Fair play to Radian (RDN) management. A couple of years ago, staring down the barrel of a liquidity and capital crisis, they must have outlined a strategy with two ends:
- Slow down cash burn at their operating company (using denials and single premium business).
- Find a way to convince auditors and regulators to allow them to use inadequate loss reserves to artificially boost capital (by slowing down claims process to make it look like loss frequency is less than it is).
The plan has worked. Despite telling investors on its 4th quarter 2012 conference call that a 2013 return to profitability meant risk-to-capital would remain below 25 to 1, the level required by regulators, they have...