Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

5. Fair Value of Financial Instruments

The following tables include a list of assets and liabilities that are measured at fair value by hierarchy level as of the dates indicated.

Assets and liabilities carried at fair value by hierarchy level
	December 31, 2024
(In thousands)	Level I		Level II		Level III		Total
Investments
Fixed maturities available for sale
U.S. government and agency securities	$	119,630	$	8,702	$	—	$	128,332
State and municipal obligations		—		148,891		—		148,891
Corporate bonds and notes		—		2,476,639		—		2,476,639
RMBS		—		1,011,630		—		1,011,630
CMBS		—		411,999		—		411,999
CLO		—		411,462		—		411,462
Other ABS		—		438,811		—		438,811
Mortgage insurance-linked notes (1)		—		47,156		—		47,156
Total fixed maturities available for sale		119,630		4,955,290		—		5,074,920

Assets and liabilities carried at fair value by hierarchy level
	December 31, 2024
(In thousands)	Level I		Level II		Level III		Total
Fixed maturities trading securities
State and municipal obligations		—		50,845		—		50,845
Corporate bonds and notes		—		23,940		—		23,940
RMBS		—		3,029		—		3,029
CMBS		—		4,838		—		4,838
Total fixed maturities trading securities		—		82,652		—		82,652
Equity securities		128,368		3,275		6,546		138,189
Residential mortgage loans held for sale (2)		—		519,885		—		519,885
Other invested assets (3) (4)		—		—		5,908		5,908
Short-term investments
State and municipal obligations		—		1,750		—		1,750
Money market instruments		384,934		—		—		384,934
Corporate bonds and notes		—		49,905		—		49,905
Other ABS		—		16,054		—		16,054
Other investments (5)		—		69,005		—		69,005
Total short-term investments		384,934		136,714		—		521,648
Total investments at fair value (4)		632,932		5,697,816		12,454		6,343,202
Other
Derivative assets		—		4,274		—		4,274
Mortgage servicing rights		—		—		2,702		2,702
Loaned securities (6)
Corporate bonds and notes		—		130,256		—		130,256
Other ABS		—		60		—		60
Equity securities		8,805		—		—		8,805
Securitized residential mortgage loans held for investment (2)		—		717,228		—		717,228
Total assets at fair value (4)	$	641,737	$	6,549,634	$	15,156	$	7,206,527
Liabilities
Derivative liabilities	$	—	$	40	$	1,249	$	1,289
Securitized nonrecourse debt (2)		—		703,526		—		703,526
Total liabilities at fair value	$	—	$	703,566	$	1,249	$	704,815

(1)Includes mortgage insurance-linked notes purchased by Radian Group in connection with the XOL Program. See Note 8 for more information.

(2)See Note 7 for more information about our residential mortgage loan activities, including our private label securitization program.

(3)Consists primarily of interests in private debt and equity investments.

(4)Does not include other invested assets of $2 million that are primarily invested in limited partnership investments valued using the net asset value as a practical expedient.

(5)Comprises short-term certificates of deposit and commercial paper.

(6)Securities loaned to third-party borrowers under securities lending agreements are classified as other assets on our consolidated balance sheets. See Note 6 for more information on our securities lending agreements.

Assets and liabilities carried at fair value by hierarchy level
	December 31, 2023
(In thousands)	Level I		Level II		Level III		Total
Investments
Fixed maturities available for sale
U.S. government and agency securities	$	124,734	$	9,859	$	—	$	134,593
State and municipal obligations		—		142,785		—		142,785
Corporate bonds and notes		—		2,511,905		—		2,511,905
RMBS		—		1,014,071		—		1,014,071
CMBS		—		558,383		—		558,383
CLO		—		487,849		—		487,849
Other ABS		—		284,559		—		284,559
Foreign government and agency securities		—		5,087		—		5,087
Mortgage insurance-linked notes (1)		—		48,996		—		48,996
Total fixed maturities available for sale		124,734		5,063,494		—		5,188,228
Fixed maturities trading securities
State and municipal obligations		—		70,844		—		70,844
Corporate bonds and notes		—		24,913		—		24,913
RMBS		—		5,930		—		5,930
CMBS		—		4,736		—		4,736
Total fixed maturities trading securities		—		106,423		—		106,423
Equity securities		81,170		5,387		2,500		89,057
Residential mortgage loans held for sale (2)		—		32,755		—		32,755
Other invested assets (3) (4)		—		—		7,196		7,196
Short-term investments
State and municipal obligations		—		2,700		—		2,700
Money market instruments		368,433		—		—		368,433
Corporate bonds and notes		—		150,930		—		150,930
CMBS		—		1,347		—		1,347
Other ABS		—		1,158		—		1,158
Other investments (5)		—		135,998		—		135,998
Total short-term investments		368,433		292,133		—		660,566
Total investments at fair value (4)		574,337		5,500,192		9,696		6,084,225
Other
Derivative assets		—		1,912		1		1,913
Loaned securities (6)
U.S. government and agency securities		9,803		—		—		9,803
Corporate bonds and notes		—		117,992		—		117,992
Equity securities		75,898		—		—		75,898
Total assets at fair value (4)	$	660,038	$	5,620,096	$	9,697	$	6,289,831
Liabilities
Derivative liabilities	$	—	$	817	$	692	$	1,509
Total liabilities at fair value	$	—	$	817	$	692	$	1,509

