671		393,626		672,309
Other comprehensive income (loss), net of tax	(143,632)		153,237		171,408
Comprehensive income	$	457,039	$	546,863	$	843,717

Schedule II—Financial Information of Registrant
Condensed Statements of Cash Flows
Parent Company Only

	Years Ended December 31,
(In thousands)	2021		2020		2019
Cash flows from operating activities
Net cash provided by (used in) operating activities (1)	$	66,317	$	(13,741)	$	143,664
Cash flows from investing activities
Proceeds from sales of:
Fixed-maturities available for sale	195,452		304,737		296,171
Trading securities	—		—		56,787
Equity securities	—		13,401		16,916
Proceeds from redemptions of:
Fixed-maturities available for sale	301,788		238,161		149,767
Trading securities	—		—		114
Purchases of:
Fixed-maturities available for sale	(156,344)		(691,874)		(293,284)
Sales, redemptions and (purchases) of:
Short-term investments, net	113,939		(53,024)		157,045
Other assets, net	(864)		(6,068)		(6,958)
Capital distributions from subsidiaries	44,951		19,000		6,000
Capital contributions to subsidiaries	(43,250)		(5,050)		(65,879)
Net cash provided by (used in) investing activities	455,672		(180,717)		316,679
Cash flows from financing activities
Dividends and dividend equivalents paid	(103,298)		(97,458)		(2,061)
Issuance of common stock	1,382		1,553		2,416
Repurchases of common stock	(399,100)		(226,305)		(300,201)
Issuance of senior notes, net	—		515,567		442,439
Repayments and repurchases of senior notes	—		—		(610,763)
Credit facility commitment fees paid	(3,325)		(2,292)		(989)
Change in secured borrowings	1,057		—		—
Net cash provided by (used in) financing activities	(503,284)		191,065		(469,159)
Effect of exchange rate changes on cash and restricted cash	—		—		(2)
Increase (decrease) in cash and restricted cash	18,705		(3,393)		(8,818)
Cash and restricted cash, beginning of period	20,141		23,534		32,352
Cash and restricted cash, end of period	$	38,846	$	20,141	$	23,534

(1)Includes cash distributions received from subsidiaries of $85.0 million, $1.7 million and $26.6 million in 2021, 2020 and 2019, respectively. Excludes non-cash distributions received from subsidiaries of $92.3 million, $484.1 million and $362.4 million in 2021, 2020 and 2019, respectively.

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 $9.0 million of statutory policyholders’ surplus and no RIF exposure as of December 31, 2021.

■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 $63.3 million of aggregate remaining credit exposure as of December 31, 2021.

As of December 31, 2021, Radian Group recorded a net deferred tax liability of $283.6 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 Internal Revenue Service.

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 Condensed Statements of Operations. Substantially all operating expenses and interest expense have been allocated to the subsidiaries for 2021, 2020 and 2019.

Amounts allocated to the subsidiaries for expenses are based on actual cost, without any mark-up. The Parent Company considers these charges to be 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.

Total allocated expenses
	Years Ended December 31,
(In thousands)	2021		2020		2019
Allocated operating expenses	$	147,386	$	129,870	$	124,412
Allocated interest expense	82,833		68,938		53,692
Total allocated expenses	$	230,219	$	198,808	$	178,104

Note C

During 2021, 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 $48.5 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, including a $500 million return of capital from Radian Guaranty to Radian Group, which was paid on February 11, 2022.