Radian Announces Completion of Quota Share Reinsurance Agreement to Proactively Manage MI Risk-to-Capital & Releases Delinque...
10 Avril 2012 - 2:00PM
Business Wire
Radian Guaranty Inc., the mortgage insurance subsidiary (MI) of
Radian Group Inc., today announced that it has entered a quota
share reinsurance agreement, effective April 1, 2012, with an
external reinsurance provider in order to proactively manage its
mortgage insurance risk-to-capital position. This represents the
completion of the reinsurance arrangement described by the company
during its fourth quarter 2011 earnings conference call, and is a
continuation of the company’s ongoing capital management activities
designed to increase financial flexibility. The company also
released data for new insurance written and primary mortgage
insurance delinquencies for March 2012.
“The risk-to-capital ratio is an important financial measure for
any mortgage insurer, and we have demonstrated our ability over the
past year to proactively manage Radian Guaranty’s risk-to-capital
position through investment gains, internal reinsurance,
restructuring and commutations,” stated Radian CEO S.A. Ibrahim.
“The external reinsurance agreement provides us with additional
capital flexibility. We are off to a strong start in 2012 with $6.5
billion of high-quality, new business written in the first quarter,
along with another decline in delinquent loans.”
Quota Share Reinsurance Agreement
Through the quota share reinsurance agreement, Radian is ceding
20 percent of its new insurance written (NIW) beginning with the
fourth quarter of 2011. As of April 1, 2012, this represents $532
million of the company’s risk in force. The total amount of risk
that may be ceded through this arrangement is limited and is
expected to be between $1.25 billion and $1.6 billion. At a 25 to 1
risk-to-capital ratio, the equivalent capital benefit associated
with ceding this amount of risk would be between $50 million and
$62.5 million. Radian has the ability, at its option, to commute
two-thirds of the reinsurance on December 31, 2014.
March Delinquency Data
The information below regarding new delinquencies and cures is
reported to Radian from loan servicers. The accuracy of these
reports may be affected by several factors, including the date on
which the report is generated and by the timing of servicing
transfers. These details may also be found on Radian’s website at
http://www.radian.biz/page?name=NewsReleases.
January
2012
February
2012
March
2012
Primary New Insurance Written ($ in billions) $2.00 $2.05 $2.43
Beginning
Primary Delinquent Inventory
(# of loans)
110,861
109,803
107,230
Plus: New Delinquencies 7,192
6,073 5,394 Less:
Cures (6,138)
(6,581) (6,678) Less: Paids
(including those charged to a deductible
or captive)
(1,118)
(1,198)
(1,506)
Less: Rescissions and Denials (994)
(867)
(1,413)
Ending Primary Delinquent Inventory
(# of loans)
109,803
107,230
103,027
About Radian
Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia,
provides private mortgage insurance and related risk mitigation
products and services to mortgage lenders nationwide through its
principal operating subsidiary, Radian Guaranty Inc. These services
help promote and preserve homeownership opportunities for
homebuyers, while protecting lenders from default-related losses on
residential first mortgages and facilitating the sale of
low-downpayment mortgages in the secondary market. Additional
information may be found at www.radian.biz.
Forward-Looking Statements
Some of the statements in this press release may constitute
“forward-looking statements” within the meaning of the United
States Private Securities Litigation Reform Act of 1995. These
statements are based on our current expectations, estimates and
projections. Words such as "will," "expects," "believes" and
similar expressions are used to identify these forward-looking
statements. These statements are only predictions and as such are
not guarantees of future performance and involve risks,
uncertainties and assumptions that are difficult to predict.
Forward-looking statements are based upon assumptions as to future
events or our future financial performance that may not prove to be
accurate. Actual outcomes and results may differ materially from
what is expressed or forecast in these forward-looking statements.
As a result, these statements speak only as of the date they were
made, and we undertake no obligation to publicly update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise. For more information
regarding these risks and uncertainties as well as certain
additional risks that we face, you should refer to the Risk Factors
detailed in Item 1A of Part I of our Annual Report on Form 10-K for
the year ended December 31, 2011 and subsequent reports and
registration statements filed from time to time with the Securities
and Exchange Commission.
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