x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 23-2691170 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
1601 Market Street, Philadelphia, PA | 19103 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer x | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Page Number | |||
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• | changes in general financial and political conditions, including the recent downgrade of the U.S. credit rating, a failure of the U.S. economy to fully recover from the most recent recession or the U.S. economy reentering a recessionary period, a lack of meaningful liquidity in the capital markets or in the credit markets, a prolonged period of high unemployment rates and limited home price appreciation or further depreciation (which has resulted in some borrowers voluntarily defaulting on their mortgages when their mortgage balances exceed the value of their homes), changes or volatility in interest rates or consumer confidence, changes in credit spreads, each of which may be accelerated or intensified by the recent downgrade of the U.S. credit rating and any further actual or threatened downgrades of U.S. credit ratings or as a result of Congressional action following the recent decision to increase the U.S. debt ceiling; |
• | changes in the way customers, investors, regulators or legislators perceive the strength of private mortgage insurers or financial guaranty providers, or investor concern over the credit quality and specific risks faced by the particular businesses, municipalities or pools of assets covered by our insurance; |
• | catastrophic events or further economic changes in geographic regions, including governments and municipalities, where our mortgage insurance or financial guaranty insurance exposure is more concentrated; |
• | our ability to successfully execute upon our capital plan for our mortgage insurance business (which depends, in part, on the performance of our financial guaranty portfolio), and if necessary, to obtain additional capital to support our mortgage insurance business and the long-term liquidity needs of our holding company; |
• | a further reduction in, or prolonged period of depressed levels of, home mortgage originations due to reduced liquidity in the lending market, tighter underwriting standards, the risk retention requirements established under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") and the decrease in housing demand throughout the U.S.; |
• | our ability to maintain adequate risk-to-capital ratios and surplus requirements in our mortgage insurance business in light of ongoing losses in this business and potential further deterioration in our financial guaranty portfolio which, in the absence of new capital, could depend on our ability to execute strategies for which regulatory and other approvals are required and may not be obtained; |
• | our ability to continue to effectively mitigate our mortgage insurance and financial guaranty losses; |
• | reduced opportunities for loss mitigation in markets where housing values do not appreciate or continue to decline; |
• | a more rapid than expected decrease in the level of insurance rescissions and claim denials from the current elevated levels (including as a result of successful challenges to previously rescinded policies or claim denials), which rescissions and denials have materially mitigated our paid losses and resulted in a significant reduction in our loss reserves; |
• | the negative impact our insurance rescissions and claim denials may have on our relationships with customers and potential customers, including the potential loss of business and the heightened risk of disputes and litigation; |
• | the need, in the event that we are unsuccessful in defending our rescissions or denials, to increase our loss reserves for, and reassume risk on, rescinded loans and pay additional claims; |
• | the concentration of our mortgage insurance business among a relatively small number of large customers; |
• | any disruption in the servicing of mortgages covered by our insurance policies and poor servicer performance; |
• | the aging of our mortgage insurance portfolio and changes in severity or frequency of losses associated with certain of our products that are riskier than traditional mortgage insurance or financial guaranty insurance policies; |
• | the performance of our insured portfolio of higher risk loans, such as Alternative-A and subprime loans, and of adjustable rate products, such as adjustable rate mortgages and interest-only mortgages; |
• | a decrease in persistency rates of our mortgage insurance policies; |
• | an increase in the risk profile of our existing mortgage insurance portfolio due to the availability of mortgage refinancing to only the most qualified borrowers in the current mortgage and housing market; |
• | further downgrades or threatened downgrades of, or other ratings actions with respect to, our credit ratings or the ratings assigned by the major rating agencies to any of our rated insurance subsidiaries at any time (in particular, the credit rating of Radian Group Inc. and the financial strength ratings assigned to Radian Guaranty Inc.); |
• | heightened competition for our mortgage insurance business from others such as the Federal Housing Administration (the "FHA"), the Veteran's Administration and private mortgage insurers (in particular, the FHA and those private mortgage insurers that have been assigned higher ratings from the major rating agencies or new entrants to the industry that are not burdened by legacy obligations); |
• | changes in the charters or business practices of, or rules or regulations applicable to, Federal National Mortgage Association ("Fannie Mae") and Freddie Mac, the largest purchasers of mortgage loans that we insure, and our ability to remain an eligible provider to both Freddie Mac and Fannie Mae; |
• | changes to the current system of housing finance, including the possibility of a new system in which private mortgage insurers are not required or their products are significantly limited in scope; |
• | the effect of the Dodd-Frank Act on the financial services industry in general, and on our mortgage insurance and financial guaranty businesses in particular, including whether and to what extent loans with mortgage insurance are considered "qualified residential mortgages" for purposes of the Dodd-Frank Act securitization provisions or "qualified mortgages" for purposes of the ability to repay provisions of the Dodd-Frank Act and potential obligations to post collateral on our existing insured derivatives portfolio; |
• | the application of existing federal or state consumer, lending, insurance, tax, securities and other applicable laws and regulations, or changes in these laws and regulations or the way they are interpreted; including, without limitation: (i) the outcome of existing, or the possibility of additional, lawsuits or investigations, and (ii) legislative and regulatory changes (a) affecting demand for private mortgage insurance, (b) limiting or restricting our use of (or increasing requirements for) additional capital and the products we may offer, or (c) affecting the form in which we execute credit protection or affecting our existing financial guaranty portfolio; |
• | the possibility that we may fail to estimate accurately the likelihood, magnitude and timing of losses in connection with establishing loss reserves for our mortgage insurance or financial guaranty businesses or premium deficiencies for our mortgage insurance business, or to estimate accurately the fair value amounts of derivative instruments in our mortgage insurance and financial guaranty businesses in determining gains and losses on these contracts; |
• | the ability of our primary insurance customers in our financial guaranty reinsurance business to provide appropriate surveillance and to mitigate losses adequately with respect to our assumed insurance portfolio; |
• | volatility in our earnings caused by changes in the fair value of our assets and liabilities carried at fair value, including our derivative instruments, and our need to reevaluate the possibility of a premium deficiency in our mortgage insurance business on a quarterly basis; |
• | our ability to realize the tax benefits associated with our gross deferred tax assets, which will depend on our ability to generate sufficient sustainable taxable income in future periods; |
• | our ability to successfully develop and implement a strategy to utilize the recently acquired Municipal and Infrastructure Assurance Corporation (the "FG Insurance Shell") in the public finance financial guaranty market, which strategy may depend on, among other items, our ability to obtain further necessary regulatory or other approvals, to attract third-party capital and to obtain ratings sufficient to support such a strategy; |
• | changes in accounting guidance from the Securities and Exchange Commission or the Financial Accounting Standards Board; and |
• | legal and other limitations on amounts we may receive from our subsidiaries as dividends or through our tax- and expense-sharing arrangements with our subsidiaries. |
June 30, 2011 | December 31, 2010 | ||||||
(In thousands, except share and per share amounts) | |||||||
ASSETS | |||||||
Investments | |||||||
Fixed-maturities held to maturity—at amortized cost (fair value $8,282 and $11,416) | $ | 7,781 | $ | 10,773 | |||
Fixed-maturities available for sale—at fair value (amortized cost $160,085 and $340,795) | 149,146 | 273,799 | |||||
Equity securities available for sale—at fair value (cost $160,038 and $160,242) | 193,965 | 184,365 | |||||
Trading securities—at fair value (including variable interest entity (“VIE”) securities of $100,691 and $83,184) | 4,445,335 | 4,562,821 | |||||
Short-term investments—at fair value (including VIE investments of $149,984 and $149,981) | 1,130,268 | 1,537,498 | |||||
Other invested assets—at cost | 62,344 | 59,627 | |||||
Total investments | 5,988,839 | 6,628,883 | |||||
Cash | 21,122 | 20,334 | |||||
Restricted cash | 28,568 | 31,413 | |||||
Deferred policy acquisition costs | 138,926 | 148,326 | |||||
Accrued investment income | 39,620 | 40,498 | |||||
Accounts and notes receivable (less allowance of $0 and $50,000) | 109,017 | 116,452 | |||||
Property and equipment, at cost (less accumulated depreciation of $95,204 and $92,451) | 15,999 | 13,024 | |||||
Derivative assets (including VIE derivative assets of $4,653 and $10,855) | 27,266 | 26,212 | |||||
Deferred income taxes, net | 27,531 | 27,531 | |||||
Reinsurance recoverables | 179,573 | 244,894 | |||||
Other assets (including VIE other assets of $115,716 and $112,426) | 352,335 | 323,320 | |||||
Total assets | $ | 6,928,796 | $ | 7,620,887 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Unearned premiums | $ | 629,813 | $ | 686,364 | |||
Reserve for losses and loss adjustment expenses (“LAE”) | 3,343,624 | 3,596,735 | |||||
Reserve for premium deficiency | 6,251 | 10,736 | |||||
Long-term debt | 811,319 | 964,788 | |||||
VIE debt—at fair value (including $3,195 and $9,514 of non-recourse debt) | 393,740 | 520,114 | |||||
Derivative liabilities (including VIE derivative liabilities of $18,831 and $19,226) | 313,708 | 723,579 | |||||
Accounts payable and accrued expenses (including VIE accounts payable of $686 and $837) | 301,031 | 258,791 | |||||
Total liabilities | 5,799,486 | 6,761,107 | |||||
Commitments and Contingencies (Note 15) | |||||||
Stockholders’ equity | |||||||
Common stock: par value $.001 per share; 325,000,000 shares authorized; 150,574,956 and 150,507,853 shares issued at June 30, 2011 and December 31, 2010, respectively; 133,113,518 and 133,049,213 shares outstanding at June 30, 2011 and December 31, 2010, respectively | 151 | 150 | |||||
Treasury stock, at cost: 17,461,438 and 17,458,640 shares at June 30, 2011 and December 31, 2010, respectively | (892,036 | ) | (892,012 | ) | |||
Additional paid-in capital | 1,965,739 | 1,963,092 | |||||
Retained earnings (deficit) | 34,861 | (204,926 | ) | ||||
Accumulated other comprehensive income (loss) | 20,595 | (6,524 | ) | ||||
Total stockholders’ equity | 1,129,310 | 859,780 | |||||
Total liabilities and stockholders’ equity | $ | 6,928,796 | $ | 7,620,887 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands, except per share amounts) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Revenues: | |||||||||||||||
Premiums written—insurance: | |||||||||||||||
Direct | $ | 174,008 | $ | 194,757 | $ | 364,849 | $ | 379,035 | |||||||
Assumed | (11,788 | ) | (7,923 | ) | (10,164 | ) | (9,171 | ) | |||||||
Ceded | (9,442 | ) | (26,933 | ) | (19,158 | ) | (54,462 | ) | |||||||
Net premiums written | 152,778 | 159,901 | 335,527 | 315,402 | |||||||||||
Decrease in unearned premiums | 36,156 | 43,545 | 56,430 | 86,312 | |||||||||||
Net premiums earned—insurance | 188,934 | 203,446 | 391,957 | 401,714 | |||||||||||
Net investment income | 43,823 | 48,619 | 86,063 | 93,977 | |||||||||||
Net gains on investments | 44,236 | 57,262 | 81,671 | 115,210 | |||||||||||
Total other-than-temporary impairment ("OTTI") losses | (11 | ) | (38 | ) | (11 | ) | (56 | ) | |||||||
Losses recognized in other comprehensive income (loss) | — | — | — | — | |||||||||||
Net impairment losses recognized in earnings | (11 | ) | (38 | ) | (11 | ) | (56 | ) | |||||||
Change in fair value of derivative instruments | 188,726 | (524,606 | ) | 432,618 | (602,560 | ) | |||||||||
Net gains (losses) on other financial instruments | 5,047 | (63,200 | ) | 80,298 | (164,764 | ) | |||||||||
Gain on sale of affiliate | — | 34,815 | — | 34,815 | |||||||||||
Other income | 1,196 | (2,072 | ) | 2,644 | 3,703 | ||||||||||
Total revenues | 471,951 | (245,774 | ) | 1,075,240 | (117,961 | ) | |||||||||
Expenses: | |||||||||||||||
Provision for losses | 263,566 | 435,166 | 690,939 | 979,046 | |||||||||||
Change in reserve for premium deficiency | (3,102 | ) | (7,354 | ) | (4,485 | ) | (8,585 | ) | |||||||
Policy acquisition costs | 14,387 | 16,797 | 28,518 | 31,665 | |||||||||||
Other operating expenses | 45,954 | 35,165 | 92,173 | 100,221 | |||||||||||
Interest expense | 16,079 | 8,245 | 33,103 | 19,049 | |||||||||||
Total expenses | 336,884 | 488,019 | 840,248 | 1,121,396 | |||||||||||
Equity in net income of affiliates | — | 6,570 | 65 | 14,668 | |||||||||||
Pretax income (loss) | 135,067 | (727,223 | ) | 235,057 | (1,224,689 | ) | |||||||||
Income tax benefit | (2,048 | ) | (252,143 | ) | (5,064 | ) | (439,254 | ) | |||||||
Net income (loss) | $ | 137,115 | $ | (475,080 | ) | $ | 240,121 | $ | (785,435 | ) | |||||
Basic net income (loss) per share | $ | 1.04 | $ | (4.31 | ) | $ | 1.82 | $ | (8.15 | ) | |||||
Diluted net income (loss) per share | $ | 1.03 | $ | (4.31 | ) | $ | 1.80 | $ | (8.15 | ) | |||||
Weighted-average number of common shares outstanding—basic | 132,185 | 110,282 | 132,185 | 96,420 | |||||||||||
Weighted-average number of common and common equivalent shares outstanding—diluted | 133,614 | 110,282 | 133,724 | 96,420 | |||||||||||
Dividends per share | $ | 0.0025 | $ | 0.0025 | $ | 0.0050 | $ | 0.0050 |
(In thousands) | Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings/(Deficit) | Foreign Currency Translation Adjustment | Unrealized Holding Gains/Losses | Other | Total | ||||||||||||||||
BALANCE, JANUARY 1, 2010 | $ | 100 | $ | (889,496 | ) | $ | 1,363,255 | $ | 1,602,143 | $ | 18,285 | $ | (72,802 | ) | $ | (16,491 | ) | $ | 2,004,994 | |||||
Comprehensive loss: | ||||||||||||||||||||||||
Net loss | — | — | — | (785,435 | ) | — | — | — | (785,435 | ) | ||||||||||||||
Unrealized foreign currency translation adjustment, net of tax of $2,684 | — | — | — | — | (3,986 | ) | — | — | ||||||||||||||||
Less: Reclassification adjustment for liquidation of foreign subsidiary and net gains on sales, net of tax of $240 | — | — | — | — | (447 | ) | — | — | ||||||||||||||||
Net foreign currency translation adjustment, net of tax of $2,444 | — | — | — | — | (4,433 | ) | — | — | (4,433 | ) | ||||||||||||||
Unrealized holding gains arising during the period, net of tax of $11,165 | — | — | — | — | — | 20,736 | — | |||||||||||||||||
Less: Reclassification adjustment for net gains included in net loss, net of tax of $673 | — | — | — | — | — | (1,250 | ) | — | ||||||||||||||||
Net unrealized gain on investments, net of tax of $10,492 | — | — | — | — | — | 19,486 | — | 19,486 | ||||||||||||||||
Comprehensive loss | — | — | — | — | — | — | — | (770,382 | ) | |||||||||||||||
Sherman unrealized loss included in net loss | — | — | — | — | — | — | 16,761 | 16,761 | ||||||||||||||||
Repurchases of common stock under incentive plans | — | (2,484 | ) | 108 | — | — | — | — | (2,376 | ) | ||||||||||||||
Issuance of common stock - stock offering | 50 | — | 526,135 | — | — | — | — | 526,185 | ||||||||||||||||
Issuance of common stock under benefit plans | — | — | 1,938 | — | — | — | — | 1,938 | ||||||||||||||||
Amortization of restricted stock | — | — | 2,854 | — | — | — | — | 2,854 | ||||||||||||||||
Stock-based compensation expense | — | — | 191 | — | — | — | — | 191 | ||||||||||||||||
Dividends declared | — | — | — | (536 | ) | — | — | — | (536 | ) | ||||||||||||||
BALANCE, June 30, 2010 | $ | 150 | $ | (891,980 | ) | $ | 1,894,481 | $ | 816,172 | $ | 13,852 | $ | (53,316 | ) | $ | 270 | $ | 1,779,629 | ||||||
BALANCE, JANUARY 1, 2011 | $ | 150 | $ | (892,012 | ) | $ | 1,963,092 | $ | (204,926 | ) | $ | 21,094 | $ | (27,857 | ) | $ | 239 | $ | 859,780 | |||||
Comprehensive income: | ||||||||||||||||||||||||
Net income | — | — | — | 240,121 | — | — | — | 240,121 | ||||||||||||||||
Unrealized foreign currency translation adjustment, net of tax of $0 | — | — | — | — | 6,520 | — | — | |||||||||||||||||
Less: Reclassification adjustment for liquidation of foreign subsidiary included in net income, net of tax of $11,617 | — | — | — | — | 27,954 | — | — | |||||||||||||||||
