Radian Receives Approval of RMAI Subsidiary from Freddie Mac through 2013
Company continues to write new MI business in Radian Guaranty
PHILADELPHIA--(BUSINESS WIRE)-- Radian Guaranty Inc., the mortgage insurance subsidiary of Radian Group Inc., today announced that on December 20, 2012, Freddie Mac agreed to extend its approval of Radian Mortgage Assurance Inc. (RMAI), a wholly owned subsidiary of Radian Guaranty, as a limited eligible mortgage insurer for an additional one-year period that will expire on December 31, 2013. As previously disclosed, RMAI maintains a similar approval for the same time period from Fannie Mae.
As of September 30, 2012, Radian Guaranty maintained a risk-to-capital ratio of 20.1:1, which is below the 25:1 risk-to-capital limit imposed by certain states. In the event Radian Guaranty is no longer in compliance with the risk-based capital requirements of certain states, the company plans to write new mortgage insurance business in those states through state-specific waivers or similar relief, or by using RMAI. The amended approval from Freddie Mac does not require any capital contributions from Radian Group to Radian Guaranty or RMAI beyond those required under the original approval. Based on the original approval, as previously announced, Radian Group contributed $100 million to Radian Guaranty in February 2012, and is required to contribute $50 million of additional capital to RMAI only in the event that Radian Guaranty were to exceed the risk-based capital requirements of those states for which a waiver or other relief has not been obtained. RMAI currently has $19 million of existing capital.
"Our top priority at Radian is to continue writing new, high-quality mortgage insurance business. This helps to improve the credit composition of our mortgage insurance book and better position Radian for a return to operating profitability next year," stated Chief Executive Officer S.A. Ibrahim. "The support of our stakeholders is critical to this effort and the extension of Freddie Mac's approval of RMAI is an illustration of that support."
In addition to the states approved under the original agreement with Freddie Mac, the amended approval also approves RMAI to write business in Idaho provided that Radian Guaranty continues its efforts to obtain a waiver approval or denial from Idaho state insurance regulators. Further, the amended approval requires Radian Guaranty to diligently pursue an extension of existing waivers beyond their current expiration dates, including those waivers in California, Florida, Illinois and New Jersey that expire as of the end of 2012. The company has submitted requests in each of these states for an extension of the existing waivers. To the extent that any such extension is not granted, Radian Guaranty is required to seek further modification of the amended approval to allow the company to use RMAI in such states.
The amended approval with Freddie Mac includes an additional condition related to the time-frame by which Radian Guaranty evaluates and internally resolves claims. Specifically, the amended approval provides that: (1) within 120 days of the amended approval, Radian Guaranty will pay to Freddie Mac or otherwise resolve internally (e.g., through loss mitigation actions such as rescission or denial) a majority of all claims outstanding greater than 90 days; and (2) going forward, a majority of claims must be paid or otherwise resolved internally (e.g., through loss mitigation actions such as rescission or denial) within 90 days of the date the claims are perfected. The terms and conditions of the amended approval may be found on the Form 8-K filed by Radian Group Inc. with the SEC today and the original approval may be found as Exhibit 10.66 to Radian Group Inc.'s Annual Report on Form 10-K for the year ended December 31, 2011. As was the case with the original approval, Freddie Mac, in its sole discretion, may modify the terms and conditions of the amended approval or withdraw it.
Radian Group Inc. (NYS: 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.
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, Item 1A of Part II of our Quarterly Reports on Form 10-Q filed in 2012, and subsequent reports and registration statements filed from time to time with the Securities and Exchange Commission.
Radian Group Inc.
Emily Riley, 215-231-1035
KEYWORDS: United States North America Pennsylvania
The article Radian Receives Approval of RMAI Subsidiary from Freddie Mac through 2013 originally appeared on Fool.com.
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