
Reinsurance impacts on net premiums written and earned

		Net Premiums Written					Net Premiums Earned
	Three Months Ended March 31,					Three Months Ended March 31,
(In thousands)		2022		2021			2022		2021
Direct
Mortgage insurance		$	241,218	$	253,314		$	258,296	$	295,416
Title insurance		9,162		7,305			9,162		7,305
Total direct		250,380		260,619			267,458		302,721
Assumed (1)
Mortgage insurance		1,332		2,298			1,331		2,298


Ceded (2)
Mortgage insurance		5,810		(8,737)			(14,453)		(33,049)
Title insurance		(146)		(98)			(146)		(98)
Total ceded		5,664		(8,835)			(14,599)		(33,147)
Total net premiums		$	257,376	$	254,082		$	254,190	$	271,872

(1)Ceding commissions earned are primarily related to mortgage insurance and are included as an offset to expenses primarily in other operating expenses on our condensed consolidated statements of operations. Deferred ceding commissions of $34.6 million and $38.6 million are included in other liabilities on our condensed consolidated balance sheets at March 31, 2022 and December 31, 2021, respectively.

Radian Guaranty entered into each of the 2016 Single Premium QSR Agreement, 2018 Single Premium QSR Agreement and 2020 Single Premium QSR Agreement with panels of third-party reinsurers to cede a contractual quota share percent of our Single Premium NIW as of the effective date of each agreement (as set forth in the table below), subject to certain conditions. Radian Guaranty receives a ceding commission for ceded premiums written pursuant to these transactions. Radian Guaranty also receives a profit commission annually, provided that the loss ratio on the loans covered under the agreement generally remains below the applicable prescribed thresholds. Losses on the ceded risk up to these thresholds reduce Radian Guaranty’s profit commission on a dollar-for-dollar basis.

Each of the agreements is subject to a scheduled termination date as set forth in the table below; however, Radian Guaranty has the option, based on certain conditions and subject to a termination fee, to terminate any of the agreements at the end of any calendar quarter on or after the applicable optional termination date. If Radian Guaranty exercises this option in the future, it would result in Radian Guaranty reassuming the related RIF in exchange for a net payment to the reinsurer calculated in accordance with the terms of the applicable agreement. Radian Guaranty also may terminate any of the agreements prior to the applicable scheduled termination date under certain circumstances, including if one or both of the GSEs no longer grant full PMIERs capital relief for the reinsurance.

Single Premium QSR Program

2020 Single Premium QSR Agreement

2018 Single Premium QSR Agreement

2016 Single Premium QSR Agreement

NIW policy dates

Jan 1, 2020-Dec 31, 2021

Jan 1, 2018-Dec 31, 2019

Jan 1, 2012-Dec 31, 2017

Effective date

January 1, 2020

January 1, 2018

January 1, 2016

Scheduled termination date

December 31, 2031

December 31, 2029

December 31, 2027

Optional termination date

January 1, 2024

January 1, 2022

January 1, 2020

Quota share %

65%

20% - 65% (1)

Ceding commission %

25%

Profit commission %

Up to 56%

Up to 55%

(In millions)

As of March 31, 2022

RIF ceded

2,137

1,021

1,698

(In millions)

As of December 31, 2021

RIF ceded

2,198

1,117

1,913

(1)Effective December 31, 2017, we amended the 2016 Single Premium QSR Agreement to increase the amount of ceded risk on performing loans under the agreement from 35% to 65% for the 2015 through 2017 vintages. Loans included in the 2012 through 2014 vintages, and any other loans subject to the agreement that were delinquent at the time of the amendment, were unaffected by the change and therefore the amount of ceded risk for those loans continues to range from 20% to 35%.

