Schedule II - Financial Information of Registrant

12 Months Ended

Dec. 31, 2022

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, 2022		December 31, 2021
Assets
Investments
Fixed-maturities available for sale—at fair value (amortized cost of $747,309 and $485,727)	$	675,948	$	481,659
Equity securities—at fair value (cost of $140,733)	140,804		—
Other invested assets—at fair value	3,958		3,511
Short-term investments—at fair value (includes $61,328 and $1,058 of reinvested cash collateral held under securities lending agreements)	108,232		120,601
Total investments	928,942		605,771
Cash	1,872		38,846
Investment in subsidiaries, at equity in net assets (Note C)	4,576,644		5,210,917
Accounts and notes receivable (Note C)	657		100,002
Other assets (Note C)	157,370		65,923
Total assets	$	5,665,485	$	6,021,459
Liabilities and stockholders’ equity
Liabilities
Senior notes	$	1,413,504	$	1,409,473
Net deferred tax liability (Note A)	196,829		283,585
Other liabilities (Note C)	135,825		69,605
Total liabilities	1,746,158		1,762,663
Common stockholders’ equity
Common stock ($0.001 par value; 485,000 shares authorized; 2022: 176,509 and 157,056 shares issued and outstanding, respectively; 2021: 194,408 and 175,421 shares issued and outstanding, respectively)	176		194
Treasury stock, at cost (2022: 19,453 shares; 2021: 18,987 shares)	(930,643)		(920,798)
Additional paid-in capital	1,519,641		1,878,372
Retained earnings	3,786,952		3,180,935
Accumulated other comprehensive income (loss)	(456,799)		120,093
Total common stockholders’ equity	3,919,327		4,258,796
Total liabilities and stockholders’ equity	$	5,665,485	$	6,021,459

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

	Years Ended December 31,
(In thousands)	2022		2021		2020
Revenues
Net investment income	$	20,584	$	7,540	$	19,459
Net gains (losses) on investments and other financial instruments	(4,322)		980		5,682
Other income	78		11		101
Total revenues	16,340		8,531		25,242
Expenses
Other operating expenses	2,043		3,163		2,619
Total expenses (Note B)	2,043		3,163		2,619
Pretax income	14,297		5,368		22,623
Income tax provision (benefit)	8,148		1,167		(3,165)
Equity in net income of affiliates	736,785		596,470		367,838
Net income	742,934		600,671		393,626
Other comprehensive income (loss), net of tax	(576,892)		(143,632)		153,237
Comprehensive income	$	166,042	$	457,039	$	546,863

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

	Years Ended December 31,
(In thousands)	2022		2021		2020
Cash flows from operating activities
Net cash provided by (used in) operating activities (1)	$	(71)	$	66,317	$	(13,741)
Cash flows from investing activities
Proceeds from sales of:
Fixed-maturities available for sale	56,934		195,452		304,737
Trading securities	8,868		—		—
Equity securities	—		—		13,401
Proceeds from redemptions of:
Fixed-maturities available for sale	194,859		301,788		238,161
Purchases of:
Fixed-maturities available for sale	(29,039)		(156,344)		(691,874)
Equity securities	(2,500)		—		—
Sales, redemptions and (purchases) of:
Short-term investments, net	188,149		113,939		(53,024)
Other assets, net	(3,851)		(864)		(6,068)
Capital distributions from subsidiaries	32,512		44,951		19,000
Capital contributions to subsidiaries	(8,000)		(43,250)		(5,050)
Net cash provided by (used in) investing activities	437,932		455,672		(180,717)
Cash flows from financing activities
Dividends and dividend equivalents paid	(135,437)		(103,298)		(97,458)
Issuance of common stock	1,341		1,382		1,553
Repurchases of common stock	(400,195)		(399,100)		(226,305)
Issuance of senior notes, net	—		—		515,567
Credit facility commitment fees paid	(814)		(3,325)		(2,292)
Change in secured borrowings, net (with terms three months or less)	60,270		1,057		—
Net cash provided by (used in) financing activities	(474,835)		(503,284)		191,065
Increase (decrease) in cash and restricted cash	(36,974)		18,705		(3,393)
Cash and restricted cash, beginning of period	38,846		20,141		23,534
Cash and restricted cash, end of period	$	1,872	$	38,846	$	20,141

(1)Includes cash distributions received from subsidiaries of $49.8 million, $85.0 million and $1.7 million in 2022, 2021 and 2020, respectively. Excludes non-cash distributions received from subsidiaries of $888.0 million, $92.3 million and $484.1 million in 2022, 2021 and 2020, respectively.

Schedule II—Financial Information of Registrant
Supplemental Notes

Parent Company Only

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 guarantees on behalf of our subsidiaries:

■In 2022, Radian Group entered into the Parent Guarantees to support its mortgage conduit business. See Note 12 of Notes to Consolidated Financial Statements for additional information.

■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 $58.4 million of aggregate remaining credit exposure as of December 31, 2022.

■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 $8.8 million of statutory policyholders’ surplus and no RIF exposure as of December 31, 2022.

As of December 31, 2022, Radian Group recorded a net deferred tax liability of $196.8 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 2022, 2021 and 2020.

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)	2022		2021		2020
Allocated operating expenses	$	163,000	$	147,386	$	129,870
Allocated interest expense	82,568		82,833		68,938
Total allocated expenses	$	245,568	$	230,219	$	198,808

Note C

During 2022 and 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 $82.0 million and $48.5 million, respectively, 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 $882 million paid during 2022 from Radian Guaranty to Radian Group.

During 2022, the Parent Company’s other assets and other liabilities increased by $66.5 million and $60.3 million, respectively, related to its participation in a securities lending program. See Note 6 of Notes to Consolidated Financial Statements for additional information related to our loaned securities.