(1)Includes mortgage insurance-linked notes purchased by Radian Group in connection with the XOL Program. See Note 8 for more information.

(2)See Note 7 for more information about our residential mortgage loan activities.

(3)Consists primarily of interests in private debt and equity investments.

(4)Does not include other invested assets of $1 million that are primarily invested in limited partnership investments valued using the net asset value as a practical expedient.

(5)Comprises short-term certificates of deposit and commercial paper.

(6)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.

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, 2024 and 2023.

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.

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 equity 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. 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.

Residential Mortgage Loans Held for Sale. The fair value of residential mortgage loans is generally estimated using present value techniques with inputs derived from observable market data, including external market research on yields and prepayment speeds for comparable residential mortgage loan pools. The discounted cash flow models are adjusted for certain loan-level factors such as loan type, loan amount, note rate, LTV, and expected exit value of the loan. Credit risk does not significantly impact the valuation since these loans are typically purchased and resold shortly after origination. Based on the availability of observable market inputs, these loans are generally categorized in Level II of the fair value hierarchy.

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.

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.

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.

Derivative Assets and Liabilities. These assets and liabilities include forward RMBS purchase contracts and interest rate swap futures contracts used to hedge interest rate risk associated with our residential mortgage loans held for sale. The estimated fair value of these instruments is derived using a market-based approach based on market price inputs from similar contracts and corroborated with observable market data. In addition, we enter into forward mortgage loan purchase commitments, for which we determine estimated fair value using a market-based approach based on underlying loan level information, adjusted for the probability the mortgage loan will fund. These mortgage-related derivative assets and liabilities are generally categorized in Level II of the fair value hierarchy based on the availability of observable market inputs that are most significant to the fair value estimate. Our derivative assets and liabilities also include embedded derivatives related to our XOL Program, which are categorized in Level III of the fair value hierarchy. The fair value of these derivatives 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. See Notes 7 and 8 for additional information on our mortgage-related and reinsurance-related derivatives, respectively.

Securitized Residential Mortgage Loans Held for Investment and Securitized Nonrecourse Debt. As described in Note 2, we estimate the fair values of our consolidated VIE assets and liabilities using the more observable of the fair value of the financial assets and the fair value of the financial liabilities. For the VIE liabilities, which primarily represent investment grade asset-backed securities issued by the trusts, we determine fair value with the assistance of independent third-party valuation service providers, using external market information that includes observable market yields, spreads and projected prepayment speeds on securitizations with similar collateral characteristics. The fair value estimates of the securitized residential mortgage loans are then derived using the fair value of the VIE liabilities. As such, we classify both the securitized residential mortgage loans held by the VIEs and the nonrecourse debt issued by the VIEs as Level II in the fair value hierarchy.

Other Fair Value Disclosure

The carrying value and estimated fair value of other selected assets and liabilities not carried at fair value on our consolidated balance sheets were as follows as of the dates indicated.

Financial instruments not carried at fair value
	December 31, 2024				December 31, 2023
(In thousands)	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Company-owned life insurance	$	110,968	$	110,968	$	106,417	$	106,417
Senior notes		1,065,337		1,088,306		1,417,781		1,406,118
Secured borrowings
Mortgage loan financing facilities	$	492,429	$	492,429	$	24,199	$	24,199
FHLB advances		45,865		45,888		95,277		95,348
Total secured borrowings	$	538,294	$	538,317	$	119,476	$	119,547

The fair value of our company-owned life insurance is estimated based on the cash surrender value less applicable surrender charges. These assets are categorized in Level II of the fair value hierarchy. See Note 9 for further information on our company-owned life insurance.

The fair value of our senior notes is estimated based on quoted market prices. The fair value of our secured borrowings is estimated based on current market rates and contractual cash flows, including for FHLB advances any fees that may be

required to be paid to the FHLB. The carrying amount of borrowings under our mortgage loan financing facilities approximates fair value due to the floating rate nature of that debt. These liabilities are all categorized in Level II of the fair value hierarchy. See Note 12 for further information about our senior notes and secured borrowings.