XML 36 R21.htm IDEA: XBRL DOCUMENT v3.24.0.1
Borrowings and Financing Activities
 12 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
Borrowings and Financing Activities Borrowings and Financing Activities
The carrying value of our debt as of the dates indicated was as follows.
Borrowings
December 31,
($ in thousands) Interest rate20232022
Senior notes
Senior Notes due 20244.500 %$449,037 $447,805 
Senior Notes due 20256.625 %522,343 520,305 
Senior Notes due 20274.875 %446,401 445,394 
Total senior notes$1,417,781 $1,413,504 
 
December 31,
($ in thousands)
Average interest rate (1)
20232022
Secured borrowings
FHLB advances
FHLB advances due 2023— %$— $104,895 
FHLB advances due 2024 (2)
4.660 %72,871 32,371 
FHLB advances due 20252.340 %12,684 9,984 
FHLB advances due 20264.469 %1,835 — 
FHLB advances due 20272.562 %7,887 6,436 
Total FHLB advances95,277 153,686 
Mortgage financing facilities6.975 %24,199 2,136 
Total secured borrowings$119,476 $155,822 
(1)As of December 31, 2023. See “FHLB Advances” and “Mortgage Loan Financing Facilities” below for more information.
(2)Includes $13 million of floating-rate advances with a weighted average interest rate of 5.602% and 3.617% as of December 31, 2023 and 2022, respectively, which resets daily based on changes in SOFR.
Senior Notes
Senior Notes due 2024. These notes, which were issued in September 2017, bear interest payable semi-annually on April 1 and October 1 of each year, and mature on October 1, 2024.
Senior Notes due 2025. These notes, which were issued in May 2020, bear interest payable semi-annually on March 15 and September 15 of each year, and mature on March 15, 2025.
Senior Notes due 2027. These notes, which were issued in June 2019, bear interest payable semi-annually on March 15 and September 15 of each year, and mature on March 15, 2027.
Redemption Terms in Senior Notes. We have the option to redeem the Senior Notes due 2024, 2025 and 2027, in whole or in part, at any time, or from time to time, prior to July 1, 2024 (the date that is three months prior to the maturity date of the Senior notes due 2024), September 15, 2024 (the date that is six months prior to the maturity date of the Senior notes due 2025) and September 15, 2026 (the date that is six months prior to the maturity date of the Senior notes due 2027) (in each case, the “Par Call Date”), respectively, at a redemption price equal to the greater of: (i) 100% of the aggregate principal amount of the notes to be redeemed and (ii) the make-whole amount, which is the sum of the present values of the remaining scheduled payments of principal and interest in respect of the notes to be redeemed from the redemption date to the Par Call Date discounted to the redemption date at the applicable treasury rate plus 50 basis points, plus, in each case, accrued and unpaid interest thereon to, but excluding, the redemption date. At any time on or after the Par Call Date, we may, at our option, redeem the notes in whole or in part, at a redemption price equal to 100% of the aggregate principal amount of the notes to be redeemed, plus accrued and unpaid interest thereon to, but excluding, the redemption date.
Covenants in Senior Notes. The indentures governing the Senior Notes due 2024, 2025 and 2027 contain covenants customary for securities of this nature, including covenants related to the payments of the notes, periodic reporting and certificates to be issued and covenants related to amendments to the indentures. Additionally, the indentures include covenants restricting us from encumbering the capital stock of a designated subsidiary (as defined in the indenture for the
notes) or disposing of any capital stock of any designated subsidiary unless either all of the stock is disposed of or we retain more than 80% of the stock. We were in compliance with all covenants as of December 31, 2023.
FHLB Advances
Radian Guaranty is a member of the FHLB. As a member, it may borrow from the FHLB, subject to certain conditions, which include the need to post collateral and the requirement to maintain a minimum investment in FHLB stock, in part depending on the level of its outstanding FHLB advances.
Interest on the FHLB advances is primarily fixed-rate and is payable quarterly, or at maturity if the term of the advance is less than 90 days. Principal is due at maturity. For obligations with maturities greater than or equal to 90 days, we may prepay the debt at any time, subject to paying a prepayment fee.
The principal balance of the FHLB advances is required to be collateralized by eligible assets with a fair value that must be maintained generally within a minimum range of 103% to 114% of the amount borrowed, depending on the type of assets pledged. Our fixed-maturities available for sale and trading securities include securities totaling $101 million and $164 million at December 31, 2023 and 2022, respectively, which serve as collateral for our FHLB advances to satisfy this requirement.
Mortgage Loan Financing Facilities
In 2022, Radian Mortgage Capital entered into the BMO Master Repurchase Agreement and the Goldman Sachs Master Repurchase Agreement to finance the acquisition of residential mortgage loans and related mortgage loan assets. The Goldman Sachs Master Repurchase Agreement is an uncommitted mortgage loan repurchase facility that initially had a maximum borrowing amount of $300 million and was amended in July 2023 to reduce the maximum borrowing amount to $100 million. The BMO Master Repurchase Agreement, which is also uncommitted, initially had a maximum borrowing amount of $300 million and was amended in April 2023 to reduce the maximum borrowing amount to $150 million. The Goldman Sachs Master Repurchase Agreement and the BMO Master Repurchase Agreement are currently scheduled to expire on September 14, 2024, and September 25, 2024, respectively.