Net foreign currency translation adjustment, net of tax of $11,617 | — | — | — | — | (21,434 | ) | — | — | (21,434 | ) | ||||||||||||||
Unrealized holding gains arising during the period, net of tax of $0 | — | — | — | — | — | 13,615 | — | |||||||||||||||||
Less: Reclassification adjustment for net losses included in net income, net of tax benefit of $17,307 (See Note 6) | — | — | — | — | — | (34,938 | ) | — | ||||||||||||||||
Net unrealized gain on investments, net of tax benefit of $17,307 | — | — | — | — | — | 48,553 | — | 48,553 | ||||||||||||||||
Comprehensive income | — | — | — | — | — | — | — | 267,240 | ||||||||||||||||
Repurchases of common stock under incentive plans | — | (24 | ) | — | — | — | — | (24 | ) | |||||||||||||||
Issuance of common stock under benefit plans | 1 | — | 404 | — | — | — | — | 405 | ||||||||||||||||
Amortization of restricted stock | — | — | 1,603 | — | — | — | — | 1,603 | ||||||||||||||||
Additional convertible debt issuance costs, net | — | — | (22 | ) | — | — | — | — | (22 | ) | ||||||||||||||
Stock-based compensation expense | — | — | 995 | — | — | — | — | 995 | ||||||||||||||||
Dividends declared | — | — | (333 | ) | (334 | ) | — | — | — | (667 | ) | |||||||||||||
BALANCE, June 30, 2011 | $ | 151 | $ | (892,036 | ) | $ | 1,965,739 | $ | 34,861 | $ | (340 | ) | $ | 20,696 | $ | 239 | $ | 1,129,310 |
(In thousands) | Six Months Ended June 30, | ||||||
2011 | 2010 | ||||||
Cash flows used in operating activities | $ | (608,917 | ) | $ | (460,719 | ) | |
Cash flows from investing activities: | |||||||
Proceeds from sales of fixed-maturity investments available for sale | 101,648 | 69,946 | |||||
Proceeds from sales of equity securities available for sale | 555 | 5,962 | |||||
Proceeds from sales of trading securities | 2,444,549 | 918,017 | |||||
Proceeds from redemptions of fixed-maturity investments available for sale | 28,032 | 30,492 | |||||
Proceeds from redemptions of fixed-maturity investments held to maturity | 3,195 | 2,635 | |||||
Purchases of trading securities | (2,206,653 | ) | (1,338,204 | ) | |||
Sales and redemptions of short-term investments, net | 407,494 | 91,768 | |||||
Purchases of other invested assets, net | (2,717 | ) | (955 | ) | |||
Proceeds from the sale of investment in affiliate | — | 172,017 | |||||
Purchases of property and equipment, net | (5,729 | ) | (1,279 | ) | |||
Net cash provided by (used in) investing activities | 770,374 | (49,601 | ) | ||||
Cash flows from financing activities: | |||||||
Dividends paid | (667 | ) | (536 | ) | |||
Redemption of long-term debt | (160,000 | ) | (29,348 | ) | |||
Issuance of common stock | — | 526,185 | |||||
Net cash (used in) provided by financing activities | (160,667 | ) | 496,301 | ||||
Effect of exchange rate changes on cash | (2 | ) | (388 | ) | |||
Increase (decrease) in cash | 788 | (14,407 | ) | ||||
Cash, beginning of period | 20,334 | 41,574 | |||||
Cash, end of period | $ | 21,122 | $ | 27,167 | |||
Supplemental disclosures of cash flow information: | |||||||
Income taxes (received) paid | $ | (1,275 | ) | $ | 1,725 | ||
Interest paid | $ | 27,244 | $ | 20,529 |
• | Potential adverse effects on us of the failure or significant delay of the United States ("U.S.") economy to fully recover, including ongoing uncertainty in the housing and related credit markets and high unemployment, which could increase our mortgage insurance or financial guaranty losses beyond existing expectations (See Notes 7, 8 and 9). |
• | Potential adverse effects if the capital and liquidity levels of Radian Group or our regulated subsidiaries' statutory capital levels are deemed inadequate to support current business operations and strategies. Radian Group had immediately available, directly or through an unregulated direct subsidiary, unrestricted cash and liquid investments of $680.2 million and $797.5 million at June 30, 2011 and December 31, 2010, respectively, which includes $150 million of investments contained in our committed preferred custodial trust securities ("CPS") as discussed in Note 5. Radian Guaranty Inc.'s ("Radian Guaranty") statutory policyholders' surplus declined from $1.3 billion at December 31, 2010, to $1.0 billion at June 30, 2011, driven primarily by a statutory net loss for the six months ended June 30, 2011, of approximately $273 million. |
• | Potential adverse effects if Radian Guaranty's regulatory risk-to-capital ratio were to increase above 25 to 1, including the possibility that insurance regulators or the Government Sponsored Enterprises ("GSEs") may limit or cause Radian Guaranty to cease underwriting new mortgage insurance risk, and Radian Guaranty's customers may decide not to insure loans with Radian Guaranty or may otherwise limit the type or amount of business done with Radian Guaranty. We have been preparing Radian Mortgage Assurance, Inc. ("Radian Mortgage Assurance", formerly Amerin Guaranty Corporation) to write new first-lien mortgage ("first-lien") insurance, if needed, and have been pursuing waivers from those states that impose a 25 to 1 limitation. If Radian Guaranty's risk-to-capital were to increase above 25 to 1, and we are unable to continue writing new first-lien insurance business through Radian Mortgage Assurance or obtain the necessary waivers from the risk-to-capital limitations, it will significantly impair our franchise value and reduce our cash flow associated with new business while we continue to honor and settle valid claims and related expenses. At June 30, 2011, Radian Guaranty's risk-to-capital ratio was 19.8 to 1, compared to 16.8 to 1 at December 31, 2010. This increase was primarily due to the statutory net loss discussed above, partially offset by an excess-of-loss reinsurance agreement with Radian Insurance Inc., under which Radian Guaranty transferred approximately $2 billion of risk in force to Radian Insurance Inc. in the second quarter of 2011. |
• | Potential adverse effects if Radian Guaranty were to lose its eligibility status with the GSEs, which could occur at any time at the discretion of the GSEs. Loss of GSE eligibility would likely result in a significant curtailment of our ability to write new mortgage insurance business, which would significantly impair our franchise value and limit our cash flow arising from new business while we continue to honor and settle valid claims and related expenses. |
• | Potential adverse effects from legislative efforts to reform the housing finance market, including the possibility that new federal legislation could reduce or eliminate the requirement for private mortgage insurance or place additional significant obligations or restrictions on mortgage insurers. |
• | Potential impact on our businesses as a result of the implementation of regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), the effect of the Dodd-Frank Act on the financial services industry in general, and on our mortgage insurance and financial guaranty businesses in particular, including whether and to what extent loans with mortgage insurance are considered "qualified residential mortgages" for purposes of the Dodd-Frank Act securitization provisions or "qualified mortgages" for purposes of the ability to repay provisions of the Dodd-Frank Act and potential obligations to post collateral on our existing insured derivatives portfolio. |
• | Potential adverse effects on Radian Group liquidity if regulators disallow or terminate our expense allocation agreements among Radian Group and its subsidiaries. In the first six months of 2011, Radian Group received $59.3 million in reimbursements from its subsidiaries under these agreements. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Mortgage Insurance | |||||||||||||||
Net premiums written—insurance | $ | 164,194 | $ | 167,909 | $ | 345,040 | $ | 324,941 | |||||||
Net premiums earned—insurance | $ | 164,325 | $ | 179,992 | $ | 350,459 | $ | 357,331 | |||||||
Net investment income | 24,853 | 28,544 | 51,686 | 54,903 | |||||||||||
Net gains on investments | 27,425 | 34,441 | 45,187 | 63,222 | |||||||||||
Net impairment losses recognized in earnings | (11 | ) | (38 | ) | (11 | ) | (56 | ) | |||||||
Change in fair value of derivative instruments | 258 | (1,310 | ) | (136 | ) | (1,033 | ) | ||||||||
Net gains (losses) on other financial instruments | (631 | ) | (7,973 | ) | 1,835 | (38,173 | ) | ||||||||
Other income | 1,124 | 1,623 | 2,524 | 3,422 | |||||||||||
Total revenues | 217,343 | 235,279 | 451,544 | 439,616 | |||||||||||
Provision for losses | 269,992 | 427,622 | 683,965 | 956,713 | |||||||||||
Change in reserve for premium deficiency | (3,102 | ) | (7,354 | ) | (4,485 | ) | (8,585 | ) | |||||||
Policy acquisition costs | 8,601 | 12,113 | 18,817 | 22,617 | |||||||||||
Other operating expenses | 33,913 | 25,639 | 68,050 | 71,872 | |||||||||||
Interest expense | 146 | 1,549 | 9,935 | 3,669 | |||||||||||
Total expenses | 309,550 | 459,569 | 776,282 | 1,046,286 | |||||||||||
Equity in net income of affiliates | — | — | — | — | |||||||||||
Pretax loss | (92,207 | ) | (224,290 | ) | (324,738 | ) | (606,670 | ) | |||||||
Income tax provision (benefit) | 5,374 | (71,763 | ) | 8,875 | (217,610 | ) | |||||||||
Net loss | $ | (97,581 | ) | $ | (152,527 | ) | $ | (333,613 | ) | $ | (389,060 | ) | |||
Cash and investments | $ | 3,334,789 | $ | 3,886,819 | |||||||||||
Deferred policy acquisition costs | 44,509 | 35,220 | |||||||||||||
Total assets | 3,688,720 | 5,367,065 | |||||||||||||
Unearned premiums | 191,737 | 207,354 | |||||||||||||
Reserve for losses and LAE | 3,268,582 | 3,656,746 | |||||||||||||
VIE debt | 56,239 | 253,178 | |||||||||||||
Derivative liabilities | — | 358 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Financial Guaranty | |||||||||||||||
Net premiums written—insurance | $ | (11,416 | ) | $ | (8,008 | ) | $ | (9,513 | ) | $ | (9,539 | ) | |||
Net premiums earned—insurance | $ | 24,609 | $ | 23,454 | $ | 41,498 | $ | 44,383 | |||||||
Net investment income | 18,970 | 20,075 | 34,377 | 39,074 | |||||||||||
Net gains on investments | 16,811 | 22,821 | 36,484 | 51,988 | |||||||||||
Net impairment losses recognized in earnings | — | — | — | — | |||||||||||
Change in fair value of derivative instruments | 188,468 | (523,296 | ) | 432,754 | (601,527 | ) | |||||||||
Net gains (losses) on other financial instruments | 5,678 | (55,227 | ) | 78,463 | (126,591 | ) | |||||||||
Other income | 72 | (3,695 | ) | 120 | 218 | ||||||||||
Total revenues | 254,608 | (515,868 | ) | 623,696 | (592,455 | ) | |||||||||
Provision for losses | (6,426 | ) | 7,544 | 6,974 | 22,333 | ||||||||||
Change in reserve for premium deficiency | — | — | — | — | |||||||||||
Policy acquisition costs | 5,786 | 4,684 | 9,701 | 9,048 | |||||||||||
Other operating expenses | 12,041 | 9,476 | 24,123 | 28,149 | |||||||||||
Interest expense | 15,933 | 6,696 | 23,168 | 15,380 | |||||||||||
Total expenses | 27,334 | 28,400 | 63,966 | 74,910 | |||||||||||
Equity in net income of affiliates | — | — | 65 | 78 | |||||||||||
Pretax income (loss) | 227,274 | (544,268 | ) | 559,795 | (667,287 | ) | |||||||||
Income tax benefit | (7,422 | ) | (194,848 | ) | (13,939 | ) | (238,889 | ) | |||||||
Net income (loss) | $ | 234,696 | $ | (349,420 | ) | $ | 573,734 | $ | (428,398 | ) | |||||
Cash and investments | $ | 2,703,740 | $ | 3,390,788 | |||||||||||
Deferred policy acquisition costs | 94,417 | 113,403 | |||||||||||||
Total assets | 3,240,076 | 3,981,423 | |||||||||||||
Unearned premiums | 438,076 | 529,321 | |||||||||||||
Reserve for losses and LAE | 75,042 | 124,494 | |||||||||||||
VIE debt | 337,501 | 374,460 | |||||||||||||
Derivative liabilities | 313,708 | 747,736 |
(In thousands) | Three Months Ended June 30, 2010 | Six Months Ended June 30, 2010 | |||||
Financial Services | |||||||
Net premiums written—insurance | $ | — | $ | — | |||
Net premiums earned—insurance | $ | — | $ | — | |||
Net investment income | — | — | |||||
Net gains on investments | — | — | |||||
Net impairment losses recognized in earnings | — | — | |||||
Change in fair value of derivative instruments | — | — | |||||
Net (losses) gains on other financial instruments | — | — | |||||
Gain on sale of affiliate | 34,815 | 34,815 | |||||
Other income | — | 63 | |||||
Total revenues | 34,815 | 34,878 | |||||
Provision for losses | — | — | |||||
Change in reserve for premium deficiency | — | — | |||||
Policy acquisition costs | — | — | |||||
Other operating expenses | 50 | 200 | |||||
Interest expense | — | — | |||||
Total expenses | 50 | 200 | |||||
Equity in net income of affiliates | 6,570 | 14,590 | |||||
Pretax income | 41,335 | 49,268 | |||||
Income tax provision | 14,468 | 17,245 | |||||
Net income | $ | 26,867 | $ | 32,023 | |||
Cash and investments | $ | — | |||||
Deferred policy acquisition costs | — | ||||||
Total assets | — | ||||||
Unearned premiums | — | ||||||
Reserve for losses and LAE | — | ||||||
VIE debt | — | ||||||
Derivative liabilities | — |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Consolidated | |||||||||||||||
Net income (loss): | |||||||||||||||
Mortgage Insurance | $ | (97,581 | ) | $ | (152,527 | ) | $ | (333,613 | ) | $ | (389,060 | ) | |||
Financial Guaranty | 234,696 | (349,420 | ) | 573,734 | (428,398 | ) | |||||||||
Financial Services | — | 26,867 | — | 32,023 | |||||||||||
Total | $ | 137,115 | $ | (475,080 | ) | $ | 240,121 | $ | (785,435 | ) |
(In millions) | June 30, 2011 | December 31, 2010 | |||||
Balance Sheets | |||||||
Derivative assets: | |||||||
Financial Guaranty credit derivative assets | $ | 22.2 | $ | 14.5 | |||
Net interest margin securities ("NIMS") assets | 4.7 | 10.8 | |||||
Other | 0.4 | 0.9 | |||||
Total derivative assets | 27.3 | 26.2 | |||||
Derivative liabilities: | |||||||
Financial Guaranty credit derivative liabilities | 294.9 | 704.4 | |||||
Financial Guaranty VIE derivative liabilities | 18.8 | 19.2 | |||||
Total derivative liabilities | 313.7 | 723.6 | |||||
Total derivative liabilities, net | $ | (286.4 | ) | $ | (697.4 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Statements of Operations | |||||||||||||||
Net premiums earned—derivatives | $ | 10.5 | $ | 12.0 | $ | 21.4 | $ | 24.1 | |||||||
Financial Guaranty credit derivatives | 181.9 | (524.2 | ) | 416.5 | (608.3 | ) | |||||||||
Financial Guaranty VIE derivatives | (4.0 | ) | (7.5 | ) | (4.9 | ) | (10.7 | ) | |||||||
NIMS | 0.4 | (0.3 | ) | (1.5 | ) | (0.5 | ) | ||||||||
Mortgage Insurance domestic and international CDS | — | (0.4 | ) | — | (0.4 | ) | |||||||||
Put options on CPS | — | (4.2 | ) | — | (6.3 | ) | |||||||||
Other | (0.1 | ) | — | 1.1 | (0.5 | ) | |||||||||
Change in fair value of derivative instruments | $ | 188.7 | $ | (524.6 | ) | $ | 432.6 | $ | (602.6 | ) |
($ in millions) | June 30, 2011 | |||||||||
Number of Contracts | Par/ Notional Exposure | Total Net Asset/ (Liability) | ||||||||
Product | ||||||||||
NIMS related and other (1) | — | $ | — | $ | 5.1 | |||||
Corporate collateralized debt obligations ("CDOs") | 79 | 31,854.3 | (6.1 | ) | ||||||
Non-Corporate CDOs and other derivative transactions: | ||||||||||
Trust Preferred Securities ("TruPs") | 19 | 1,977.2 | (77.7 | ) | ||||||
CDOs of commercial mortgage-backed securities ("CMBS") | 4 | 1,831.0 | (70.3 | ) | ||||||
Other: | ||||||||||
Structured finance | 9 | 815.0 | (62.0 | ) | ||||||
Public finance | 27 | 1,794.0 | (39.6 | ) | ||||||
Total Non-Corporate CDOs and other derivative transactions | 59 | 6,417.2 | (249.6 | ) | ||||||
Assumed financial guaranty credit derivatives: | ||||||||||
Structured finance | 264 | 1,036.1 | (15.5 | ) | ||||||
Public finance | 10 | 166.6 | (1.5 | ) | ||||||
Total Assumed | 274 | 1,202.7 | (17.0 | ) | ||||||
Financial Guaranty VIE derivative liabilities (2) | — | — | (18.8 | ) | ||||||
Grand Total | 412 | $ | 39,474.2 | $ | (286.4 | ) |
(1) | Represents NIMS derivative assets related to consolidated NIMS VIEs. Also includes common stock warrants. Because none of these investments represent financial guaranty contracts that we issued, they cannot become liabilities, and therefore, do not represent additional par exposure. |
(2) | Represents the fair value of an interest rate swap included in the consolidation of one of our financial guaranty transactions. The notional amount of the interest rate swap does not represent additional par exposure, and therefore, is excluded from this table. See Note 5 for information on our maximum exposure to loss from our consolidated financial guaranty transactions. |
(In basis points) | June 30, 2011 | December 31, 2010 | June 30, 2010 | December 31, 2009 | |||||||
Radian Group's five-year CDS spread | 968 | 465 | 701 | 1,530 |
(In millions) | Fair Value Liability before Consideration of Radian Non-Performance Risk June 30, 2011 | Impact of Radian Non-Performance Risk June 30, 2011 | Fair Value Liability Recorded June 30, 2011 | ||||||||
Product | |||||||||||
Corporate CDOs | $ | (220.2 | ) | $ | 214.1 | $ | (6.1 | ) | |||
Non-Corporate CDO-related (1) | (1,579.1 | ) | 1,188.9 | (390.2 | ) | ||||||
NIMS-related (2) | (57.6 | ) | 6.1 | (51.5 | ) | ||||||
Total | $ | (1,856.9 | ) | $ | 1,409.1 | $ | (447.8 | ) |
(In millions) | Fair Value Liability before Consideration of Radian Non-Performance Risk December 31, 2010 | Impact of Radian Non-Performance Risk December 31, 2010 | Fair Value Liability Recorded December 31, 2010 | ||||||||
Product | |||||||||||
Corporate CDOs | $ | (387.1 | ) | $ | 281.5 | $ | (105.6 | ) | |||
Non-Corporate CDO-related (1) | (1,696.2 | ) | 934.1 | (762.1 | ) | ||||||
NIMS-related (2) | (134.1 | ) | 4.8 | (129.3 | ) | ||||||
Total | $ | (2,217.4 | ) | $ | 1,220.4 | $ | (997.0 | ) |
(1) | Includes the net liability recorded within derivative assets and derivative liabilities, and the net liability recorded within VIE debt and other financial statement line items for consolidated VIEs. |
(2) | Includes NIMS VIE debt and NIMS derivative assets. |
(In millions) | Level I | Level II | Level III | Total | ||||||||||||
Assets and Liabilities at Fair Value | ||||||||||||||||
