Radian Agrees to Commute $827 Million Financial Guaranty Reinsurance Portfolio to FGIC
Reduces total reinsurance portfolio by 13%
PHILADELPHIA--(BUSINESS WIRE)-- Radian Group Inc. today announced that on November 09, 2012, its financial guaranty insurance subsidiary, Radian Asset Assurance Inc., entered into an agreement (the Agreement) with Financial Guaranty Insurance Company (FGIC) which, if consummated, would commute the remaining $827 million of outstanding par reinsured by Radian Asset from FGIC (the Commutation). This portfolio represents 13 percent of Radian Assets total reinsurance exposure as of September 30, 2012, and includes $196 million of Radian Assets $225 million in net par outstanding as of September 30, 2012, related to Jefferson County, Alabama sewer warrants.
Entering into this agreement is another example of our efforts to actively reduce our financial guaranty exposure, which is an important component of our capital management strategy, stated Chief Executive Officer S.A. Ibrahim.
A rehabilitation proceeding for FGIC pursuant to Article 74 of the New York Insurance Law is currently pending before the Supreme Court of the State of New York (the Court), and the effectuation of the Commutation is subject to approval by the Court of the Agreement and certain related matters. Such approval is within the Courts sole discretion, and no assurance can be given that the Court will grant such approval or when it will be granted. If the Court grants such approval, Radian Asset will be required to make a commutation payment to FGIC in the approximate amount of $52.4 million once that approval becomes final in accordance with the Agreement, and the Commutation will become effective upon FGICs receipt of such payment. The amount of this payment was determined primarily based on existing loss reserves and unearned premium reserves, and therefore is not expected to have a material impact on Radians consolidated financial statements or Radian Assets statutory capital position.
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.
All statements in this press release that address events, developments or results that we expect or anticipate may occur in the future are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the United States (U.S.) Private Securities Litigation Reform Act of 1995. In most cases, forward-looking statements may be identified by words such as anticipate, may, will, could, should, would, expect, intend, plan, goal, contemplate, believe, estimate, predict, project, potential, continue, or the negative or other variations on these words and other similar expressions. These statements, which may include, without limitation, projections regarding our future performance and financial condition, are made on the basis of managements current views and assumptions with respect to future events. Any forward-looking statement is not a guarantee of future performance and actual results could differ materially from those contained in the forward-looking information. The forward-looking statements, as well as our prospects as a whole, are subject to risks and uncertainties, including our ability to consummate the Commutation which depends on, among other things, obtaining the Courts approval of the Agreement.
For more information regarding 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 in Item 1A of Part II of our Quarterly Reports on Form 10-Q filed during 2012, and in subsequent reports and registration statements filed from time to time with the Securities and Exchange Commission.
Radian Group Inc.
Emily Riley, 215-231-1035
Source: Radian Group Inc.Copyright Business Wire 2012