In January 2024, Radian Mortgage Capital entered into a master repurchase agreement with Flagstar Bank, N.A. (“Flagstar”). This agreement is an uncommitted mortgage loan repurchase facility with a maximum borrowing amount of $150 million pursuant to which Radian Mortgage Capital may from time to time sell to Flagstar, and later repurchase, certain residential mortgage loan assets. The Flagstar Master Repurchase Agreement is scheduled to expire on January 27, 2025.
The Master Repurchase Agreements are uncommitted, and Goldman Sachs Bank USA (“Goldman Sachs”), Bank of Montreal, a Canadian chartered bank acting through its Chicago branch (“BMO”) and Flagstar are under no obligation to fund the purchase of any residential mortgage loan assets under their respective agreements. In the event Goldman Sachs, BMO or Flagstar advances funds to purchase residential mortgage loan assets, the amount of such advances generally will be calculated as a percentage of the unpaid principal balance or market value of the residential mortgage loan assets, depending on the credit characteristics of the loans being purchased.
As of December 31, 2023, there were $21 million and $3 million of outstanding borrowings under the BMO Master Repurchase Agreement and the Goldman Sachs Master Repurchase Agreement, respectively. Of our mortgage loans held for sale, $31 million and $2 million at December 31, 2023 and 2022, respectively, served as collateral for the Master Repurchase Agreements to support the funds advanced.
The borrowings under the Master Repurchase Agreements bear a variable interest rate based on one-month SOFR or compounded SOFR, depending on the agreement, plus an applicable margin, with interest payable monthly. Principal is due upon the earliest of the sale or disposition of the related mortgage loans, the occurrence of certain default or acceleration events or at the termination date of the applicable Master Repurchase Agreement.
The Master Repurchase Agreements contain provisions that provide Goldman Sachs, BMO and Flagstar, respectively, with certain rights in the event of a decline in the market value of the purchased residential mortgage loan assets. Under these provisions, Radian Liberty Funding or Radian Mortgage Capital, as applicable, may be required to transfer cash or additional eligible residential mortgage loan assets with an aggregate market value that is equal to the difference between the value of the residential mortgage loan assets then subject to the applicable Master Repurchase Agreement and a minimum threshold amount.
Radian Group has entered into the Parent Guarantees to guaranty the obligations of certain of its subsidiaries in connection with the Master Repurchase Agreements described above.
Pursuant to the Parent Guarantees, Radian Group is subject to negative and affirmative covenants customary for this type of financing transaction, including, among others, limitations on the incurrence of debt and restrictions on certain transactions with affiliates, payments and investments and various financial covenants that the Company must remain in compliance with, including those related to: (i) the total adjusted capital of the Company’s primary mortgage insurance subsidiary, currently Radian Guaranty; (ii) the Company’s minimum consolidated net worth; and (iii) the Company’s maximum Debt-to-Total Capitalization Ratio (as defined in the Parent Guarantees). The covenants and financial covenants in the Parent
Guarantees are generally consistent with the comparable covenants in the Company’s revolving credit facility, including with respect to the payment of dividends on shares of its common stock which are permitted under the revolving credit facility and the Master Repurchase Agreements so long as no default or event of default exists and the Company is in pro forma compliance with the applicable financial covenants on the date a dividend is declared. As of December 31, 2023, we are in compliance with all of the debt covenants under our mortgage loan financing facilities.
Revolving Credit Facility
Radian Group has in place a $275 million unsecured revolving credit facility with a syndicate of bank lenders. The revolving credit facility matures in December 2026, although under certain conditions Radian Group may need to offer to repay any outstanding amounts and terminate lender commitments earlier than the maturity date. Terms of the credit facility include an accordion feature that allows Radian Group, at its option, to increase the total borrowing capacity during the term of the agreement, subject to our obtaining the necessary increased commitments from lenders (which may include then existing or other lenders), up to a total of $400 million.
Subject to certain limitations, borrowings under the credit facility may be used for working capital and general corporate purposes, including capital contributions to Radian Group’s insurance and other subsidiaries as well as growth initiatives. The credit facility contains customary representations, warranties, covenants, terms and conditions. Our ability to borrow under the credit facility is conditioned on the satisfaction of certain financial and other covenants, including covenants related to minimum net worth and statutory surplus, a maximum debt-to-capitalization level, limits on certain types of indebtedness and liens, and Radian Guaranty’s eligibility as a private mortgage insurer with the GSEs. At December 31, 2023, Radian Group was in compliance with all the covenants and there were no amounts outstanding under this revolving credit facility.