Investment Portfolio: | ||||||||||||||||
U.S. government and agency securities | $ | 618.2 | $ | 672.6 | $ | — | $ | 1,290.8 | ||||||||
State and municipal obligations | — | 1,015.1 | 23.6 | 1,038.7 | ||||||||||||
Money market instruments | 360.4 | — | — | 360.4 | ||||||||||||
Corporate bonds and notes | — | 865.2 | — | 865.2 | ||||||||||||
Residential mortgage-backed securities ("RMBS") | — | 954.6 | 61.4 | 1,016.0 | ||||||||||||
CMBS | — | 190.4 | 29.4 | 219.8 | ||||||||||||
CDO | — | — | 3.9 | 3.9 | ||||||||||||
Other ABS | — | 114.1 | 2.0 | 116.1 | ||||||||||||
Foreign government securities | — | 101.6 | — | 101.6 | ||||||||||||
Hybrid securities | — | 367.8 | — | 367.8 | ||||||||||||
Equity securities (1) | 176.9 | 198.5 | 5.6 | 381.0 | ||||||||||||
Other investments (2) | — | 151.6 | 5.8 | 157.4 | ||||||||||||
Total Investments at Fair Value (3) | 1,155.5 | 4,631.5 | 131.7 | 5,918.7 | ||||||||||||
Derivative Assets | — | 0.4 | 26.9 | 27.3 | ||||||||||||
Other Assets (4) | — | — | 113.7 | 113.7 | ||||||||||||
Total Assets at Fair Value | $ | 1,155.5 | $ | 4,631.9 | $ | 272.3 | $ | 6,059.7 | ||||||||
Derivative Liabilities | $ | — | $ | — | $ | 313.7 | $ | 313.7 | ||||||||
VIE debt (5) | — | — | 393.7 | 393.7 | ||||||||||||
Total Liabilities at Fair Value | $ | — | $ | — | $ | 707.4 | $ | 707.4 |
(1) | Comprised of broadly diversified domestic equity mutual funds included within Level I and various preferred and common stocks invested across numerous companies and industries included within Levels II and III. |
(2) | Comprised of short-term commercial paper within CPS trusts ($150.0 million) and short-term CDs ($1.6 million) included within Level II, and lottery annuities ($1.8 million) and TruPs held by consolidated VIEs ($4.0 million) included within Level III. |
(3) | Does not include fixed-maturities held to maturity ($7.8 million) and other invested assets ($62.3 million), primarily invested in limited partnerships, accounted for as cost-method investments and not measured at fair value. |
(4) | Comprised of manufactured housing loan collateral related to two consolidated financial guaranty VIEs. |
(5) | Comprised of consolidated debt related to NIMS VIEs ($56.2 million) and amounts related to financial guaranty VIEs ($337.5 million). |
(In millions) | Level I | Level II | Level III | Total | ||||||||||||
Assets and Liabilities at Fair Value | ||||||||||||||||
Investment Portfolio: | ||||||||||||||||
U.S. government and agency securities | $ | 1,075.0 | $ | 731.4 | $ | — | $ | 1,806.4 | ||||||||
State and municipal obligations | — | 1,159.7 | 23.2 | 1,182.9 | ||||||||||||
Money market instruments | 310.9 | — | — | 310.9 | ||||||||||||
Corporate bonds and notes | — | 1,060.4 | — | 1,060.4 | ||||||||||||
RMBS | — | 913.5 | 52.5 | 966.0 | ||||||||||||
CMBS | — | 173.6 | 23.0 | 196.6 | ||||||||||||
CDO | — | — | 2.4 | 2.4 | ||||||||||||
Other ABS | — | 131.1 | 3.3 | 134.4 | ||||||||||||
Foreign government securities | — | 83.5 | — | 83.5 | ||||||||||||
Hybrid securities | — | 318.9 | — | 318.9 | ||||||||||||
Equity securities (1) | 168.4 | 168.6 | 2.9 | 339.9 | ||||||||||||
Other investments (2) | — | 150.0 | 4.6 | 154.6 | ||||||||||||
Total Investments at Fair Value (3) | 1,554.3 | 4,890.7 | 111.9 | 6,556.9 | ||||||||||||
Derivative Assets | — | — | 26.2 | 26.2 | ||||||||||||
Other Assets (4) | — | — | 109.7 | 109.7 | ||||||||||||
Total Assets at Fair Value | $ | 1,554.3 | $ | 4,890.7 | $ | 247.8 | $ | 6,692.8 | ||||||||
Derivative Liabilities | $ | — | $ | — | $ | 723.6 | $ | 723.6 | ||||||||
VIE debt (5) | — | — | 520.1 | 520.1 | ||||||||||||
Total Liabilities at Fair Value | $ | — | $ | — | $ | 1,243.7 | $ | 1,243.7 |
(1) | Comprised of broadly diversified domestic equity mutual funds included within Level I and various preferred and common stocks invested across numerous companies and industries included within Levels II and III. |
(2) | Comprised of short-term commercial paper within CPS trusts included within Level II, and lottery annuities ($2.6 million) and TruPs held by consolidated VIEs ($2.0 million) included within Level III. |
(3) | Does not include fixed-maturities held to maturity ($10.8 million), certain short-term investments ($1.6 million), primarily invested in CDs and time deposits, and other invested assets ($59.6 million), primarily invested in limited partnerships, accounted for as cost-method investments and not measured at fair value. |
(4) | Comprised of manufactured housing loan collateral related to two consolidated financial guaranty VIEs. |
(5) | Comprised of consolidated debt related to NIMS VIEs ($141.0 million) and amounts related to financial guaranty VIEs ($379.1 million) that required consolidation as of January 1, 2010, under the accounting standard update regarding improvements to financial reporting by enterprises involving VIEs. |
(In millions) | Beginning Balance at April 1, 2011 | Realized and Unrealized Gains (Losses) Recorded in Earnings (1) | Purchases | Sales | Issuances | Settlements | Transfers Into (Out of) Level III (2) | Ending Balance at June 30, 2011 | |||||||||||||||||||||||
Investments: | |||||||||||||||||||||||||||||||
State and municipal obligations | $ | 23.2 | $ | 0.4 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 23.6 | |||||||||||||||
RMBS | 55.3 | 7.6 | — | (1.6 | ) | — | 0.1 | — | 61.4 | ||||||||||||||||||||||
CMBS | 24.0 | 5.4 | — | — | — | — | — | 29.4 | |||||||||||||||||||||||
CDO | 4.1 | (0.3 | ) | — | 0.1 | — | — | — | 3.9 | ||||||||||||||||||||||
Other ABS | 4.7 | (2.7 | ) | — | — | — | — | — | 2.0 | ||||||||||||||||||||||
Hybrid securities | — | 0.6 | — | — | — | — | (0.6 | ) | — | ||||||||||||||||||||||
Equity securities | 4.3 | (0.7 | ) | 2.1 | (0.1 | ) | — | — | — | 5.6 | |||||||||||||||||||||
Other investments | 3.9 | 1.9 | — | — | — | — | — | 5.8 | |||||||||||||||||||||||
Total Level III Investments | 119.5 | 12.2 | 2.1 | (1.6 | ) | — | 0.1 | (0.6 | ) | 131.7 | |||||||||||||||||||||
NIMS derivative assets | 9.0 | 0.4 | — | — | — | (4.7 | ) | — | 4.7 | ||||||||||||||||||||||
Other assets | 106.3 | 14.4 | — | — | — | (7.0 | ) | — | 113.7 | ||||||||||||||||||||||
Total Level III Assets, net | $ | 234.8 | $ | 27.0 | $ | 2.1 | $ | (1.6 | ) | $ | — | $ | (11.6 | ) | $ | (0.6 | ) | $ | 250.1 | ||||||||||||
Derivative liabilities, net | $ | (472.2 | ) | $ | 188.3 | $ | — | $ | — | $ | — | $ | (7.6 | ) | $ | — | $ | (291.5 | ) | ||||||||||||
VIE debt | (373.0 | ) | (44.0 | ) | — | — | — | 23.3 | — | (393.7 | ) | ||||||||||||||||||||
Total Level III Liabilities, net | $ | (845.2 | ) | $ | 144.3 | $ | — | $ | — | $ | — | $ | 15.7 | $ | — | $ | (685.2 | ) |
(1) | Includes unrealized gains (losses) relating to assets and liabilities still held as of June 30, 2011, as follows: $10.6 million for investments, $(1.5) million for NIMS derivative assets, $11.2 million for other assets, $173.4 million for derivative liabilities, and $(9.8) million for VIE debt. |
(2) | Transfers are recognized at the end of the period as the availability of market observed inputs change from period to period. |
(In millions) | Beginning Balance at January 1, 2011 | Realized and Unrealized Gains (Losses) Recorded in Earnings (1) | Purchases | Sales | Issuances | Settlements | Transfers Into (Out of) Level III (2) | Ending Balance at June 30, 2011 | |||||||||||||||||||||||
Investments: | |||||||||||||||||||||||||||||||
State and municipal obligations | $ | 23.2 | $ | 0.4 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 23.6 | |||||||||||||||
RMBS | 52.5 | 11.6 | — | (1.6 | ) | — | (1.1 | ) | — | 61.4 | |||||||||||||||||||||
CMBS | 23.0 | 6.4 | — | — | — | — | — | 29.4 | |||||||||||||||||||||||
CDO | 2.4 | 1.3 | — | 0.1 | — | 0.1 | — | 3.9 | |||||||||||||||||||||||
Other ABS | 3.3 | (1.3 | ) | — | — | — | — | — | 2.0 | ||||||||||||||||||||||
Hybrid securities | — | (0.1 | ) | 0.7 | — | — | — | (0.6 | ) | — | |||||||||||||||||||||
Equity securities | 2.9 | (0.3 | ) | 3.2 | (0.2 | ) | — | — | — | 5.6 | |||||||||||||||||||||
Other investments | 4.6 | 2.0 | — | (0.5 | ) | — | (0.3 | ) | — | 5.8 | |||||||||||||||||||||
Total Level III Investments | 111.9 | 20.0 | 3.9 | (2.2 | ) | — | (1.3 | ) | (0.6 | ) | 131.7 | ||||||||||||||||||||
NIMS derivative assets | 11.7 | (2.0 | ) | 0.1 | — | — | (4.7 | ) | (0.4 | ) | 4.7 | ||||||||||||||||||||
Other assets | 109.7 | 18.3 | — | — | — | (14.3 | ) | — | 113.7 | ||||||||||||||||||||||
Total Level III Assets, net | $ | 233.3 | $ | 36.3 | $ | 4.0 | $ | (2.2 | ) | $ | — | $ | (20.3 | ) | $ | (1.0 | ) | $ | 250.1 | ||||||||||||
Derivative liabilities, net | $ | (709.1 | ) | $ | 433.0 | $ | — | $ | — | $ | — | $ | (15.4 | ) | $ | — | $ | (291.5 | ) | ||||||||||||
VIE debt | (520.1 | ) | 28.9 | — | — | — | 97.5 | — | (393.7 | ) | |||||||||||||||||||||
Total Level III Liabilities, net | $ | (1,229.2 | ) | $ | 461.9 | $ | — | $ | — | $ | — | $ | 82.1 | $ | — | $ | (685.2 | ) |
(1) | Includes unrealized gains (losses) relating to assets and liabilities still held as of June 30, 2011, as follows: $18.1 million for investments, $(2.1) million for NIMS derivative assets, $12.0 million for other assets, $399.1 million for derivative liabilities, and $(17.1) million for VIE debt. |
(2) | Transfers are recognized at the end of the period as the availability of market observed inputs change from period to period. |
(In millions) | Beginning Balance at April 1, 2010 | Realized and Unrealized Gains(Losses) Recorded in Earnings (1) | Purchases | Sales | Issuances | Settlements | Transfers Into (Out of) Level III (2) | Ending Balance at June 30, 2010 | |||||||||||||||||||||||
Investments: | |||||||||||||||||||||||||||||||
State and municipal obligations | $ | 24.4 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 24.4 | |||||||||||||||
RMBS | 54.1 | 6.7 | — | (3.5 | ) | — | — | — | 57.3 | ||||||||||||||||||||||
CMBS | 24.3 | (1.1 | ) | — | — | — | — | — | 23.2 | ||||||||||||||||||||||
CDO | 3.8 | (1.4 | ) | — | — | — | — | — | 2.4 | ||||||||||||||||||||||
Other ABS | 3.5 | (0.2 | ) | — | — | — | — | — | 3.3 | ||||||||||||||||||||||
Hybrid securities | 1.1 | — | — | — | — | — | (1.1 | ) | — | ||||||||||||||||||||||
Equity securities | 1.5 | (0.2 | ) | 0.1 | — | — | — | 0.3 | 1.7 | ||||||||||||||||||||||
Other investments | 6.7 | (1.7 | ) | — | — | — | (0.2 | ) | — | 4.8 | |||||||||||||||||||||
Total Level III Investments | 119.4 | 2.1 | 0.1 | (3.5 | ) | — | (0.2 | ) | (0.8 | ) | 117.1 | ||||||||||||||||||||
NIMS and CPS derivative assets | 42.5 | (4.5 | ) | (26.7 | ) | — | — | — | — | 11.3 | |||||||||||||||||||||
Other assets | 118.3 | 8.9 | (11.1 | ) | — | — | — | — | 116.1 | ||||||||||||||||||||||
Total Level III Assets, net | $ | 280.2 | $ | 6.5 | $ | (37.7 | ) | $ | (3.5 | ) | $ | — | $ | (0.2 | ) | $ | (0.8 | ) | $ | 244.5 | |||||||||||
Derivative liabilities, net | $ | (210.2 | ) | $ | (520.1 | ) | $ | (7.1 | ) | $ | — | $ | — | $ | — | $ | — | $ | (737.4 | ) | |||||||||||
VIE debt | (596.1 | ) | (63.4 | ) | 31.9 | — | — | — | — | (627.6 | ) | ||||||||||||||||||||
Total Level III Liabilities, net | $ | (806.3 | ) | $ | (583.5 | ) | $ | 24.8 | $ | — | $ | — | $ | — | $ | — | $ | (1,365.0 | ) |
(1) | Includes unrealized gains (losses) relating to assets and liabilities still held as of June 30, 2010, as follows: $1.5 million for investments, $(4.1) million for NIMS and CPS derivative assets, $1.3 million for other assets, $(528.1) million for derivative liabilities, and $(11.4) million for VIE debt. |
(2) | Transfers are recognized at the end of the period as the availability of market observed inputs change from period to period. |
(In millions) | Beginning Balance at January 1, 2010 | VIE Consolidation at January 1, 2010 (1) | Realized and Unrealized Gains(Losses) Recorded in Earnings (2) | Purchases | Sales | Issuances | Settlements | Transfers Into (Out of) Level III (3) | Ending Balance at June 30, 2010 | ||||||||||||||||||||||||||
Investments: | |||||||||||||||||||||||||||||||||||
State and municipal obligations | $ | 24.4 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 24.4 | |||||||||||||||||
RMBS | — | 44.3 | 18.7 | — | (5.7 | ) | — | — | — | 57.3 | |||||||||||||||||||||||||
CMBS | — | 23.8 | (0.6 | ) | — | — | — | — | — | 23.2 | |||||||||||||||||||||||||
CDO | — | 3.8 | (1.5 | ) | — | 0.1 | — | — | — | 2.4 | |||||||||||||||||||||||||
Other ABS | — | 3.5 | (0.2 | ) | — | — | — | — | — | 3.3 | |||||||||||||||||||||||||
Hybrid securities | 0.6 | — | — | — | — | — | — | (0.6 | ) | — | |||||||||||||||||||||||||
Equity securities | 1.7 | — | (0.5 | ) | 0.2 | — | — | — | 0.3 | 1.7 | |||||||||||||||||||||||||
Other investments | 3.8 | 3.7 | (1.7 | ) | — | (0.8 | ) | — | (0.2 | ) | — | 4.8 | |||||||||||||||||||||||
Total Level III Investments | 30.5 | 79.1 | 14.2 | 0.2 | (6.4 | ) | — | (0.2 | ) | (0.3 | ) | 117.1 | |||||||||||||||||||||||
NIMS and CPS derivative assets | 44.7 | — | (7.3 | ) | 0.2 | (0.1 | ) | — | (26.2 | ) | — | 11.3 | |||||||||||||||||||||||
Other assets | — | 119.7 | 10.9 | — | — | — | (14.5 | ) | — | 116.1 | |||||||||||||||||||||||||
Total Level III Assets, net | $ | 75.2 | $ | 198.8 | $ | 17.8 | $ | 0.4 | $ | (6.5 | ) | $ | — | $ | (40.9 | ) | $ | (0.3 | ) | $ | 244.5 | ||||||||||||||
Derivative liabilities, net | $ | (214.9 | ) | $ | 51.8 | $ | (595.2 | ) | $ | — | $ | — | $ | — | $ | 20.9 | $ | — | $ | (737.4 | ) | ||||||||||||||
VIE debt | (296.1 | ) | (253.5 | ) | (170.4 | ) | — | — | — | 92.4 | — | (627.6 | ) | ||||||||||||||||||||||
Total Level III Liabilities, net | $ | (511.0 | ) | $ | (201.7 | ) | $ | (765.6 | ) | $ | — | $ | — | $ | — | $ | 113.3 | $ | — | $ | (1,365.0 | ) |
(1) | Represents the impact of our adoption of the accounting standard update regarding improvements to financial reporting by enterprises involving VIEs. |
(2) | Includes unrealized gains (losses) relating to assets and liabilities still held as of June 30, 2010, as follows: $13.1 million for investments, $(5.9) million for NIMS and CPS derivative assets, $3.3 million for other assets, $(635.2) million for derivative liabilities, and $(42.1) million for VIE debt. |
(3) | Transfers are recognized at the end of the period as the availability of market observed inputs change from period to period. |
June 30, 2011 | December 31, 2010 | ||||||||||||||
(In millions) | Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | |||||||||||
Assets: | |||||||||||||||
Fixed-maturities held to maturity | $ | 7.8 | $ | 8.3 | $ | 10.8 | $ | 11.4 | |||||||
Short-term investments (carried at cost) | — | — | 1.6 | 1.6 | |||||||||||
Other invested assets | 62.3 | 66.2 | 59.6 | 58.4 | |||||||||||
Liabilities: | |||||||||||||||
Long-term debt | 811.3 | 767.9 | 964.8 | 1,082.5 | |||||||||||
Non-derivative financial guaranty liabilities | 377.2 | 477.2 | 406.1 | 531.1 |
(In millions) | June 30, 2011 | December 31, 2010 | |||||
Balance Sheet: | |||||||
Derivative assets | $ | 4.7 | $ | 10.8 | |||
VIE debt—at fair value | 56.2 | 141.0 | |||||
Maximum exposure (1) | 58.7 | 135.8 |
(1) | The difference between the carrying amounts of the net asset/liability position and maximum exposure related to VIEs is primarily due to the difference between the face amount of the obligation and the recorded fair values, which include an adjustment for our non-performance risk. The maximum exposure is based on the net par amount of our insured obligation as of the reporting date. |
Six Months Ended June 30, | |||||||
(In millions) | 2011 | 2010 | |||||
Statement of Operations: | |||||||
Net investment income | $ | 0.3 | $ | — | |||
Change in fair value of derivative instruments—loss | (1.5 | ) | (0.5 | ) | |||
Net gain (loss) on other financial instruments | 1.8 | (38.7 | ) | ||||
Net Cash Outflow | 78.1 | 73.5 |
Consolidated | |||||||
(In millions) | June 30, 2011 | December 31, 2010 | |||||
Balance Sheet: | |||||||
Short-term investments | $ | 150.0 | $ | 150.0 | |||
Maximum exposure (1) | 150.0 | 150.0 |
(1) | The maximum exposure is based on our carrying amounts of the investments. |
Consolidated | Unconsolidated (1) | ||||||||||||||
Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Statement of Operations: | |||||||||||||||
Net investment income | $ | 0.1 | $ | — | $ | — | $ | — | |||||||
Change in fair value of derivative instruments—loss | — | — | — | (6.3 | ) | ||||||||||
Net loss on other financial instruments | — | (21.6 | ) | — | — | ||||||||||
Other operating expenses | 0.1 | 0.2 | — | — | |||||||||||
Net Cash Outflow | — | 39.0 | — | 0.9 |
(1) | Activity displayed reflects the impact, for the periods prior to June 30, 2010, for one CPS custodial trust that was not consolidated prior to that date. |
Consolidated | Unconsolidated | ||||||||||||||
(In millions) | June 30, 2011 | December 31, 2010 | June 30, 2011 | December 31, 2010 | |||||||||||
Balance Sheet: | |||||||||||||||
Trading securities | $ | 100.7 | $ | 83.2 | $ | — | $ | — | |||||||
Derivative assets | — | — | 5.6 | 6.0 | |||||||||||
Premiums receivable | — | — | 4.3 | 5.2 | |||||||||||
Other assets | 115.7 | 112.4 | — | — | |||||||||||
Unearned premiums | — | — | 4.6 | 6.0 | |||||||||||
Reserve for losses and LAE | — | — | 14.4 | 15.0 | |||||||||||
Derivative liabilities | 18.8 | 19.2 | 258.5 | 585.9 | |||||||||||
VIE debt—at fair value | 337.5 | 379.1 | — | — | |||||||||||
Accounts payable and accrued expenses | 0.7 | 0.8 | — | — | |||||||||||
Maximum exposure (1) | 581.8 | 584.6 | 6,610.4 | 6,874.2 |
(1) | The difference between the carrying amounts of the net asset/liability position and maximum exposure related to VIEs is primarily due to the difference between the face amount of the obligation and the recorded fair values, which include an adjustment for our non-performance risk. The maximum exposure is based on the net par amount of our insured obligation as of the reporting date. |
Consolidated | Unconsolidated | ||||||||||||||
Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Statement of Operations: | |||||||||||||||
Premiums earned | $ | — | $ | — | $ | 1.6 | $ | 1.3 | |||||||