Radian Guaranty has entered into six fully collateralized reinsurance arrangements with the Eagle Re Issuers. For the respective coverage periods, Radian Guaranty retains the first-loss layer of aggregate losses, as well as any losses in excess of the outstanding reinsurance coverage amounts. The Eagle Re Issuers provide second layer coverage up to the outstanding coverage amounts. For each of these six reinsurance arrangements, the Eagle Re Issuers financed their coverage by issuing mortgage insurance-linked notes to eligible capital markets investors in unregistered private offerings. The aggregate excess-of-loss reinsurance coverage for these arrangements decreases over the maturity period of the mortgage insurance-linked notes (either a 10-year or 12.5-year period depending on the transaction) as the principal balances of the underlying covered mortgages decrease and as any claims are paid by the applicable Eagle Re Issuer or the mortgage insurance is canceled. Radian Guaranty has rights to terminate the reinsurance agreements upon the occurrence of certain events.

Under each of the reinsurance agreements, the outstanding reinsurance coverage amount will begin amortizing after an initial period in which a target level of credit enhancement is obtained and will stop amortizing if certain thresholds, or triggers, are reached, including a delinquency trigger event based on an elevated level of delinquencies as defined in the related insurance-linked notes transaction agreements. With the exception of insurance-linked notes issued by Eagle Re 2020-2 Ltd., Eagle Re 2021-1 Ltd. and Eagle Re 2021-2 Ltd., the insurance-linked notes issued by the Eagle Re Issuers in connection with our Excess-of-Loss Program are currently subject to a delinquency trigger event, which was first reported to the insurance-linked note investors on June 25, 2020. For the insurance-linked notes that are subject to a delinquency trigger event, both the amortization of the outstanding reinsurance coverage amount pursuant to our reinsurance arrangements with the Eagle Re Issuers and the amortization of the principal amount of the related insurance-linked notes issued by the Eagle Re Issuers have been suspended and will continue to be suspended during the pendency of the trigger event.


Excess-of-Loss Program

(In millions)	Eagle Re 2021-2 Ltd.		Eagle Re 2021-1 Ltd. (1)		Eagle Re 2020-2 Ltd. (2)		Eagle Re 2020-1 Ltd.		Eagle Re 2019-1 Ltd.		Eagle Re 2018-1 Ltd.
Issued	November 2021		April 2021		October 2020		February 2020		April 2019		November 2018
NIW policy dates	Jan 1, 2021- Jul 31, 2021		Aug 1, 2020- Dec 31, 2020		Oct 1, 2019- Jul 31, 2020		Jan 1, 2019- Sep 30, 2019		Jan 1, 2018- Dec 31, 2018		Jan 1, 2017- Dec 31, 2017
Initial RIF	$	10,758	$	11,061	$	13,011	$	9,866	$	10,705	$	9,109
Initial coverage	484		498		390		488		562		434
Initial first layer retention	242		221		423		202		268		205

(In millions)	As of March 31, 2022
RIF	$	10,060	$	9,056	$	7,067	$	2,906	$	2,173	$	1,894
Remaining coverage	484		465		103		488		385		276
First layer retention	242		221		423		202		264		201

(In millions)	As of December 31, 2021
RIF	$	10,379	$	9,496	$	7,623	$	3,241	$	2,429	$	2,117
Remaining coverage	484		498		144		488		385		276
First layer retention	242		221		423		202		264		201

(1)Radian Group purchased $45.4 million original principal amount of these mortgage insurance-linked notes, which are included in fixed-maturities available for sale on our condensed consolidated balance sheet at March 31, 2022. See Notes 5 and 6 for additional information.

(2)In March 2022, Radian Group purchased $17.5 million original principal amount of these mortgage insurance-linked notes, of which $15.0 million principal amount is remaining and included in fixed-maturities available for sale on our condensed consolidated balance sheet at March 31, 2022. See Notes 5 and 6 for additional information.