Net investment income | 4.1 | 5.6 | — | — | |||||||||||
Net gains on investments | 20.0 | 14.6 | — | — | |||||||||||
Change in fair value of derivative instruments—(loss) gain | (4.9 | ) | (10.7 | ) | 330.0 | (360.6 | ) | ||||||||
Net gain (loss) on other financial instruments | 45.3 | (113.1 | ) | — | — | ||||||||||
Provision for losses—(decrease) increase | — | — | (0.1 | ) | 6.6 | ||||||||||
Other operating expenses | 1.5 | 1.8 | — | — | |||||||||||
Net Cash Inflow (Outflow) | 0.4 | 1.1 | 3.8 | (36.0 | ) |
June 30, 2011 | |||||||||||||||
(In thousands) | Amortized Cost | Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | |||||||||||
Fixed-maturities held to maturity: | |||||||||||||||
Bonds and notes: | |||||||||||||||
State and municipal obligations | $ | 7,781 | $ | 8,282 | $ | 513 | $ | 12 | |||||||
$ | 7,781 | $ | 8,282 | $ | 513 | $ | 12 | ||||||||
Fixed-maturities available for sale: | |||||||||||||||
U.S. government and agency securities | $ | 10,906 | $ | 12,659 | $ | 1,753 | $ | — | |||||||
State and municipal obligations | 122,256 | 109,328 | 305 | 13,233 | |||||||||||
Corporate bonds and notes | 18,113 | 18,001 | 339 | 451 | |||||||||||
RMBS | 3,453 | 3,504 | 64 | 13 | |||||||||||
CMBS | 2,679 | 2,695 | 62 | 46 | |||||||||||
Other ABS | 1,027 | 1,165 | 138 | — | |||||||||||
Other investments | 1,651 | 1,794 | 143 | — | |||||||||||
$ | 160,085 | $ | 149,146 | $ | 2,804 | $ | 13,743 | ||||||||
Equity securities available for sale (1) | $ | 160,038 | $ | 193,965 | $ | 33,936 | $ | 9 | |||||||
Total debt and equity securities | $ | 327,904 | $ | 351,393 | $ | 37,253 | $ | 13,764 |
(1) | Comprised of broadly diversified domestic equity mutual funds ($176.9 million fair value at June 30, 2011) and various preferred and common stocks invested across numerous companies and industries ($17.1 million fair value at June 30, 2011). |
December 31, 2010 | |||||||||||||||
(In thousands) | Amortized Cost | Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | |||||||||||
Fixed-maturities held to maturity: | |||||||||||||||
Bonds and notes: | |||||||||||||||
State and municipal obligations | $ | 10,773 | $ | 11,416 | $ | 662 | $ | 19 | |||||||
$ | 10,773 | $ | 11,416 | $ | 662 | $ | 19 | ||||||||
Fixed-maturities available for sale: | |||||||||||||||
U.S. government and agency securities | $ | 25,120 | $ | 27,742 | $ | 2,622 | $ | — | |||||||
State and municipal obligations | 269,185 | 199,187 | 272 | 70,270 | |||||||||||
Corporate bonds and notes | 26,748 | 26,206 | 334 | 876 | |||||||||||
RMBS | 11,952 | 12,538 | 600 | 14 | |||||||||||
CMBS | 3,279 | 3,310 | 70 | 39 | |||||||||||
Other ABS | 2,104 | 2,226 | 127 | 5 | |||||||||||
Other investments | 2,407 | 2,590 | 183 | — | |||||||||||
$ | 340,795 | $ | 273,799 | $ | 4,208 | $ | 71,204 | ||||||||
Equity securities available for sale (1) | $ | 160,242 | $ | 184,365 | $ | 24,188 | $ | 65 | |||||||
Total debt and equity securities | $ | 511,810 | $ | 469,580 | $ | 29,058 | $ | 71,288 |
(1) | Comprised of broadly diversified domestic equity mutual funds ($168.4 million fair value at December 31, 2010) and various preferred and common stocks invested across numerous companies and industries ($16.0 million fair value at December 31, 2010). |
(In thousands) | June 30, 2011 | December 31, 2010 | |||||
Trading securities: | |||||||
U.S. government and agency securities | $ | 659,965 | $ | 703,636 | |||
State and municipal obligations | 929,429 | 983,680 | |||||
Corporate bonds and notes | 847,164 | 1,034,206 | |||||
RMBS | 1,012,497 | 953,416 | |||||
CMBS | 217,093 | 193,244 | |||||
CDO | 3,866 | 2,406 | |||||
Other ABS | 114,941 | 132,149 | |||||
Foreign government securities (1) | 101,555 | 83,508 | |||||
Hybrid securities | 367,792 | 318,940 | |||||
Equity securities | 187,033 | 155,636 | |||||
Other investments | 4,000 | 2,000 | |||||
Total | $ | 4,445,335 | $ | 4,562,821 |
June 30, 2011: ($ in thousands) Description of Securities | Less Than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||||||||||
# of securities | Fair Value | Unrealized Losses | # of securities | Fair Value | Unrealized Losses | # of securities | Fair Value | Unrealized Losses | |||||||||||||||||||||||||
State and municipal obligations | 5 | $ | 23,259 | $ | 2,081 | 9 | $ | 77,146 | $ | 11,164 | 14 | $ | 100,405 | $ | 13,245 | ||||||||||||||||||
Corporate bonds and notes | 24 | 12,156 | 451 | — | — | — | 24 | 12,156 | 451 | ||||||||||||||||||||||||
RMBS | 3 | 1,098 | 13 | — | — | — | 3 | 1,098 | 13 | ||||||||||||||||||||||||
CMBS | 3 | 1,343 | 46 | — | — | — | 3 | 1,343 | 46 | ||||||||||||||||||||||||
Other ABS | 1 | 6 | — | — | — | — | 1 | 6 | — | ||||||||||||||||||||||||
Equity securities | 2 | 94 | 9 | — | — | — | 2 | 94 | 9 | ||||||||||||||||||||||||
Total | 38 | $ | 37,956 | $ | 2,600 | 9 | $ | 77,146 | $ | 11,164 | 47 | $ | 115,102 | $ | 13,764 |
December 31, 2010: ($ in thousands) Description of Securities | Less Than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||||||||||
# of securities | Fair Value | Unrealized Losses | # of securities | Fair Value | Unrealized Losses | # of securities | Fair Value | Unrealized Losses | |||||||||||||||||||||||||
State and municipal obligations | 6 | $ | 3,507 | $ | 110 | 26 | $ | 189,194 | $ | 70,179 | 32 | $ | 192,701 | $ | 70,289 | ||||||||||||||||||
Corporate bonds and notes | 31 | 16,364 | 852 | 2 | 604 | 24 | 33 | 16,968 | 876 | ||||||||||||||||||||||||
RMBS | 1 | 1,436 | 14 | — | — | — | 1 | 1,436 | 14 | ||||||||||||||||||||||||
CMBS | 3 | 1,885 | 39 | — | — | — | 3 | 1,885 | 39 | ||||||||||||||||||||||||
Other ABS | 2 | 802 | 5 | — | — | — | 2 | 802 | 5 | ||||||||||||||||||||||||
Equity securities | 2 | 205 | 65 | — | — | — | 2 | 205 | 65 | ||||||||||||||||||||||||
Total | 45 | $ | 24,199 | $ | 1,085 | 28 | $ | 189,798 | $ | 70,203 | 73 | $ | 213,997 | $ | 71,288 |
June 30, 2011 | |||||||||||||||
Held to Maturity | Available for Sale | ||||||||||||||
(In thousands) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||
Due in one year or less (1) | $ | 1,876 | $ | 1,912 | $ | 2,197 | $ | 2,165 | |||||||
Due after one year through five years (1) | 2,528 | 2,689 | 15,788 | 16,282 | |||||||||||
Due after five years through ten years (1) | 3,074 | 3,390 | 7,236 | 7,413 | |||||||||||
Due after ten years (1) | 303 | 291 | 127,705 | 115,922 | |||||||||||
RMBS (2) | — | — | 3,453 | 3,504 | |||||||||||
CMBS (2) | — | — | 2,679 | 2,695 | |||||||||||
Other ABS (2) | — | — | 1,027 | 1,165 | |||||||||||
Total | $ | 7,781 | $ | 8,282 | $ | 160,085 | $ | 149,146 |
(1) | Actual maturities may differ as a result of calls before scheduled maturity. |
(2) | RMBS, CMBS and Other ABS are shown separately, as they are not due at a single maturity date. |
(In thousands) | June 30, 2011 | December 31, 2010 | |||||
Mortgage insurance reserves | $ | 3,268,582 | $ | 3,524,971 | |||
Financial guaranty reserves | 75,042 | 71,764 | |||||
Total reserve for losses and LAE | $ | 3,343,624 | $ | 3,596,735 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Mortgage Insurance | |||||||||||||||
Balance at beginning of period | $ | 3,542,797 | $ | 3,597,035 | $ | 3,524,971 | $ | 3,450,538 | |||||||
Less reinsurance recoverables (1) | (192,258 | ) | (596,325 | ) | (223,254 | ) | (621,644 | ) | |||||||
Balance at beginning of period, net of reinsurance recoverables | 3,350,539 | 3,000,710 | 3,301,717 | 2,828,894 | |||||||||||
Add losses and LAE incurred in respect of default notices reported and unreported in: | |||||||||||||||
Current year (2) | 246,433 | 239,271 | 437,119 | 490,558 | |||||||||||
Prior years | 23,559 | 188,351 | 246,846 | 466,155 | |||||||||||
Total incurred | 269,992 | 427,622 | 683,965 | 956,713 | |||||||||||
Deduct paid claims and LAE related to: | |||||||||||||||
Current year (2) | 1,364 | (14,451 | ) | 2,201 | 4,515 | ||||||||||
Prior years | 511,249 | 351,774 | 875,563 | 690,083 | |||||||||||
Total paid | 512,613 | 337,323 | 877,764 | 694,598 | |||||||||||
Balance at end of period, net of reinsurance recoverables | 3,107,918 | 3,091,009 | 3,107,918 | 3,091,009 | |||||||||||
Add reinsurance recoverables (1) | 160,664 | 565,737 | 160,664 | 565,737 | |||||||||||
Balance at end of period | $ | 3,268,582 | $ | 3,656,746 | $ | 3,268,582 | $ | 3,656,746 |
(1) | Related to ceded losses on captive reinsurance transactions and Smart Home. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Off-Balance Sheet Arrangements" for additional information regarding our Smart Home transactions. |
(2) | Related to underlying defaulted loans with a most recent date of default notice in the current year. For example, if a loan had defaulted in a prior year, but then subsequently cured and later re-defaulted in the current year, that default would be considered a current year default. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Rescissions—first loss position | $ | 126.6 | $ | 75.2 | $ | 220.4 | $ | 204.6 | |||||||
Denials—first loss position | 14.2 | 24.1 | 38.8 | 32.1 | |||||||||||
Total first loss position (1) | 140.8 | 99.3 | 259.2 | 236.7 | |||||||||||
Rescissions—second loss position | 41.2 | 47.6 | 72.2 | 158.0 | |||||||||||
Denials—second loss position | 11.0 | 20.1 | 13.7 | 23.8 | |||||||||||
Total second loss position (2) | 52.2 | 67.7 | 85.9 | 181.8 | |||||||||||
Total first-lien claims submitted for payment that were rescinded or denied (3) | $ | 193.0 | $ | 167.0 | $ | 345.1 | $ | 418.5 |
(1) | Related to claims from policies in which we were in a first loss position and would have paid the claim absent the rescission or denial. |
(2) | Related to claims from policies in which we were in a second loss position. These rescissions or denials may not have resulted in a claim payment obligation due to deductibles and other exposure limitations included in our policies. |
(3) | Includes a small number of submitted claims that were subsequently withdrawn by the insured. |
(In millions) | 2011 | 2010 | 2009 | ||||||||
First loss position | $ | 94.7 | $ | 160.3 | $ | 101.1 | |||||
Second loss position | 24.6 | 61.5 | 91.0 | ||||||||
Total non-overturned rebuttals on rescinded first-lien claims | $ | 119.3 | $ | 221.8 | $ | 192.1 |
Claim Received Quarter | Cumulative Rescission Rate for Each Quarter (1) | Percentage of Claims Resolved (2) | ||||
Q1 2008 | 12.2 | % | 100 | % | ||
Q2 2008 | 13.1 | % | 100 | % | ||
Q3 2008 | 19.2 | % | 100 | % | ||
Q4 2008 | 21.3 | % | 100 | % | ||
Q1 2009 | 24.2 | % | 100 | % | ||
Q2 2009 | 25.9 | % | 99 | % | ||
Q3 2009 | 23.3 | % | 99 | % | ||
Q4 2009 | 21.2 | % | 98 | % | ||
Q1 2010 | 19.1 | % | 97 | % | ||
Q2 2010 | 18.4 | % | 96 | % | ||
Q3 2010 | 15.6 | % | 92 | % | ||
Q4 2010 | 15.2 | % | 82 | % |
(1) | Rescission rates represent the ratio of claims rescinded or denied to claims received (by claim count) and represent (as of June 30, 2011) the cumulative rate for each quarter based on number of claims received during that quarter. Until all of the claims received during the periods shown have been internally resolved, the rescission rates for each quarter will be subject to change. These rates also will remain subject to change based on reinstatements of previously rescinded policies or denied claims. |
(2) | The percentage of claims resolved for each quarter presented in the table above, represents the number of claims that have been internally resolved as a percentage of the total number of claims received for that specific quarter. A claim is considered internally resolved when it is either paid or it is concluded that the claim should be denied or rescinded. For the first and second quarters of 2011, a significant portion of claims received for those quarters have not been internally resolved; therefore, we do not believe the cumulative rescission rates for those periods are presently meaningful. |
(In millions): | June 30, 2011 | December 31, 2010 | |||||
First-lien portfolio | |||||||
Net present value of expected premiums | $ | 2,705 | $ | 2,806 | |||
Net present value of expected losses and expenses | (4,584 | ) | (4,537 | ) | |||
Reserve for premiums and losses established, net of reinsurance recoverables | 3,099 | 3,276 | |||||
Net projected premium excess | $ | 1,220 | $ | 1,545 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Second-lien PDR | |||||||||||||||
Balance at beginning of period | $ | 9,353 | $ | 24,126 | $ | 10,736 | $ | 25,357 | |||||||
Incurred losses recognized in loss reserves | (1,927 | ) | (5,152 | ) | (4,732 | ) | (10,232 | ) | |||||||
Premiums recognized in earned premiums | 591 | 734 | 1,211 | 1,244 | |||||||||||
Changes in underlying assumptions | (1,714 | ) | (3,324 | ) | (1,843 | ) | 162 | ||||||||
Accretion of discount and other | (52 | ) | 388 | 879 | 241 | ||||||||||
Balance at end of period | $ | 6,251 | $ | 16,772 | $ | 6,251 | $ | 16,772 |
Surveillance Categories | |||||||||||||||||||
($ in millions) | Performing | Special Mention | Intensified Surveillance | Case Reserve | Total | ||||||||||||||
Number of policies | 9 | 134 | 59 | 102 | 304 | ||||||||||||||
Remaining weighted-average contract period (in years) | 23 | 19 | 22 | 25 | 21 | ||||||||||||||
Insured contractual payments outstanding: | |||||||||||||||||||
Principal | $ | 28.6 | $ | 1,058.5 | $ | 373.9 | $ | 395.5 | $ | 1,856.5 | |||||||||
Interest | 10.5 | 611.4 | 209.8 | 206.7 | 1,038.4 | ||||||||||||||
Total | $ | 39.1 | $ | 1,669.9 | $ | 583.7 | $ | 602.2 | $ | 2,894.9 | |||||||||
Gross claim liability | $ | 0.4 | $ | 16.7 | $ | 124.5 | $ | 148.7 | $ | 290.3 | |||||||||
Less: | |||||||||||||||||||
Gross potential recoveries | — | 0.6 | 62.8 | 112.1 | 175.5 | ||||||||||||||
Discount, net | 0.1 | 5.4 | 20.1 | 4.2 | 29.8 | ||||||||||||||
Net claim liability | $ | 0.3 | $ | 10.7 | $ | 41.6 | $ | 32.4 | $ | 85.0 | |||||||||
Unearned premium revenue | $ | 0.1 | $ | 27.2 | $ | 8.0 | $ | — | $ | 35.3 | |||||||||
Claim liability reported in the balance sheet | $ | 0.2 | $ | 3.2 | $ | 35.0 | $ | 32.4 | $ | 70.8 | |||||||||
Reinsurance recoverables | $ | — | $ | — | $ | — | $ | — | $ | — |
(In millions) | June 30, 2011 | December 31, 2010 | |||||
Premiums receivable | $ | 37.3 | $ | 44.0 | |||
Unearned premiums | 42.8 | 60.5 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Premiums written | $ | 0.3 | $ | 0.4 | $ | 0.6 | $ | 0.8 | |||||||
Premiums earned | 0.3 | 0.4 | 0.6 | 0.8 | |||||||||||
Policy acquisition costs | 0.1 | 0.1 | 0.2 | 0.2 |
(In millions) | Future Expected Premium Payments | ||
Third Quarter 2011 | $ | 1.5 | |
Fourth Quarter 2011 | 0.9 | ||
2011 | 2.4 | ||
2012 | 5.7 | ||
2013 | 3.3 | ||
2014 | 1.6 | ||
2015 | 3.0 | ||
2011 – 2015 | 16.0 | ||
2016 – 2020 | 11.3 | ||
2021 – 2025 | 7.7 | ||
2026 – 2030 | 5.0 | ||
After 2030 | 6.9 | ||
Total | $ | 46.9 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Balance at beginning of period | $ | 43.8 | $ | 51.1 | $ | 44.0 | $ | 54.4 | |||||||
Payments received | (1.2 | ) | (2.1 | ) | (2.5 | ) | (3.7 | ) | |||||||
Accretion | 0.3 | 0.4 | 0.5 | 0.7 | |||||||||||
Adjustments to installment premiums | (0.1 | ) | (0.4 | ) | (0.2 | ) | (0.7 | ) | |||||||
Recaptures/commutations | (6.0 | ) | (1.8 | ) | (6.0 | ) | (1.8 | ) | |||||||
Foreign exchange revaluation | 0.5 | (0.8 | ) | 1.5 | (2.5 | ) | |||||||||
Balance at end of period | $ | 37.3 | $ | 46.4 | $ | 37.3 | $ | 46.4 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Refundings | $ | 9.3 | $ | 10.2 | $ | 14.1 | $ | 19.7 | |||||||
Recaptures/commutations | 2.8 | — | 2.8 | — | |||||||||||
Unearned premium acceleration upon establishment of case reserves | 1.3 | 0.4 | 1.3 | 0.7 | |||||||||||
Foreign exchange revaluation, gross of commissions | 0.7 | (1.1 | ) | 2.0 | (2.8 | ) | |||||||||
Adjustments to installment premiums, gross of commissions | 0.1 | (0.4 | ) | 0.3 | (0.4 | ) | |||||||||
Other | — | 2.1 | — | 2.1 | |||||||||||
Total adjustment to premiums earned | $ | 14.2 | $ | 11.2 | $ | 20.5 | $ | 19.3 |
(In millions) | Ending Net Unearned Premiums | Unearned Premium Amortization | Accretion | Total Premium Revenue | |||||||||||
Third Quarter 2011 | $ | 428.3 | $ | 9.8 | $ | 0.3 | $ | 10.1 | |||||||
Fourth Quarter 2011 | 417.8 | 10.5 | 0.3 | 10.8 | |||||||||||
2011 | 417.8 | 20.3 | 0.6 | 20.9 | |||||||||||
2012 | 381.8 | 36.0 | 1.1 | 37.1 | |||||||||||
2013 | 346.5 | 35.3 | 1.0 | 36.3 | |||||||||||
2014 | 312.9 | 33.6 | 0.9 | 34.5 | |||||||||||
2015 | 282.7 | 30.2 | 0.8 | 31.0 | |||||||||||
2011 – 2015 | 282.7 | 155.4 | 4.4 | 159.8 | |||||||||||
2016 – 2020 | 162.4 | 120.3 | 3.3 | 123.6 | |||||||||||
2021 – 2025 | 80.9 | 81.5 | 2.2 | 83.7 | |||||||||||
2026 – 2030 | 33.6 | 47.3 | 1.3 | 48.6 | |||||||||||
After 2030 | — | 33.6 | 1.6 | 35.2 | |||||||||||
Total | $ | — | $ | 438.1 | $ | 12.8 | $ | 450.9 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Claim liability at beginning of period | $ | 80.6 | $ | 133.4 | $ | 67.4 | $ | 121.8 | |||||||
Incurred losses and LAE: | |||||||||||||||
Increase in gross claim liability | 22.4 | 33.8 | 41.7 | 73.9 | |||||||||||
Increase in gross potential recoveries | (30.0 | ) | (22.5 | ) | (33.2 | ) | (45.9 | ) | |||||||
Increase in discount | (2.5 | ) | (4.6 | ) | (5.8 | ) | (7.1 | ) | |||||||
Decrease in unearned premiums | 3.4 | 1.0 | 4.0 | 2.0 | |||||||||||
Incurred losses and LAE | (6.7 | ) | 7.7 | 6.7 | 22.9 | ||||||||||
Paid losses and LAE | (3.1 | ) | (21.8 | ) | (3.3 | ) | (25.4 | ) | |||||||
Claim liability at end of period | $ | 70.8 | $ | 119.3 | $ | 70.8 | $ | 119.3 | |||||||
Components of incurred losses and LAE: | |||||||||||||||
Claim liability established in current period | $ | — | $ | 0.3 | $ | — | $ | 1.2 | |||||||
Changes in existing claim liabilities | (6.7 | ) | 7.4 | 6.7 | 21.7 | ||||||||||
Total incurred losses and LAE | $ | (6.7 | ) | $ | 7.7 | $ | 6.7 | $ | 22.9 | ||||||
Components of increase in discount: | |||||||||||||||
Increase in discount related to claim liabilities established in current period | $ | — | $ | (0.2 | ) | $ | (0.1 | ) | $ | (2.3 | ) | ||||
Increase in discount related to existing claim liabilities | (2.5 | ) | (4.4 | ) | (5.7 | ) | (4.8 | ) | |||||||
Total increase in discount | $ | (2.5 | ) | $ | (4.6 | ) | $ | (5.8 | ) | $ | (7.1 | ) |
December 31, 2009 | 4.34 | % |
March 31, 2010 | 4.39 | % |
June 30, 2010 | 3.88 | % |
December 31, 2010 | 3.69 | % |
March 31, 2011 | 4.11 | % |
June 30, 2011 | 3.97 | % |
(In thousands) | June 30, 2011 | December 31, 2010 | |||||||
7.75 | % | Debentures due 2011 | $ | — | $ | 160,344 | |||
5.63 | % | Senior Notes due 2013 | 253,285 | 254,305 | |||||
5.38 | % | Senior Notes due 2015 | 249,795 | 249,772 | |||||
3.00 | % | Convertible Senior Notes due 2017 | 308,239 | 300,367 | |||||
$ | 811,319 | $ | 964,788 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Net income (loss), as reported | $ | 137,115 | $ | (475,080 | ) | $ | 240,121 | $ | (785,435 | ) | |||||
Other comprehensive income (net of tax): | |||||||||||||||
Net unrealized gains on investments, net of tax | 40,565 | 2,701 | 48,553 | 19,486 | |||||||||||
Net foreign currency translation adjustment, net of tax | (23,291 | ) | (1) | (1,980 | ) | (21,434 | ) | (1) | (4,433 | ) | |||||
Comprehensive income (loss) | $ | 154,389 | $ | (474,359 | ) | $ | 267,240 | $ | (770,382 | ) |
(1) | During the second quarter of 2011, we liquidated a foreign subsidiary which resulted in the recognition of significant foreign currency translation gains that were previously included in other comprehensive income. |
(In thousands) | June 30, 2011 | December 31, 2010 | |||||
Investment in subsidiaries, at equity in net assets | $ | 1,218,817 | $ | 947,724 | |||
Total assets | 1,994,889 | 1,864,896 | |||||
Long-term debt | 811,319 | 964,788 | |||||
Total liabilities | 865,579 | 1,005,116 | |||||
Total stockholders' equity | 1,129,310 | 859,780 | |||||
Total liabilities and stockholders' equity | 1,994,889 | 1,864,896 |
• | Public Finance—Insurance of public finance obligations, including tax-exempt and taxable indebtedness of states, counties, cities, special service districts, other political subdivisions, enterprises such as public and private higher education institutions and health care facilities and infrastructure, project finance and private finance initiative assets in sectors such as airports, education, healthcare and other infrastructure projects; |
• | Structured Finance—Insurance of structured finance obligations, including corporate collateralized debt obligations ("CDOs") and asset-backed securities ("ABS"), consisting of funded and non-funded (referred to herein as "synthetic") executions that are payable from or tied to the performance of a specific pool of assets or covered reference entities. Examples of the pools of assets that collateralize or underlie structured finance obligations include corporate loans, bonds or other borrowed money, residential and commercial mortgages, trust preferred securities ("TruPs"), diversified payment rights ("DPR"), a variety of consumer loans, equipment receivables, real and personal property leases, or a combination of asset classes or securities backed by one or more of these pools of assets; |
• | Reinsurance—Reinsurance of domestic and international public finance obligations, including those issued by sovereign and sub-sovereign entities, and structured finance obligations. |
Statement of Operations (In millions) | |||
Decrease in assumed premiums written | $ | (226.5 | ) |
Decrease in net premiums earned | $ | (42.2 | ) |
Increase in change in fair value of derivative instruments - gain | 18.1 | ||
Decrease in policy acquisition costs | 7.0 | ||
Decrease in provision for losses | 5.0 | ||
Decrease in pre-tax income | $ | (12.1 | ) |
Balance Sheet (In millions) | |||
Decrease in: | |||
Cash | $ | 177.5 | |
Deferred policy acquisition costs | 61.8 | ||
Accounts and notes receivable | 26.8 | ||
Derivative assets | 1.2 | ||
Unearned premiums | 184.3 | ||
Reserves for losses and loss adjustment expenses ("LAE") | 51.6 | ||
Derivative liabilities | 19.3 |
• | Defaults. Our first-lien primary default rate at June 30, 2011 was 15.2%, compared to 16.5% at December 31, 2010. Our primary default inventory comprised 111,434 loans at June 30, 2011, compared to 116,896 loans and 125,470 loans at March 31, 2011, and December 31, 2010, respectively. Our primary default inventory continued to decline slightly in July 2011. This positive trend is primarily the result of fewer new defaults compared to the number of cures, combined with the payment of claims on defaulted loans and the number of loans for which coverage was rescinded or claims were denied. Despite this positive trend, our overall primary default rates continue to remain elevated due to high unemployment and continued weakness in the U.S. housing and mortgage credit markets. Defaults have remained at elevated levels across all our mortgage insurance product lines, including our insured portfolio of prime, first-lien mortgages. Overall, the underlying trend of high defaults continues to be driven primarily by the poor performance of our 2005 through 2008 books of business. In addition, a slowdown in mortgage foreclosures, and consequently a slowdown in claims submitted to us, mainly due to the foreclosure moratoriums imposed by various government entities and lenders, servicing delays and the effect of prolonged modification programs for delinquent loans, has contributed to the sustained high level of our default inventory. This slowdown has resulted in more defaults remaining unresolved for a longer period of time than has historically been the case. We believe that a return to sustained profitability in our mortgage insurance business is dependent upon both a further reduction in the number of new defaults and an increase in the number of cures, particularly coming from our older delinquent loans. |
• | Provision for Losses. Our mortgage insurance provision for losses in the second quarter and first half of 2011 was $270.0 million and $684.0 million, respectively. Our provision for losses for both the second quarter and first half of 2011 was primarily related to reserves established on new defaults that occurred in 2011. In addition, our provision for losses has been impacted by an increase in our weighted average default to claim rate, due to a greater than anticipated impact from the aging of underlying defaulted loans. With continuing declines in home values, persistently high unemployment and delays by servicers in either modifying loans or foreclosing on properties, the ability to cure or otherwise resolve a delinquent loan has exceeded our expected timeframe. Consequently, in recent years, our default inventory has experienced an increase in its weighted average age, and we apply higher estimated default to claim rates on our more aged delinquent loans, resulting in higher reserves. Although the weighted average age of our defaulted portfolio continued to increase throughout the first half of 2011, the pace of this increase slowed in the second quarter of 2011, resulting in a smaller impact on incurred losses. Finally, our results for the first half of 2011 were also negatively impacted by an increase in our incurred but not recorded ("IBNR") reserve estimate in the first quarter of 2011, related to an increase in our estimate of future reinstatements of previously rescinded policies and denied claims. |
• | Claims paid. Total mortgage insurance claims paid in the second quarter and first half of 2011 were $512.6 million and $877.8 million, respectively. The claims for both periods of 2011 include $53.6 million related to claims paid in connection with the termination of certain structured mortgage insurance transactions. Foreclosure moratoriums, servicer delays and loan modification programs have reduced the number of defaults going to claim. We cannot be certain of the ultimate impact of these programs on our business or results of operations, or the timing of this impact. Some of the most recent foreclosure moratoriums related to borrower challenges to allegations of improper foreclosure documentation have further delayed our receipt of claims. Based on our current projections, however, we believe that claims paid in the second quarter of 2011 generally represent a peak in quarterly claims paid and that claims paid will begin to trend down slowly over time. We currently expect total claims paid in 2011 to be approximately $1.7 billion. |
• | New Insurance Written. We wrote $2.3 billion and $4.9 billion of new mortgage insurance in the second quarter and first half of 2011, respectively, compared to $2.7 billion and $4.6 billion of insurance written in the corresponding periods of 2010. The increase in the first six months of 2011 compared to 2010 is mainly attributable to an increase in the penetration rate of private mortgage insurance in the overall insured mortgage market. While the private mortgage insurance industry has made some progress in recapturing business from the FHA, the FHA's market share remains historically high, and this competition with the FHA, in conjunction with other market factors identified above, is likely to continue to negatively affect the volume of our new insurance written (“NIW”). We have been more aggressively marketing our product offerings that favorably compete with the FHA in order to gain market share back from the FHA. In the second quarter of 2011, we implemented a series of changes to our underwriting guidelines and rates, including a more efficient underwriting process for conforming loans, lower borrower-paid rates and an expansion of our non-conforming “jumbo” loan program. Effective April 18, 2011, the FHA reduced its upfront mortgage insurance premium and increased its annual premium, and the maximum loan that may be insured by the FHA in certain areas is expected to be reduced from $729,750 to $625,000 effective October 1, 2011. While we cannot be certain of the impact on our new insurance written of our recent program changes and the recent and planned changes by the FHA, we believe that these changes could allow us to be more competitive with the FHA and other private mortgage insurers than in the recent past. |
• | Terminations. In 2009, we began pursuing opportunities to manage our legacy mortgage insurance portfolio and non-traditional mortgage insurance RIF through a series of commutations, transaction settlements and terminations, including the following transactions in 2011: |
• | In February 2011, we exercised our option to terminate two of our four Smart Home transactions, which added approximately $41.0 million of RIF to our portfolio. There was minimal impact to our financial statements as a result of these terminations. |
• | In order to mitigate future expected losses, during the first half of 2011, we purchased one NIMS bond that we insure with approximately $0.9 million face value, at a purchase price approximately equal to our fair value liability for such NIMS bond at the time of purchase. |
• | In April 2011, we paid approximately $39 million to terminate a structured transaction, comprising $45 million of pool insurance RIF. This transaction had the effect of reducing our pool insurance default count by approximately 2,200 loans. This transaction resulted in approximately $6.5 million of pre-tax income in the second quarter of 2011, as a result of a difference between the amount paid and our existing loss reserves. |
• | In June 2011, we paid approximately $16.6 million to terminate a second-lien transaction, resulting in a $29.1 million reduction in RIF. There was minimal net impact to our financial statements as a result of this termination, as the amounts paid substantially offset the reduction to our reserves. |
• | Net Par Outstanding. Our financial guaranty segment's net par outstanding was $74.7 billion as of June 30, 2011, compared to $78.8 billion at December 31, 2010. The reduction in net par outstanding was primarily due to: (i) the April 2011 CDO Termination, which eliminated $1.7 billion in net par outstanding; (ii) the April 2011 Reinsurance Commutation of $0.5 billion in net par outstanding; (iii) a counterparty exercising its early termination rights with respect to a TruPs CDO transaction with $0.1 billion in net par outstanding; and (iv) the amortization or scheduled maturity of our insured portfolio and prepayments ("refundings") of public finance transactions. In light of our decision in 2008 to discontinue writing new financial guaranty business, we expect our net par outstanding to continue to decrease as our financial guaranty portfolio matures and as we seek to proactively reduce our financial guaranty net par outstanding. |
• | Credit Performance. The overall credit quality of our financial guaranty insured portfolio improved slightly during the first half of 2011. The percentage of internally rated AAA credits in our portfolio increased to 45.5% of our net par outstanding at June 30, 2011, from 43.0% at December 31, 2010. This was primarily due to credit improvements in our insured corporate CDO portfolio and the removal of $231.2 million of below investment grade (“BIG”) exposure from our public finance portfolio as part of the April 2011 Reinsurance Commutation. |
• | Public Finance. Our public finance insured portfolio continues to experience stress from the general economic downturn and slow economic recovery, although no new U.S. domestic public finance credits were downgraded to BIG during the second quarter of 2011. Notwithstanding this stress, the percentage of our insured public finance portfolio rated BIG decreased to 4.1% of our financial guaranty segment's net par outstanding at June 30, 2011, compared to 4.6% at December 31, 2010, primarily due to the April 2011 Reinsurance Commutation. |
• | Structured Finance. The credit performance of our structured finance portfolio continued to improve in the first half of 2011, with no directly insured transactions being downgraded to BIG and no new defaults occurring in the collateral underlying our corporate CDOs in 2011. The percentage of internally rated AAA credits in our structured finance portfolio increased to 80.1% at June 30, 2011, from 75.8% at December 31, 2010. We have seen stabilization and slightly improved performance across a majority of the transactions in our directly insured TruPs CDO portfolio. Our weighted average internal rating for our directly insured TruPs bonds improved to BB- as of June 30, 2011, from B+ as of December 31, 2010, reflecting the improvement in observed TruPs performance and our updated internal views of the banking sector and future TruPs performance. In addition, during the first half of 2011, one counterparty exercised its right to terminate a TruPs CDO with $84.9 million of net par outstanding. See "Results of Operations—Financial Guaranty—Financial Guaranty Exposure Information" below for additional information regarding material changes in the credit performance of our insured TruPs CDO portfolio. |
(In millions) | NIMS | Financial Guaranty Derivatives and VIEs | Total | ||||||||
Balance Sheet | |||||||||||
Trading securities | $ | — | $ | 100.7 | $ | 100.7 | |||||
Derivative assets | 4.7 | 22.2 | 26.9 | ||||||||
Other assets | — | 115.7 | 115.7 | ||||||||
Total assets | 4.7 | 238.6 | 243.3 | ||||||||
Derivative liabilities | — | 313.7 | 313.7 | ||||||||
VIE debt-at fair value | 56.2 | 337.5 | 393.7 | ||||||||
Accounts payable and accrued expenses | — | 0.7 | 0.7 | ||||||||
Total liabilities | 56.2 | 651.9 | 708.1 | ||||||||
Total fair value net liabilities | $ | 51.5 | $ | 413.3 | $ | 464.8 | |||||
Present value of estimated credit loss payments (1) | $ | 59.9 | $ | 432.2 | $ | 492.1 |
(1) | Represents the present value of our estimated credit loss payments (net of estimated recoveries) for those transactions for which we currently anticipate paying net losses, calculated using a discount rate of approximately 2.2%, which represents our current investment yield. At a discount rate of 5%, our estimated credit loss payments would decrease by approximately $198.2 million to $293.9 million. |
Three Months Ended June 30, | % Change | Six Months Ended June 30, | % Change | ||||||||||||||||||
($ in millions) | 2011 | 2010 | 2011 vs. 2010 | 2011 | 2010 | 2011 vs. 2010 | |||||||||||||||
Net income (loss) | $ | 137.1 | $ | (475.1 | ) | n/m | $ | 240.1 | $ | (785.4 | ) | n/m | |||||||||
Net premiums written—insurance | 152.8 | 159.9 | (4.4 | ) | 335.5 | 315.4 | 6.4 | % | |||||||||||||
Net premiums earned—insurance | 188.9 | 203.4 | (7.1 | ) | 392.0 | 401.7 | (2.4 | ) | |||||||||||||
Net investment income | 43.8 | 48.6 | (9.9 | ) | 86.1 | 94.0 | (8.4 | ) | |||||||||||||
Net gains on investments | 44.3 | 57.2 | (22.6 | ) | 81.7 | 115.2 | (29.1 | ) | |||||||||||||
Net impairment losses recognized in earnings | — | — | — | — | (0.1 | ) | n/m | ||||||||||||||
Change in fair value of derivative instruments | 188.7 | (524.6 | ) | n/m | 432.6 | (602.6 | ) | n/m | |||||||||||||
Net gains (losses) on other financial instruments | 5.0 | (63.2 | ) | n/m | 80.3 | (164.8 | ) | n/m | |||||||||||||
Gain on sale of affiliate | — | 34.8 | n/m | — | 34.8 | n/m | |||||||||||||||
Other income | 1.2 | (2.1 | ) | n/m | 2.6 | 3.7 | (29.7 | ) | |||||||||||||
Provision for losses | 263.6 | 435.2 | (39.4 | ) | 690.9 | 979.0 | (29.4 | ) | |||||||||||||
Change in reserve for premium deficiency | (3.1 | ) | (7.4 | ) | (58.1 | ) | (4.5 | ) | (8.6 | ) | (47.7 | ) | |||||||||
Policy acquisition costs | 14.4 | 16.8 | (14.3 | ) | 28.5 | 31.7 | (10.1 | ) | |||||||||||||
Other operating expenses | 46.0 | 35.2 | 30.7 | 92.2 | 100.2 | (8.0 | ) | ||||||||||||||
Interest expense | 16.1 | 8.2 | 96.3 | 33.1 | 19.0 | 74.2 | |||||||||||||||
Equity in net income of affiliates | — | 6.6 | n/m | 0.1 | 14.7 | (99.3 | ) | ||||||||||||||
Income tax benefit | (2.0 | ) | (252.1 | ) | n/m | (5.1 | ) | (439.3 | ) | n/m |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Net unrealized gains related to change in fair value of trading securities | $ | 51.0 | $ | 28.4 | $ | 76.7 | $ | 80.6 | |||||||