The Eagle Re Issuers are not subsidiaries or affiliates of Radian Guaranty. Based on the accounting guidance that addresses VIEs, we have not consolidated any of the assets and liabilities of the Eagle Re Issuers in our financial statements, because Radian does not have: (i) the power to direct the activities that most significantly affect the Eagle Re Issuers’ economic performances or (ii) the obligation to absorb losses or the right to receive benefits from the Eagle Re Issuers that potentially could be significant to the Eagle Re Issuers. See Note 2 of Notes to Consolidated Financial Statements in our 2021 Form 10-K for more information on our accounting treatment of VIEs.

The reinsurance premium due to the Eagle Re Issuers is calculated by multiplying the outstanding reinsurance coverage amount at the beginning of a period by a coupon rate, which is the sum of one-month LIBOR (or an acceptable alternative to LIBOR) or SOFR, as applicable, plus a contractual risk margin, and then subtracting actual investment income collected on the assets in the reinsurance trust during the preceding month. As a result, the premiums we pay will vary based on: (i) the spread between LIBOR (or an acceptable alternative to LIBOR) or SOFR, as provided in each applicable reinsurance agreement, and the rates on the investments held by the reinsurance trust and (ii) the outstanding amount of reinsurance coverage.

As the reinsurance premium will vary based on changes in these rates, we concluded that the reinsurance agreements contain embedded derivatives, which we have accounted for separately as freestanding derivatives and recorded in other assets or other liabilities on our condensed consolidated balance sheets. Changes in the fair value of these embedded derivatives are recorded in net gains (losses) on investments and other financial instruments in our condensed consolidated statements of operations. See Note 5 herein and Note 5 of Notes to Consolidated Financial Statements in our 2021 Form 10-K for more information on our fair value measurements of financial instruments, including our embedded derivatives.

In the event an Eagle Re Issuer is unable to meet its future obligations to us, if any, our insurance subsidiaries would be liable to make claims payments to our policyholders. In the event that all of the assets in the reinsurance trust (consisting of U.S. government money market funds, cash or U.S. Treasury securities) become worthless and the Eagle Re Issuer is unable to make its payments to us, our maximum potential loss would be the amount of mortgage insurance claim payments for losses on the insured policies, net of the aggregate reinsurance payments already received, up to the full aggregate excess-of-loss reinsurance coverage amount. In the same scenario, the related embedded derivative would no longer have value.


Total VIE assets and liabilities of Eagle Re Issuers (1)

(In thousands)	March 31, 2022		December 31, 2021
Eagle Re 2021-2 Ltd.	$	484,122	$	484,122
Eagle Re 2021-1 Ltd.	464,469		497,735
Eagle Re 2020-2 Ltd.	102,623		143,986
Eagle Re 2020-1 Ltd.	488,385		488,385
Eagle Re 2019-1 Ltd.	384,602		384,602
Eagle Re 2018-1 Ltd.	275,718		275,718
Total	$	2,199,919	$	2,274,548

(1)Assets held by the Eagle Re Issuers are required to be invested in U.S. government money market funds, cash or U.S. Treasury securities. Liabilities of the Eagle Re Issuers consist of their mortgage insurance-linked notes, as described above. Assets and liabilities are equal to each other for each of the Eagle Re Issuers.

Although we use reinsurance as one of our risk management tools, reinsurance does not relieve us of our obligations to our policyholders. In the event the reinsurers are unable to meet their obligations to us, our insurance subsidiaries would be liable for any defaulted amounts. However, consistent with the PMIERs reinsurer counterparty collateral requirements, Radian Guaranty’s reinsurers have established trusts to help secure our potential cash recoveries. In addition to the total VIE assets of the Eagle Re Issuers discussed above, the amount held in reinsurance trusts was $134.3 million as of March 31, 2022, compared to $167.9 million as of December 31, 2021. In addition, for the Single Premium QSR Program, Radian Guaranty holds amounts related to ceded premiums written to collateralize the reinsurers’ obligations, which is reported in reinsurance funds withheld on our condensed consolidated balance sheets. Any loss recoveries and profit commissions paid to Radian Guaranty related to the Single Premium QSR Program are expected to be realized from this account.