Net realized gains (losses) on sales | (6.7 | ) | 28.8 | 5.0 | 34.6 | ||||||||||
Net gains on investments | $ | 44.3 | $ | 57.2 | $ | 81.7 | $ | 115.2 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Statements of Operations | |||||||||||||||
Net premiums earned—derivatives | $ | 10.5 | $ | 12.0 | $ | 21.4 | $ | 24.1 | |||||||
Financial Guaranty credit derivatives | 181.9 | (524.2 | ) | 416.5 | (608.3 | ) | |||||||||
Financial Guaranty VIE derivatives | (4.0 | ) | (7.5 | ) | (4.9 | ) | (10.7 | ) | |||||||
NIMS | 0.4 | (0.3 | ) | (1.5 | ) | (0.5 | ) | ||||||||
Mortgage Insurance domestic and international CDS | — | (0.4 | ) | — | (0.4 | ) | |||||||||
Put options on Money Market Committed Preferred Custodial Trust Securities ("CPS") | — | (4.2 | ) | — | (6.3 | ) | |||||||||
Other | (0.1 | ) | — | 1.1 | (0.5 | ) | |||||||||
Change in fair value of derivative instruments | $ | 188.7 | $ | (524.6 | ) | $ | 432.6 | $ | (602.6 | ) |
(In basis points) | June 30, 2011 | December 31, 2010 | June 30, 2010 | December 31, 2009 | |||||||
Radian Group's five-year CDS spread | 968 | 465 | 701 | 1,530 |
(In millions) | Fair Value Liability before Consideration of Radian Non-Performance Risk June 30, 2011 | Impact of Radian Non-Performance Risk June 30, 2011 | Fair Value Liability Recorded June 30, 2011 | ||||||||
Product | |||||||||||
Corporate CDOs | $ | (220.2 | ) | $ | 214.1 | $ | (6.1 | ) | |||
Non-Corporate CDO-related | (1,579.1 | ) | 1,188.9 | (390.2 | ) | ||||||
NIMS-related | (57.6 | ) | 6.1 | (51.5 | ) | ||||||
Total | $ | (1,856.9 | ) | $ | 1,409.1 | $ | (447.8 | ) |
(In millions) | Fair Value Liability before Consideration of Radian Non-Performance Risk December 31, 2010 | Impact of Radian Non-Performance Risk December 31, 2010 | Fair Value Liability Recorded December 31, 2010 | ||||||||
Product | |||||||||||
Corporate CDOs | $ | (387.1 | ) | $ | 281.5 | $ | (105.6 | ) | |||
Non-Corporate CDO-related | (1,696.2 | ) | 934.1 | (762.1 | ) | ||||||
NIMS-related | (134.1 | ) | 4.8 | (129.3 | ) | ||||||
Total | $ | (2,217.4 | ) | $ | 1,220.4 | $ | (997.0 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Net gains (losses) related to NIMS VIE debt | $ | (0.6 | ) | $ | (8.0 | ) | $ | 1.8 | $ | (38.7 | ) | ||||
Gains (losses) related to change in fair value of Financial Guaranty VIE debt | (43.5 | ) | (50.1 | ) | 27.0 | (125.8 | ) | ||||||||
Gains related to other Financial Guaranty VIE assets | 14.4 | 8.9 | 18.3 | 10.8 | |||||||||||
Gain on the repurchase of long-term debt | — | — | — | 2.5 | |||||||||||
Loss related to CPS VIE | — | (13.4 | ) | — | (13.6 | ) | |||||||||
Foreign currency gain related to the liquidation of a foreign subsidiary | 39.6 | — | 39.6 | — | |||||||||||
Other | (4.9 | ) | (0.6 | ) | (6.4 | ) | — | ||||||||
Net gains (losses) on other financial instruments | $ | 5.0 | $ | (63.2 | ) | $ | 80.3 | $ | (164.8 | ) |
Three Months Ended June 30, | % Change | Six Months Ended June 30, | % Change | ||||||||||||||||||
($ in millions) | 2011 | 2010 | 2011 vs. 2010 | 2011 | 2010 | 2011 vs. 2010 | |||||||||||||||
Net loss | $ | (97.6 | ) | $ | (152.5 | ) | (36.0 | )% | $ | (333.6 | ) | $ | (389.1 | ) | n/m | ||||||
Net premiums written—insurance | 164.2 | 167.9 | (2.2 | ) | 345.0 | 324.9 | 6.2 | % | |||||||||||||
Net premiums earned—insurance | 164.3 | 180.0 | (8.7 | ) | 350.5 | 357.3 | (1.9 | ) | |||||||||||||
Net investment income | 24.9 | 28.5 | (12.6 | ) | 51.7 | 54.9 | (5.8 | ) | |||||||||||||
Net gains on investments | 27.5 | 34.4 | (20.1 | ) | 45.2 | 63.2 | (28.5 | ) | |||||||||||||
Net impairment losses recognized in earnings | — | — | — | — | (0.1 | ) | n/m | ||||||||||||||
Change in fair value of derivative instruments | 0.3 | (1.3 | ) | n/m | (0.1 | ) | (1.1 | ) | (90.9 | ) | |||||||||||
Net gains (losses) on other financial instruments | (0.7 | ) | (8.0 | ) | (91.3 | ) | 1.8 | (38.2 | ) | n/m | |||||||||||
Other income | 1.1 | 1.6 | (31.3 | ) | 2.5 | 3.4 | (26.5 | ) | |||||||||||||
Provision for losses | 270.0 | 427.6 | (36.9 | ) | 684.0 | 956.7 | (28.5 | ) | |||||||||||||
Change in reserve for premium deficiency | (3.1 | ) | (7.4 | ) | (58.1 | ) | (4.5 | ) | (8.6 | ) | (47.7 | ) | |||||||||
Policy acquisition costs | 8.6 | 12.1 | (28.9 | ) | 18.8 | 22.6 | (16.8 | ) | |||||||||||||
Other operating expenses | 33.9 | 25.6 | 32.4 | 68.1 | 71.9 | (5.3 | ) | ||||||||||||||
Interest expense | 0.1 | 1.6 | (93.8 | ) | 9.9 | 3.7 | 167.6 | ||||||||||||||
Income tax provision (benefit) | 5.4 | (71.8 | ) | n/m | 8.9 | (217.6 | ) | n/m |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Premiums written | |||||||||||||||
Primary and Pool Insurance | $ | 163,556 | $ | 167,250 | $ | 343,813 | $ | 324,663 | |||||||
Second-lien | 592 | 734 | 1,212 | 279 | |||||||||||
International | 46 | (75 | ) | 15 | (1 | ) | |||||||||
Total premiums written—insurance | $ | 164,194 | $ | 167,909 | $ | 345,040 | $ | 324,941 | |||||||
Premiums earned | |||||||||||||||
Primary and Pool Insurance | $ | 162,388 | $ | 176,622 | $ | 345,857 | $ | 350,734 | |||||||
Second-lien | 592 | 734 | 1,212 | 1,245 | |||||||||||
International | 1,345 | 2,636 | 3,390 | 5,352 | |||||||||||
Total premiums earned—insurance | $ | 164,325 | $ | 179,992 | $ | 350,459 | $ | 357,331 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Net unrealized gains related to change in fair value of trading securities | $ | 19.4 | $ | 23.3 | $ | 31.8 | $ | 47.9 | |||||||
Net realized gains on sales | 8.1 | 11.1 | 13.4 | 15.3 | |||||||||||
Net gains on investments | $ | 27.5 | $ | 34.4 | $ | 45.2 | $ | 63.2 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Net premiums earned—derivatives | $ | — | $ | 0.2 | $ | — | $ | 0.3 | |||||||
NIMS | 0.4 | (0.3 | ) | (1.5 | ) | (0.5 | ) | ||||||||
Mortgage Insurance domestic and international CDS | — | (0.4 | ) | — | (0.4 | ) | |||||||||
Put options on CPS | — | — | 0.3 | — | |||||||||||
Other | (0.1 | ) | (0.8 | ) | 1.1 | (0.5 | ) | ||||||||
Change in fair value of derivative instruments | $ | 0.3 | $ | (1.3 | ) | $ | (0.1 | ) | $ | (1.1 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Net gains (losses) related to NIMS VIE debt | $ | (0.7 | ) | $ | (8.0 | ) | $ | 1.7 | $ | (38.7 | ) | ||||
Gain on the repurchase of long-term debt | — | — | — | 0.5 | |||||||||||
Other | — | — | 0.1 | — | |||||||||||
Net gains (losses) on other financial instruments | $ | (0.7 | ) | $ | (8.0 | ) | $ | 1.8 | $ | (38.2 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 (1) | 2010 (1) | |||||||||||
New defaults | $ | 179.7 | $ | 223.9 | $ | 357.7 | $ | 457.8 | |||||||
Cures and prepayments | (203.9 | ) | (295.0 | ) | (458.7 | ) | (563.9 | ) | |||||||
Existing defaults (2) | 285.0 | 434.2 | 653.6 | 908.2 | |||||||||||
Claim dispositions (3) | 11.9 | 73.9 | 122.5 | 124.9 | |||||||||||
Second-lien, LAE and Other | (2.7 | ) | (9.4 | ) | 8.9 | 29.7 | |||||||||
Provision for losses | $ | 270.0 | $ | 427.6 | $ | 684.0 | $ | 956.7 |
(In millions) | June 30, 2011 | December 31, 2010 | |||||
Decrease to our loss reserve due to estimated rescissions and denials | $ | (655 | ) | $ | (922 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Rescissions—first loss position | $ | 126.6 | $ | 75.2 | $ | 220.4 | $ | 204.6 | |||||||
Denials—first loss position | 14.2 | 24.1 | 38.8 | 32.1 | |||||||||||
Total first loss position (1) | 140.8 | 99.3 | 259.2 | 236.7 | |||||||||||
Rescissions—second loss position | 41.2 | 47.6 | 72.2 | 158.0 | |||||||||||
Denials—second loss position | 11.0 | 20.1 | 13.7 | 23.8 | |||||||||||
Total second loss position (2) | 52.2 | 67.7 | 85.9 | 181.8 | |||||||||||
Total first-lien claims submitted for payment that were rescinded or denied (3) | $ | 193.0 | $ | 167.0 | $ | 345.1 | $ | 418.5 |
Claim Received Quarter | Cumulative Rescission Rate for Each Quarter (1) | Percentage of Claims Resolved (2) | ||||
Q1 2008 | 12.2 | % | 100 | % | ||
Q2 2008 | 13.1 | % | 100 | % | ||
Q3 2008 | 19.2 | % | 100 | % | ||
Q4 2008 | 21.3 | % | 100 | % | ||
Q1 2009 | 24.2 | % | 100 | % | ||
Q2 2009 | 25.9 | % | 99 | % | ||
Q3 2009 | 23.3 | % | 99 | % | ||
Q4 2009 | 21.2 | % | 98 | % | ||
Q1 2010 | 19.1 | % | 97 | % | ||
Q2 2010 | 18.4 | % | 96 | % | ||
Q3 2010 | 15.6 | % | 92 | % | ||
Q4 2010 | 15.2 | % | 82 | % |
(1) | Rescission rates represent the ratio of claims rescinded or denied to claims received (by claim count) and represent (as of June 30, 2011) the cumulative rate for each quarter based on number of claims received during that quarter. Until all of the claims received during the periods shown have been internally resolved, the rescission rates for each quarter will be subject to change. These rates also will remain subject to change based on reinstatements of previously rescinded policies or denied claims. |
(2) | The percentage of claims resolved for each quarter presented in the table above, represents the number of claims that have been internally resolved as a percentage of the total number of claims received for that specific quarter. A claim is considered internally resolved when it is either paid or it is concluded that the claim should be denied or rescinded. For the first and second quarters of 2011, a significant portion of claims received for those quarters have not been internally resolved; therefore, we do not believe the cumulative rescission rates for those periods are presently meaningful. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
($ in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||
Primary NIW | |||||||||||||||||||||||||||
Prime | $ | 2,280 | 100.0 | % | $ | 2,653 | 100.0 | % | $ | 4,863 | 99.9 | % | $ | 4,549 | 100.0 | % | |||||||||||
A minus and below | — | — | 1 | — | 3 | 0.1 | 2 | — | |||||||||||||||||||
Total Primary | $ | 2,280 | 100.0 | % | $ | 2,654 | 100.0 | % | $ | 4,866 | 100.0 | % | $ | 4,551 | 100.0 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
($ in millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||
Total primary NIW by FICO (1) Score | |||||||||||||||||||||||||||
>=740 | $ | 1,846 | 81.0 | % | $ | 2,100 | 79.1 | % | $ | 3,927 | 80.7 | % | $ | 3,561 | 78.2 | % | |||||||||||
680-739 | 434 | 19.0 | 552 | 20.8 | 936 | 19.2 | 987 | 21.7 | |||||||||||||||||||
620-679 | — | — | 2 | 0.1 | 3 | 0.1 | 3 | 0.1 | |||||||||||||||||||
Total Primary | $ | 2,280 | 100.0 | % | $ | 2,654 | 100.0 | % | $ | 4,866 | 100.0 | % | $ | 4,551 | 100.0 | % |
(1) | FICO credit scoring model. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||
Percentage of primary NIW | |||||||||||
Refinances | 23.0 | % | 22.0 | % | 38.0 | % | 27.0 | % | |||
95.01% LTV (2) and above | 1.4 | % | 0.2 | % | 1.3 | % | 0.4 | % | |||
Adjustable Rate Mortgages ("ARMs") | |||||||||||
Less than five years | 0.1 | % | 0.2 | % | 0.1 | % | 0.1 | % | |||
Five years and longer | 6.9 | % | 7.0 | % | 5.8 | % | 6.2 | % |
($ in millions) | June 30, 2011 | December 31, 2010 | June 30, 2010 | |||||||||||||||||
Primary insurance in force | ||||||||||||||||||||
Flow | $ | 111,510 | 89.1 | % | $ | 115,532 | 89.2 | % | $ | 118,486 | 86.3 | % | ||||||||
Structured | 13,600 | 10.9 | 14,034 | 10.8 | 18,799 | 13.7 | ||||||||||||||
Total Primary | $ | 125,110 | 100.0 | % | $ | 129,566 | 100.0 | % | $ | 137,285 | 100.0 | % | ||||||||
Prime | $ | 103,860 | 83.0 | % | $ | 106,466 | 82.2 | % | $ | 108,488 | 79.0 | % | ||||||||
Alternative-A ("Alt-A") | 13,318 | 10.7 | 14,542 | 11.2 | 19,580 | 14.3 | ||||||||||||||
A minus and below | 7,932 | 6.3 | 8,558 | 6.6 | 9,217 | 6.7 | ||||||||||||||
Total Primary | $ | 125,110 | 100.0 | % | $ | 129,566 | 100.0 | % | $ | 137,285 | 100.0 | % | ||||||||
Modified pool insurance in force (1) | ||||||||||||||||||||
Prime | $ | 1,021 | 31.6 | % | $ | 671 | 22.2 | % | $ | 722 | 11.4 | % | ||||||||
Alt-A | 2,060 | 63.7 | 2,216 | 73.1 | 5,441 | 86.2 | ||||||||||||||
A minus and below | 151 | 4.7 | 143 | 4.7 | 152 | 2.4 | ||||||||||||||
Total modified pool | $ | 3,232 | 100.0 | % | $ | 3,030 | 100.0 | % | $ | 6,315 | 100.0 | % | ||||||||
Primary risk in force | ||||||||||||||||||||
Flow | ||||||||||||||||||||
Prime | $ | 23,637 | 86.1 | % | $ | 24,213 | 85.3 | % | $ | 24,615 | 84.3 | % | ||||||||
Alt-A | 2,374 | 8.7 | 2,618 | 9.2 | 2,873 | 9.9 | ||||||||||||||
A minus and below | 1,437 | 5.2 | 1,566 | 5.5 | 1,700 | 5.8 | ||||||||||||||
Total Flow | $ | 27,448 | 100.0 | % | $ | 28,397 | 100.0 | % | $ | 29,188 | 100.0 | % | ||||||||
Structured | ||||||||||||||||||||
Prime | $ | 1,702 | 58.4 | % | $ | 1,788 | 58.4 | % | $ | 1,926 | 55.4 | % | ||||||||
Alt-A | 665 | 22.8 | 702 | 22.9 | 945 | 27.2 | ||||||||||||||
A minus and below | 546 | 18.8 | 574 | 18.7 | 606 | 17.4 | ||||||||||||||
Total Structured | $ | 2,913 | 100.0 | % | $ | 3,064 | 100.0 | % | $ | 3,477 | 100.0 | % | ||||||||
Total | ||||||||||||||||||||
Prime | $ | 25,339 | 83.5 | % | $ | 26,001 | 82.6 | % | $ | 26,541 | 81.2 | % | ||||||||
Alt-A | 3,039 | 10.0 | 3,320 | 10.6 | 3,818 | 11.7 | ||||||||||||||
A minus and below | 1,983 | 6.5 | 2,140 | 6.8 | 2,306 | 7.1 | ||||||||||||||
Total Primary | $ | 30,361 | 100.0 | % | $ | 31,461 | 100.0 | % | $ | 32,665 | 100.0 | % |
($ in millions) | June 30, 2011 | December 31, 2010 | June 30, 2010 | |||||||||||||||||
Modified pool risk in force (1) | ||||||||||||||||||||
Prime | $ | 85 | 29.5 | % | $ | 74 | 25.6 | % | $ | 77 | 16.8 | % | ||||||||
Alt-A | 185 | 64.2 | 197 | 68.2 | 362 | 79.2 | ||||||||||||||
A minus and below | 18 | 6.3 | 18 | 6.2 | 18 | 4.0 | ||||||||||||||
Total modified pool | $ | 288 | 100.0 | % | $ | 289 | 100.0 | % | $ | 457 | 100.0 | % |
(1) | Included in primary insurance amounts. |
($ in millions) | June 30, 2011 | December 31, 2010 | June 30, 2010 | |||||||||||||||||
Total primary risk in force by FICO Score | ||||||||||||||||||||
Flow | ||||||||||||||||||||
>=740 | $ | 11,196 | 40.8 | % | $ | 11,039 | 38.9 | % | $ | 10,712 | 36.7 | % | ||||||||
680-739 | 9,327 | 34.0 | 9,849 | 34.7 | 10,354 | 35.5 | ||||||||||||||
620-679 | 5,865 | 21.4 | 6,359 | 22.4 | 6,878 | 23.6 | ||||||||||||||
<=619 | 1,060 | 3.8 | 1,150 | 4.0 | 1,244 | 4.2 | ||||||||||||||
Total Flow | $ | 27,448 | 100.0 | % | $ | 28,397 | 100.0 | % | $ | 29,188 | 100.0 | % | ||||||||
Structured | ||||||||||||||||||||
>=740 | $ | 776 | 26.6 | % | $ | 825 | 26.9 | % | $ | 956 | 27.5 | % | ||||||||
680-739 | 848 | 29.1 | 892 | 29.1 | 1,061 | 30.5 | ||||||||||||||
620-679 | 781 | 26.8 | 815 | 26.6 | 901 | 25.9 | ||||||||||||||
<=619 | 508 | 17.5 | 532 | 17.4 | 559 | 16.1 | ||||||||||||||
Total Structured | $ | 2,913 | 100.0 | % | $ | 3,064 | 100.0 | % | $ | 3,477 | 100.0 | % | ||||||||
Total | ||||||||||||||||||||
>=740 | $ | 11,972 | 39.4 | % | $ | 11,864 | 37.7 | % | $ | 11,668 | 35.7 | % | ||||||||
680-739 | 10,175 | 33.5 | 10,741 | 34.1 | 11,415 | 35.0 | ||||||||||||||
620-679 | 6,646 | 21.9 | 7,174 | 22.8 | 7,779 | 23.8 | ||||||||||||||
<=619 | 1,568 | 5.2 | 1,682 | 5.4 | 1,803 | 5.5 | ||||||||||||||
Total Primary | $ | 30,361 | 100.0 | % | $ | 31,461 | 100.0 | % | $ | 32,665 | 100.0 | % | ||||||||
Percentage of primary risk in force | ||||||||||||||||||||
Refinances | 31 | % | 31 | % | 31 | % | ||||||||||||||
95.01% LTV and above | 19 | % | 19 | % | 20 | % | ||||||||||||||
ARMs | ||||||||||||||||||||
Less than five years | 5 | % | 6 | % | 7 | % | ||||||||||||||
Five years and longer | 7 | % | 7 | % | 8 | % |
($ in millions) | June 30, 2011 | December 31, 2010 | June 30, 2010 | |||||||||||||||||
Total primary risk in force by LTV | ||||||||||||||||||||
85.00% and below | $ | 2,753 | 9.1 | % | $ | 2,816 | 8.9 | % | $ | 3,051 | 9.3 | % | ||||||||
85.01% to 90.00% | 11,722 | 38.6 | 12,102 | 38.5 | 12,355 | 37.8 | ||||||||||||||
90.01% to 95.00% | 10,268 | 33.8 | 10,506 | 33.4 | 10,737 | 32.9 | ||||||||||||||
95.01% and above | 5,618 | 18.5 | 6,037 | 19.2 | 6,522 | 20.0 | ||||||||||||||
Total Primary | $ | 30,361 | 100.0 | % | $ | 31,461 | 100.0 | % | $ | 32,665 | 100.0 | % |
($ in millions) | June 30, 2011 | December 31, 2010 | June 30, 2010 | |||||||||||||||||
Pool risk in force | ||||||||||||||||||||
Prime | $ | 1,676 | 75.6 | % | $ | 1,828 | 74.5 | % | $ | 1,867 | 73.5 | % | ||||||||
Alt-A | 132 | 6.0 | 165 | 6.7 | 179 | 7.0 | ||||||||||||||
A minus and below | 408 | 18.4 | 460 | 18.8 | 495 | 19.5 | ||||||||||||||
Total pool risk in force | $ | 2,216 | 100.0 | % | $ | 2,453 | 100.0 | % | $ | 2,541 | 100.0 | % |
(In millions) | June 30, 2011 | December 31, 2010 | June 30, 2010 | ||||||||
Other risk in force | |||||||||||
Second-lien | |||||||||||
1st loss | $ | 109 | $ | 114 | $ | 129 | |||||
2nd loss | 33 | 79 | 86 | ||||||||
NIMS | 59 | 136 | 268 | ||||||||
International | |||||||||||
1st loss-Hong Kong primary mortgage insurance | 89 | 126 | 185 | ||||||||
CDS | — | — | 109 | ||||||||
Total other risk in force | $ | 290 | $ | 455 | $ | 777 |
June 30, 2011 | December 31, 2010 | June 30, 2010 | ||||||||||||||||
Risk in Force | Reserve for Losses | Risk in Force | Reserve for Losses | Risk in Force | Reserve for Losses | |||||||||||||
2005 and prior | 24.7 | % | 32.2 | % | 25.9 | % | 32.7 | % | 27.4 | % | 33.1 | % | ||||||
2006 | 11.2 | 19.4 | 11.7 | 20.4 | 12.4 | 20.1 | ||||||||||||
2007 | 24.5 | 37.1 | 25.7 | 36.5 | 27.1 | 38.3 | ||||||||||||
2008 | 18.3 | 10.8 | 18.9 | 10.1 | 19.6 | 8.3 | ||||||||||||
2009 | 9.6 | 0.5 | 9.8 | 0.3 | 10.3 | 0.2 | ||||||||||||
2010 | 8.0 | — | 8.0 | — | 3.2 | — | ||||||||||||
2011 | 3.7 | — | — | — | — | — | ||||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
June 30, 2011 | December 31, 2010 | June 30, 2010 | |||||||||||||||
Risk in Force | Reserve for Losses | Risk in Force | Reserve for Losses | Risk in Force | Reserve for Losses | ||||||||||||
Top Ten States | |||||||||||||||||
California | 11.5 | % | 12.7 | % | 11.4 | % | 13.0 | % | 11.6 | % | 16.8 | % | |||||
Florida | 8.0 | 18.3 | 8.3 | 18.9 | 8.5 | 18.2 | |||||||||||
Texas | 6.2 | 3.1 | 6.4 | 3.4 | 6.5 | 3.3 | |||||||||||
Illinois | 5.2 | 5.8 | 5.0 | 5.7 | 4.8 | 5.1 | |||||||||||
Georgia | 4.7 | 4.2 | 4.7 | 4.3 | 4.7 | 4.4 | |||||||||||
Ohio | 4.3 | 2.9 | 4.3 | 3.0 | 4.3 | 2.7 | |||||||||||
New York | 4.1 | 5.1 | 4.1 | 4.9 | 4.0 | 4.5 | |||||||||||
New Jersey | 3.8 | 4.9 | 3.7 | 4.5 | 3.6 | 3.9 | |||||||||||
Michigan | 3.3 | 3.2 | 3.3 | 3.3 | 3.3 | 3.3 | |||||||||||
Pennsylvania | 3.1 | 2.4 | 3.1 | 2.4 | 3.1 | 2.2 | |||||||||||
Total | 54.2 | % | 62.6 | % | 54.3 | % | 63.4 | % | 54.4 | % | 64.4 | % |
June 30, 2011 | December 31, 2010 | June 30, 2010 | ||||||
Default Statistics | ||||||||
Primary Insurance: | ||||||||
Flow | ||||||||
Prime | ||||||||
Number of insured loans | 564,839 | 584,213 | 599,909 | |||||
Number of loans in default | 64,143 | 71,196 | 74,800 | |||||
Percentage of loans in default | 11.36 | % | 12.19 | % | 12.47 | % | ||
Alt-A | ||||||||
Number of insured loans | 47,491 | 51,765 | 56,323 | |||||
Number of loans in default | 15,329 | 17,934 | 20,289 | |||||
Percentage of loans in default | 32.28 | % | 34.65 | % | 36.02 | % | ||
A minus and below | ||||||||
Number of insured loans | 43,597 | 47,044 | 50,719 | |||||
Number of loans in default | 14,098 | 16,401 | 18,100 | |||||
Percentage of loans in default | 32.34 | % | 34.86 | % | 35.69 | % | ||
Total Flow | ||||||||
Number of insured loans | 655,927 | 683,022 | 706,951 | |||||
Number of loans in default | 93,570 | 105,531 | 113,189 | |||||
Percentage of loans in default | 14.27 | % | 15.45 | % | 16.01 | % | ||
Structured | ||||||||
Prime | ||||||||
Number of insured loans | 43,429 | 42,131 | 45,201 | |||||
Number of loans in default | 6,248 | 6,735 | 6,548 | |||||
Percentage of loans in default | 14.39 | % | 15.99 | % | 14.49 | % | ||
Alt-A | ||||||||
Number of insured loans | 19,600 | 20,234 | 31,852 | |||||
Number of loans in default | 5,930 | 6,635 | 11,485 | |||||
Percentage of loans in default | 30.26 | % | 32.79 | % | 36.06 | % | ||
A minus and below | ||||||||
Number of insured loans | 16,159 | 16,716 | 17,593 | |||||
Number of loans in default | 5,686 | 6,569 | 6,793 | |||||
Percentage of loans in default | 35.19 | % | 39.30 | % | 38.61 | % | ||
Total Structured | ||||||||
Number of insured loans | 79,188 | 79,081 | 94,646 | |||||
Number of loans in default | 17,864 | 19,939 | 24,826 | |||||
Percentage of loans in default | 22.56 | % | 25.21 | % | 26.23 | % | ||
Total Primary Insurance | ||||||||
Prime | ||||||||
Number of insured loans | 608,268 | 626,344 | 645,110 | |||||
Number of loans in default | 70,391 | 77,931 | 81,348 | |||||
Percentage of loans in default | 11.57 | % | 12.44 | % | 12.61 | % | ||
Alt-A | ||||||||
Number of insured loans | 67,091 | 71,999 | 88,175 | |||||
Number of loans in default | 21,259 | 24,569 | 31,774 | |||||
Percentage of loans in default | 31.69 | % | 34.12 | % | 36.04 | % | ||
A minus and below | ||||||||
Number of insured loans | 59,756 | 63,760 | 68,312 | |||||
Number of loans in default | 19,784 | 22,970 | 24,893 | |||||
Percentage of loans in default | 33.11 | % | 36.03 | % | 36.44 | % | ||
Total Primary | ||||||||
Number of insured loans | 735,115 | 762,103 | 801,597 | |||||
Number of loans in default | 111,434 | 125,470 | 138,015 | |||||
Percentage of loans in default | 15.16 | % | 16.46 | % | 17.22 | % | ||
Pool insurance | ||||||||
Number of loans in default | 26,016 | 32,456 | 32,486 |
June 30, 2011 | December 31, 2010 | June 30, 2010 | ||||||
Default Statistics—Modified Pool Insurance: | ||||||||
Number of insured loans in force | 18,725 | 15,487 | 25,325 | |||||
Number of loans in default | 3,714 | 4,009 | 7,759 | |||||
Percentage of loans in default | 19.83 | % | 25.89 | % | 30.64 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||
Beginning default inventory | 116,896 | 143,914 | 125,470 | 151,998 | |||||||
Plus: New defaults | 22,421 | 27,465 | 45,769 | 59,987 | |||||||
Less: Cures | (17,642 | ) | (25,460 | ) | (41,466 | ) | (54,978 | ) | |||
Less: Claims paid (1) | (8,049 | ) | (6,517 | ) | (14,829 | ) | (11,342 | ) | |||
Less: Rescissions and denials (2) | (2,192 | ) | (1,387 | ) | (3,510 | ) | (3,221 | ) | |||
Less: Terminations of transactions | — | — | — | (4,429 | ) | ||||||
Ending default inventory | 111,434 | 138,015 | 111,434 | 138,015 |
(1) | Includes those charged to a deductible or captive. |
(2) | Net of any previously rescinded policies or denied claims that were reinstated during the period. Such reinstated rescissions may ultimately result in a paid claim, while any previously denied claims are generally reviewed for possible rescission prior to any claim payment. The table below shows the details related to the number of rescinded policies and denied claims for the periods indicated. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||
Rescinded policies: | |||||||||||
Rescinded | (1,812 | ) | (1,163 | ) | (3,282 | ) | (2,842 | ) | |||
Reinstated | 168 | 131 | 343 | 166 | |||||||
Denied claims: | |||||||||||
Denied | (1,347 | ) | (508 | ) | (2,824 | ) | (802 | ) | |||
Reinstated | 799 | 153 | 2,253 | 257 | |||||||
Total net rescissions and denials | (2,192 | ) | (1,387 | ) | (3,510 | ) | (3,221 | ) |
June 30, 2011 | ||||||||||||||||||
Projected Default to Claim Rate | ||||||||||||||||||
Gross (1) | Net (2) | Reserve for Losses | % of Reserve | |||||||||||||||
($ in thousands) | # | % | % | % | $ | % | ||||||||||||
Missed payments: | ||||||||||||||||||
Three payments or less | 20,842 | 19 | % | 23 | % | 21 | % | $ | 205,473 | 7 | % | |||||||
Four to eleven payments | 32,160 | 29 | 51 | % | 45 | % | 715,074 | 27 | ||||||||||
Twelve payments or more | 58,432 | 52 | 66 | % | 53 | % | 1,735,893 | 66 | ||||||||||
Total | 111,434 | 100 | % | 53 | % | 45 | % | 2,656,440 | 100 | % | ||||||||
IBNR | 99,931 | |||||||||||||||||
LAE and Other | 66,723 | |||||||||||||||||
Total primary reserves | $ | 2,823,094 |
June 30, 2011 | December 31, 2010 | June 30, 2010 | |||||||||
First-lien reserve per default (1) | |||||||||||
Primary reserve per default | $ | 25,334 | $ | 23,374 | $ | 22,957 | |||||
Pool reserve per default (2) | 16,795 | 17,456 | 14,072 | ||||||||
Total first-lien reserve per default | 23,718 | 22,158 | 21,264 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Net claims paid (1): | |||||||||||||||
Prime | $ | 256,020 | $ | 164,043 | $ | 464,215 | $ | 290,007 | |||||||
Alt-A | 88,140 | 81,030 | 163,270 | 146,061 | |||||||||||
A minus and below | 52,794 | 48,645 | 97,379 | 85,029 | |||||||||||
Total primary claims paid | 396,954 | 293,718 | 724,864 | 521,097 | |||||||||||
Pool | 58,341 | 39,063 | 92,699 | 70,472 | |||||||||||
Second-lien and other | 3,736 | 4,494 | 6,619 | 12,473 | |||||||||||
Subtotal | 459,031 | 337,275 | 824,182 | 604,042 | |||||||||||
Impact of first-lien terminations | 38,198 | 239 | 38,198 | 80,349 | |||||||||||
Impact of captive terminations | (1,166 | ) | (191 | ) | (1,166 | ) | (627 | ) | |||||||
Impact of second-lien terminations | 16,550 | — | 16,550 | 10,834 | |||||||||||
Total net claims paid | $ | 512,613 | $ | 337,323 | $ | 877,764 | $ | 694,598 | |||||||
Average net claim paid (1) (2): | |||||||||||||||
Prime | $ | 49.9 | $ | 44.2 | $ | 49.0 | $ | 44.9 | |||||||
Alt-A | 62.0 | 56.9 | 60.9 | 58.1 | |||||||||||
A minus and below | 40.8 | 36.9 | 39.0 | 38.1 | |||||||||||
Total average net primary claim paid | 50.6 | 45.5 | 49.5 | 46.5 | |||||||||||
Pool | 80.2 | 74.3 | 75.7 | 69.8 | |||||||||||
Second-lien and other | 27.7 | 32.3 | 28.9 | 32.7 | |||||||||||
Total average net claim paid | $ | 52.7 | $ | 47.4 | $ | 51.2 | $ | 47.9 | |||||||
Average direct primary claim paid (2) (3) | $ | 55.3 | $ | 53.3 | $ | 54.8 | $ | 53.5 | |||||||
Average total direct claim paid (2) (3) | $ | 56.9 | $ | 54.4 | $ | 56.0 | $ | 54.2 |
(1) | Net of reinsurance recoveries. |
(2) | Calculated without giving effect to the impact of terminations of captive reinsurance transactions and the terminations of first- and second-lien transactions. |
(3) | Before reinsurance recoveries. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
($ in thousands) | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||
States with highest direct claims paid (first-lien): | |||||||||||||||||||||||||||
California | $ | 84,868 | 16.6 | % | $ | 64,602 | 19.2 | % | $ | 147,362 | 16.8 | % | $ | 127,946 | 18.4 | % | |||||||||||
Florida | 70,389 | 13.7 | 55,003 | 16.3 | 133,491 | 15.2 | 102,374 | 14.7 | |||||||||||||||||||
Arizona | 44,858 | 8.8 | 37,574 | 11.1 | 78,341 | 8.9 | 63,300 | 9.1 | |||||||||||||||||||
Georgia | 26,631 | 5.2 | 20,937 | 6.2 | 47,131 | 5.4 | 36,388 | 5.2 | |||||||||||||||||||
Michigan | 22,998 | 4.5 | 20,795 | 6.2 | 41,817 | 4.8 | 43,886 | 6.3 | |||||||||||||||||||
States with highest number of defaults: | |||||||||||||||||||||||||||
Florida | 18,586 | 16.7 | % | 22,385 | 16.2 | % | |||||||||||||||||||||
California | 9,247 | 8.3 | 15,202 | 11.0 | |||||||||||||||||||||||
Illinois | 6,644 | 6.0 | 7,497 | 5.4 | |||||||||||||||||||||||
Georgia | 5,523 | 5.0 | 7,231 | 5.2 | |||||||||||||||||||||||
Ohio | 5,164 | 4.6 | 5,895 | 4.3 |
(In thousands) | June 30, 2011 | December 31, 2010 | June 30, 2010 | ||||||||
Reserves for losses by category: | |||||||||||
Prime | $ | 1,635,206 | $ | 1,607,741 | $ | 1,386,271 | |||||
Alt-A | 652,577 | 687,960 | 815,055 | ||||||||
A minus and below | 374,647 | 413,137 | 400,679 | ||||||||
Reinsurance recoverable (1) | 160,664 | 223,254 | 565,737 | ||||||||
Total primary reserves | 2,823,094 | 2,932,092 | 3,167,742 | ||||||||
Pool | 436,948 | 566,565 | 457,129 | ||||||||
Total first-lien reserves | 3,260,042 | 3,498,657 | 3,624,871 | ||||||||
Second-lien (2) | 8,522 | 26,161 | 31,795 | ||||||||
Other | 18 | 153 | 80 | ||||||||
Total reserve for losses | $ | 3,268,582 | $ | 3,524,971 | $ | 3,656,746 | |||||
Modified pool reserves (included in primary reserves above) | $ | 73,187 | $ | 87,218 | $ | 244,628 | |||||
Reserve for premium deficiency on second-liens | $ | 6,251 | $ | 10,736 | $ | 16,772 |
(1) | Represents ceded losses on captive transactions and Smart Home. See "Off-Balance Sheet Arrangements" for additional information regarding our Smart Home transactions. |
(2) | Does not include second-lien premium deficiency reserve ("PDR"). |
As of and for the Three Months Ended June 30, | As of and for the Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
First-lien Captives | |||||||||||||||
Premiums ceded to captives (in thousands) | $ | 7,266 | $ | 24,684 | $ | 14,853 | $ | 50,158 | |||||||
% of total premiums | 4.2 | % | 12.1 | % | 4.1 | % | 12.4 | % | |||||||
NIW subject to captives (in thousands) | $ | — | $ | (204 | ) | $ | — | $ | 129 | ||||||
% of primary NIW | — | (<1)% | — | <1% | |||||||||||
IIF (1) subject to captives | 9.9 | % | 28.8 | % | |||||||||||
RIF (2) subject to captives | 9.7 | % | 30.5 | % | |||||||||||
Persistency (12 months ended) (3) | 82.5 | % | 81.7 | % |
(1) | Insurance in force on captives as a percentage of total insurance in force. |
(2) | RIF on captives as a percentage of total insurance in force. |
(3) | Reflects the impact of terminations of captive reinsurance transactions and first- and second-lien transactions. |
Three Months Ended June 30, | % Change | Six Months Ended June 30, | % Change | ||||||||||||||||||
($ in millions) | 2011 | 2010 | 2011 vs. 2010 | 2011 | 2010 | 2011 vs. 2010 | |||||||||||||||
Net income (loss) | $ | 234.7 | $ | (349.4 | ) | n/m | $ | 573.7 | $ | (428.4 | ) | n/m | |||||||||
Net premiums written—insurance | (11.4 | ) | (8.0 | ) | 42.5 | % | (9.5 | ) | (9.5 | ) | — | % | |||||||||
Net premiums earned—insurance | 24.6 | 23.5 | 4.7 | 41.5 | 44.4 | (6.5 | ) | ||||||||||||||
Net investment income | 19.0 | 20.1 | (5.5 | ) | 34.4 | 39.1 | (12.0 | ) | |||||||||||||
Net gains on investments | 16.8 | 22.8 | (26.3 | ) | 36.5 | 52.0 | (29.8 | ) | |||||||||||||
Change in fair value of derivative instruments | 188.4 | (523.3 | ) | n/m | 432.7 | (601.5 | ) | n/m | |||||||||||||
Net gains (losses) on other financial instruments | 5.7 | (55.2 | ) | n/m | 78.5 | (126.6 | ) | n/m | |||||||||||||
Other income | 0.1 | (3.7 | ) | n/m | 0.1 | 0.2 | (50.0 | ) | |||||||||||||
Provision for losses | (6.4 | ) | 7.5 | n/m | 7.0 | 22.3 | (68.6 | ) | |||||||||||||
Policy acquisition costs | 5.8 | 4.7 | 23.4 | 9.7 | 9.0 | 7.8 | |||||||||||||||
Other operating expenses | 12.0 | 9.5 | 26.3 | 24.1 | 28.1 | (14.2 | ) | ||||||||||||||
Interest expense | 15.9 | 6.7 | 137.3 | 23.2 | 15.4 | 50.6 | |||||||||||||||
Income tax benefit | (7.4 | ) | (194.8 | ) | (96.2 | ) | (13.9 | ) | (238.9 | ) | (94.2 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Net premiums earned: | |||||||||||||||
Public finance direct | $ | 11,580 | $ | 15,897 | $ | 19,416 | $ | 28,233 | |||||||
Public finance reinsurance | 8,262 | 6,196 | 16,066 | 13,109 | |||||||||||
Structured direct | 941 | 443 | 1,382 | 1,160 | |||||||||||
Structured reinsurance | 955 | 932 | 1,764 | 1,847 | |||||||||||
Trade credit reinsurance | 42 | 3 | 41 | 51 | |||||||||||
Total premiums earned—insurance | $ | 21,780 | $ | 23,471 | $ | 38,669 | $ | 44,400 | |||||||
Impact of commutations | 2,829 | (17 | ) | 2,829 | (17 | ) | |||||||||
Total net premiums earned—insurance | $ | 24,609 | $ | 23,454 | $ | 41,498 | $ | 44,383 | |||||||
Refundings included in total net premiums earned | $ | 9,300 | $ | 10,205 | $ | 14,131 | $ | 19,738 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Net unrealized gains related to change in fair value of trading securities | $ | 31.6 | $ | 5.1 | $ | 44.9 | $ | 32.7 | |||||||
Net realized (losses) gains on sales | (14.8 | ) | 17.7 | (8.4 | ) | 19.3 | |||||||||
Net gains on investments | $ | 16.8 | $ | 22.8 | $ | 36.5 | $ | 52.0 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Net premiums earned—derivatives | $ | 10.5 | $ | 11.8 | $ | 21.4 | $ | 23.8 | |||||||
Financial Guaranty credit derivatives | 181.9 | (524.2 | ) | 416.5 | (608.3 | ) | |||||||||
Financial Guaranty VIE derivatives | (4.0 | ) | (7.5 | ) | (4.9 | ) | (10.7 | ) | |||||||
Put options on CPS | — | (4.2 | ) | (0.3 | ) | (6.3 | ) | ||||||||
Other | — | 0.8 | — | — | |||||||||||
Change in fair value of derivative instruments | $ | 188.4 | $ | (523.3 | ) | $ | 432.7 | $ | (601.5 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Gain (loss) related to change in fair value of Financial Guaranty VIE debt | $ | (43.5 | ) | $ | (50.1 | ) | $ | 27.0 | $ | (125.8 | ) | ||||
Gains related to other Financial Guaranty VIE assets | 14.4 | 8.9 | 18.3 | 10.8 | |||||||||||
Gain on the repurchase of long-term debt | — | — | — | 2.0 | |||||||||||
Loss related to CPS VIE | — | (13.4 | ) | — | (13.6 | ) | |||||||||
Foreign currency gain related to the liquidation of a foreign subsidiary | 39.6 | — | 39.6 | — | |||||||||||
Other | (4.8 | ) | (0.6 | ) | (6.4 | ) | — | ||||||||
Net gains (losses) on other financial instruments | $ | 5.7 | $ | (55.2 | ) | $ | 78.5 | $ | (126.6 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Claims Paid: | |||||||||||||||
Financial guaranty | $ | 3,145 | $ | 21,841 | $ | 3,435 | $ | 25,198 | |||||||
Trade credit reinsurance | 285 | (2 | ) | 261 | 1,084 | ||||||||||
Total | $ | 3,430 | $ | 21,839 | $ | 3,696 | $ | 26,282 |
(In thousands) | June 30, 2011 | December 31, 2010 | June 30, 2010 | ||||||||
Reserve for Losses: | |||||||||||
Financial guaranty | $ | 70,753 | $ | 67,446 | $ | 119,256 | |||||
Trade credit reinsurance | 4,289 | 4,318 | 5,238 | ||||||||
Total | $ | 75,042 | $ | 71,764 | $ | 124,494 |
June 30, 2011 | ||||||||||||||
Net Par Outstanding (1) | % of Total Net Par Outstanding (1) | Net Claim (Asset) Liability (2) | Fair Value Net (Asset) Liability (3) | |||||||||||
Type of Obligation | (In billions) | (In millions) | (In millions) | |||||||||||
Public finance: | ||||||||||||||
General obligation and other tax supported | $ | 16.7 | 22.5 | % | $ | 1.0 | $ | 0.3 | ||||||
Healthcare and long-term care | 5.8 | 7.8 | 16.5 | (0.3 | ) | |||||||||
Water/sewer/electric gas and investor-owned utilities | 3.9 | 5.2 | 37.0 | 2.2 | ||||||||||
Airports/transportation | 3.6 | 4.8 | 2.1 | 38.2 | ||||||||||
Education | 2.5 | 3.3 | (12.8 | ) | 0.1 | |||||||||
Escrowed transactions (4) | 1.8 | 2.4 | — | — | ||||||||||
Housing | 0.3 | 0.4 | 0.3 | — | ||||||||||
Other municipal (5) | 1.0 | 1.3 | (4.0 | ) | 0.6 | |||||||||
Total public finance (6) | 35.6 | 47.7 | 40.1 | 41.1 | ||||||||||
Structured finance: | ||||||||||||||
CDO | 37.8 | 50.6 | 1.6 | 358.6 | ||||||||||
Asset-backed obligations | 1.0 | 1.3 | 29.1 | 15.0 | ||||||||||
Other structured (7) | 0.3 | 0.4 | — | (1.4 | ) | |||||||||
Total structured finance | 39.1 | 52.3 | 30.7 | 372.2 | ||||||||||
Total | $ | 74.7 | 100.0 | % | $ | 70.8 | $ | 413.3 |
December 31, 2010 | ||||||||||||||
Net Par Outstanding (1) | % of Total Net Par Outstanding (1) | Net Claim (Asset) Liability (2) | Fair Value Net (Asset) Liability (3) | |||||||||||
Type of Obligation | (In billions) | (In millions) | (In millions) | |||||||||||
Public finance: | ||||||||||||||
General obligation and other tax supported | $ | 17.5 | 22.2 | % | $ | (0.3 | ) | $ | 0.4 | |||||
Healthcare and long-term care | 6.2 | 7.9 | 18.1 | (0.6 | ) | |||||||||
Water/sewer/electric gas and investor-owned utilities | 4.2 | 5.3 | 30.0 | 2.3 | ||||||||||
Airports/transportation | 3.9 | 4.9 | 2.7 | 45.4 | ||||||||||
Education | 2.6 | 3.3 | (10.4 | ) | 0.3 | |||||||||
Escrowed transactions (4) | 1.9 | 2.4 | — | — | ||||||||||
Housing | 0.3 | 0.4 | 0.3 | — | ||||||||||
Other municipal (5) | 1.1 | 1.4 | (3.5 | ) | 0.7 | |||||||||
Total public finance (6) | 37.7 | 47.8 | 36.9 | 48.5 | ||||||||||
Structured finance: | ||||||||||||||
CDO | 39.6 | 50.3 | 1.2 | 825.9 | ||||||||||
Asset-backed obligations | 1.1 | 1.4 | 29.3 | 20.4 | ||||||||||
Other structured (7) | 0.4 | 0.5 | — | (1.3 | ) | |||||||||
Total structured finance | 41.1 | 52.2 | 30.5 | 845.0 | ||||||||||
Total | $ | 78.8 | 100.0 | % | $ | 67.4 | $ | 893.5 |
(1) | Represents our exposure to the aggregate outstanding principal on insured obligations. |
(2) | A claim liability is recorded on the balance sheet when there is evidence that deterioration has occurred and the net present value of our expected losses for a particular policy exceeds the unearned premium reserve for that policy. The claim liability reported is net of estimated salvage and subrogation, which may result in a net claim asset. |
(3) | Represents either the net (asset) liability recorded within derivative assets or derivative liabilities for derivative contracts, or the net (asset) liability recorded within VIE debt and other financial statement line items for financial guaranty consolidated VIEs. |
(4) | Legally defeased bond issuances where our financial guaranty policy is not extinguished, but cash or securities in an amount sufficient to pay remaining obligations under such bonds have been deposited in an escrow account for the benefit of the bond holders. |
(5) | Represents other types of municipal obligations, including human service providers, second-to-pay international public finance, non-profit institutions, project finance accommodations and stadiums, none of which individually constitutes a material amount of our financial guaranty net par outstanding. |
(6) | Includes $3.5 billion and $3.8 billion at June 30, 2011 and December 31, 2010, respectively, of international public finance insured obligations (which includes sovereign debt), of which $128.1 million and $118.0 million at June 30, 2011 and December 31, 2010, respectively, of such obligations were in the five Eurozone countries (Portugal, Ireland, Italy, Greece and Spain). We had no exposure to Ireland at either June 30, 2011 or December 31, 2010. |
(7) | Represents other types of structured finance obligations, including DPRs, collateralized guaranteed investment contracts or letters of credit, foreign commercial assets and life insurance securitizations, none of which individually constitutes a material amount of our financial guaranty net par outstanding. |
• | We have provided credit protection on the senior-most tranche of a CDO of ABS transaction with $451.4 million net par outstanding at June 30, 2011. The underlying collateral consists predominantly of mezzanine tranches of mortgage-backed securities ("MBS”). As of June 30, 2011, $385.1 million (or 89.3%) of the underlying collateral was rated BIG by at least one rating agency, of which $240.0 million (or 55.7%) of the underlying collateral had defaulted. Due to the substantial deterioration of the underlying collateral, we currently expect to begin paying claims related to interest shortfalls on this transaction in 2012, and possibly earlier if the deterioration is worse than projected. Due to the structure of this transaction, we do not expect to pay claims related to principal shortfalls until sometime between 2036 and the legal final maturity date for the transaction in 2046. Although losses for this transaction are difficult to estimate, we currently believe that our ultimate claim payments in respect of principal for this transaction will be substantially our entire total net par outstanding. This transaction is currently rated CC internally and by S&P, and Ca by Moody's Investor Service ("Moody's”). We continue to explore loss mitigation alternatives with respect to this transaction, including the possibility of commuting our remaining risk. We can provide no assurance that we will be successful in such loss mitigation efforts. |
• | We have reinsured several primary financial guaranty insurers' obligations with respect to $227.6 million in net par outstanding at June 30, 2011, related to Jefferson County, Alabama (the "County”) sewer bonds. We began paying claims related to these obligations in 2008, and have paid $21.0 million of claims, net of salvage, on this transaction through June 30, 2011. The County's sewer system operations have generated sufficient revenues since the beginning of 2009 to pay interest on its outstanding debt, as well as regularly scheduled annual installments of principal in February of 2010 and 2011, primarily due to historically low prevailing interest rates on the County's variable rate obligations. However, we believe a number of factors continue to adversely affect the performance of our insured obligations, including the County's highly leveraged capital position, the sub-par performance of the sewer facilities and the possibility that the County will be unable to generate sufficient revenues to make regularly scheduled payments of principal and interest on the underlying obligations if interest rates increase. |
• | We have provided credit protection on 15 directly insured senior bonds ("TruPs bonds") issued pursuant to TruPs CDOs. We provide credit protection on these TruPs bonds through 19 separate CDS contracts, meaning that with respect to four of the TruPs bonds we insure, we entered into two separate CDS contracts (each with a different counterparty) covering the same TruPs bond with an aggregate net par outstanding of $1,977.2 million as of June 30, 2011. Many issuers of the TruPs collateral underlying our insured obligations continue to be negatively affected by the most recent U.S. economic recession and slow recovery, and as a result, have defaulted on their obligation to pay interest on their TruPs or have voluntarily chosen to defer interest payments, which is permissible for up to five years. As of June 30, 2011, $1.3 billion of our net par outstanding to directly insured senior TruPs bonds was internally rated BIG. The fair value liability of our directly insured TruPs transactions, which are accounted for as derivatives, was $77.7 million as of June 30, 2011. |
(In thousands) | Three Months Ended June 30, 2010 | Six Months Ended June 30, 2010 | |||||
Equity in net income of affiliates—Sherman | $ | 6,570 | $ | 14,590 | |||
Gain on sale of affiliate—Sherman | 34,815 | 34,815 | |||||
Net income | 26,867 | 32,023 |
Initial | As of June 30, 2011 | ||
Pool of mortgages (par value) | $ 12.2 billion | $ 3.5 billion | |
Risk in force (par value) | $ 3.1 billion | $ 0.9 billion | |
Notes sold to investors/risk ceded (principal amount) | $534.0 million | $422.9 million |
Six Months Ended June 30, | |||||||
(In thousands) | 2011 | 2010 | |||||
Net income (loss) | $ | 240,121 | $ | (785,435 | ) | ||
Change in loss and LAE reserves | (198,667 | ) | 293,221 | ||||
Change in second-lien PDR | (4,485 | ) | (8,585 | ) | |||
Deferred tax benefit | (6,055 | ) | (393,344 | ) | |||
Depreciation and amortization, net | 33,130 | 13,051 | |||||
Change in unearned premiums | (55,695 | ) | (85,980 | ) | |||
Change in deferred policy acquisition costs | 9,400 | 11,647 | |||||
Net payments related to derivative contracts and VIE debt (1) | (82,128 | ) | (110,606 | ) | |||
Equity in earnings of affiliates | (65 | ) | (14,668 | ) | |||
Distributions from affiliates (1) | — | 29,498 | |||||
Net (gains) losses on investments and other financial instruments, change in fair value of derivatives and net impairment losses recognized in earnings | (594,576 | ) | 652,170 | ||||
Change in reinsurance recoverables | 64,459 | 42,141 | |||||
Cash paid for commutations, terminations and recaptures (1) | (54,225 | ) | (93,179 | ) | |||
Gain on sale of affiliate | — | (34,815 | ) | ||||
Change in other assets | 38,649 | 3,492 | |||||
Change in accounts payable and accrued expenses | 1,220 | 20,673 | |||||
Cash flows used in operating activities | $ | (608,917 | ) | $ | (460,719 | ) |
(1) | Cash item. |
MOODY'S (1) | S&P (2) | ||
Radian Group | B3 | CCC+ | |
Radian Guaranty | Ba3 | B+ | |
Radian Insurance | B1 | (3 | ) |
Radian Mortgage Assurance | Ba3 | B+ | |
Radian Asset Assurance | Ba1 | BB- |
(1) | Moody's ratings outlook for Radian Group, Radian Guaranty, Radian Insurance and Radian Mortgage Assurance is currently Positive. Moody's ratings outlook for Radian Asset Assurance is currently Stable. |
(2) | S&P's ratings outlook for Radian Group and all our rated insurance subsidiaries is currently Negative. |
(3) | Ratings have been withdrawn. |
• | first, we define a tranche on the CDX index (defined below) that equates to the risk profile of our specific transaction (we refer to this tranche as an "equivalent-risk tranche"); |
• | second, we determine the fair premium amount on the equivalent-risk tranche for those market participants engaged in trading on the CDX index (we refer to each of these participants as a "typical market participant"); and |
• | third, we adjust the fair premium amount for a typical market participant to account for the difference between the non-performance or default risk of a typical market participant and the non-performance or default risk of a financial guarantor of similar credit quality to us (in each case, we refer to the risk of non-performance as "non-performance risk"). |
• | the extent and the duration of the decline in value; |
• | the reasons for the decline in value (e.g., credit event, interest related or market fluctuations); |
• | the financial position and access to capital of the issuer, including the current and future impact of any specific events; and |
• | the financial condition, and near term prospects, of the issuer. |
NIMS related ($ in millions) | |||||||||||
Weighted average credit spread | 42.87 | % | |||||||||
Fair value of net liabilities (1) | $ | 51.5 | |||||||||
Increase/(Decrease) in Fair Value Liability based on: | |||||||||||
10% tightening of NIMS credit spreads | 0% change in NIMS credit spreads | 10% widening of NIMS credit spreads | |||||||||
50% tightening of Radian Group's CDS spread | $ | 2.3 | $ | 2.4 | $ | 2.4 | |||||
0 basis points change in Radian Group's CDS spread | — | — | — | ||||||||
50% widening of Radian Group's CDS spread | (1.7 | ) | (1.7 | ) | (1.7 | ) | |||||
_______________________ | |||||||||||
Corporate CDOs ($ in millions) | |||||||||||
Weighted average credit spread | 0.46 | % | |||||||||
Fair value of net liabilities | $ | 6.1 | |||||||||
Increase/(Decrease) in Fair Value Liability based on: | |||||||||||
10% tightening of CDO credit spreads | 0% change in CDO credit spreads | 10% widening of CDO credit spreads | |||||||||
50% tightening of Radian Group's CDS spread | $ | 27.0 | $ | 33.1 | $ | 40.1 | |||||
0 basis points change in Radian Group's CDS spread | (1.3 | ) | — | 2.1 | |||||||
50% widening of Radian Group's CDS spread | (4.8 | ) | (4.0 | ) | (2.5 | ) | |||||
_______________________ | |||||||||||
Non-Corporate CDO related (2) ($ in millions) | |||||||||||
Weighted average credit spread | 2.70 | % | |||||||||
Fair value of net liabilities (3) | $ | (390.2 | ) | ||||||||
Increase/(Decrease) in Fair Value Liability based on: | |||||||||||
10% tightening of CDO credit spreads | 0% change in CDO credit spreads | 10% widening of CDO credit spreads | |||||||||
50% tightening of Radian Group's CDS spread | $ | 330.1 | $ | 361.6 | $ | 388.1 | |||||
0 basis points change in Radian Group's CDS spread | (21.0 | ) | — | 17.0 | |||||||
50% widening of Radian Group's CDS spread | (116.4 | ) | (102.2 | ) | (90.7 | ) |
• | implement new eligibility requirements for mortgage insurers and alter or liberalize underwriting standards on low-down-payment mortgages they purchase; |
• | alter the terms on which mortgage insurance coverage may be canceled before reaching the cancellation thresholds established by law; |
• | require private mortgage insurers to perform activities intended to avoid or mitigate loss on insured mortgages that are in default; |
• | establish the amount of loan level delivery fees (which result in higher cost to borrowers) that the GSEs charge on loans that require mortgage insurance; and |
• | influence a mortgage lender's selection of the mortgage insurer providing coverage. |
• | establishes the Bureau of Consumer Financial Protection to regulate the offering and provision of consumer financial products or services under federal law, including residential mortgages; |
• | requires securitizers to retain at least 5% of the economic risk associated with mortgage loans that they cause to be securitized, unless the mortgage loans are "qualified residential mortgages" ("QRMs"), are insured by the FHA or guaranteed by the VA or another federal agency or fall within another exception. In certain circumstances, the securitizers may elect to allocate a portion of this risk retention to willing originators. The Dodd-Frank Act provides that the definition of QRMs will be determined by regulators, with consideration to be given, among other things, to the presence of mortgage insurance, to the extent that the presence of mortgage insurance reduces the risk of default. On March 29, 2011, federal regulators issued the proposed risk retention rule that includes a definition of QRM. Among other requirements, the proposed rule excludes loans with non-traditional features, such as negative amortization loans, and required adherence to strict, objective underwriting standards, including a maximum LTV of 80% on a home purchase transaction, regardless of whether mortgage insurance is present, maximum debt-to-income ratios and borrower credit history restrictions. The proposal also includes a request for comment on an alternative QRM definition that, if approved by regulators, would take mortgage insurance into account in determining whether the borrower met a 90% LTV requirement. The proposed rule was subject to a public comment period that ended August 1, 2011 (extended from June 10th). The regulators sought comments on virtually all aspects of the QRM definition, including: (1) a request for historical loan data that the regulators may use to assess whether loans with mortgage insurance are less likely to default than loans without mortgage insurance, (2) if the QRM definition included mortgage insurance, what financial eligibility standards should be incorporated for mortgage insurance providers and how might those standards be monitored and enforced, and (3) the potential benefits and costs of the alternative QRM definition that would give credit to mortgage insurance. |
• | may impose additional reporting, capital and collateral requirements on our financial guaranty business, including potentially, the posting of collateral for existing derivative contracts. On April 28, 2011, the Commodities Future Trading Commission published in the Federal Register its proposed rule regarding margin for uncleared swaps entered into by swap dealers or major swap participants. Under this proposal, the rules would apply to uncleared swaps entered into only after the effective date of the regulation. Thus, the proposed requirements would not apply retroactively. Comments on this proposal were due on July 22nd. The CFTC has not yet released its final rules regarding capital requirements for swap dealers and major swap participants. Until these rules are finalized, we cannot provide assurance that these requirements will not be applied retroactively to our existing derivative contracts, which if so applied, would likely require that we post significant collateral amounts that could exceed our current investment balances, and consequently, could have a material adverse effect on our businesses and on our financial condition, including significantly reducing or eliminating the ability of our financial guaranty business to provide dividends to our mortgage insurance business; |
• | sets new limitations and restrictions on banking, derivatives and asset-backed securities that may make it more difficult for us to commute, restructure, hedge or otherwise mitigate losses or reduce exposure on our existing financial guaranty portfolio. In addition, proposed definitions of insurance contracts may not exempt certain financial guaranty policies from the provisions of the derivatives rules of the Dodd-Frank Act, which could adversely affect the ability of issuers of our insured bonds to restructure outstanding transactions; and |
• | establishes a Financial Stability Oversight Council, which is authorized to subject nonbank financial companies deemed systemically significant to more rigorous prudential standards and other requirements and to subject such companies to a special liquidation process outside the federal bankruptcy code, administered by the FDIC (although insurance company subsidiaries would remain subject to liquidation and rehabilitation proceedings under state law). In addition, the Dodd-Frank Act establishes a Federal Insurance Office within the Department of the Treasury. While not having a general supervisory or regulatory authority over the business of insurance, the director of this office will perform various functions with respect to insurance, including serving as a non-voting member of the Financial Stability Oversight Council and making recommendations to the Council regarding insurers to be designated for more stringent regulation. The director is also required to conduct a study on how to modernize and improve the system of insurance regulation in the United States, including by increased national uniformity through either a federal charter or effective action by the states. |
Exhibit No. | Exhibit Name | |
+10.1 | Employment Agreement between the Registrant and S. A. Ibrahim, dated April 5, 2011 (incorporated by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K dated April 5, 2011 and filed on April 7, 2011) | |
+10.2 | Amendments to Incentive Awards under 2008 Executive Long-Term Incentive Cash Plan, dated April 5, 2011 (incorporated by reference to Exhibit 99.2 to the Registrant's Current Report on Form 8-K dated April 5, 2011 and filed on April 7, 2011) | |
+10.3 | Amended and Restated Radian Group Inc. 2008 Equity Compensation Plan (incorporated by reference to Exhibit 10.1 to Registrant’s Registration Statement on Form S-8, filed on May 23, 2011) | |
+10.4 | Amended and Restated Radian Group Inc. 2008 Executive Long-Term Incentive Cash Plan (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K dated May 10, 2011 and filed on May 16, 2011) | |
*+10.5 | Form of 2011 Performance Based Restricted Stock Unit Agreement under the 2008 Equity Compensation Plan | |
*+10.6 | Form of 2011 Stock Option Agreement under the 2008 Equity Compensation Plan | |
*+10.7 | 2011 Performance Based Restricted Stock Unit Agreement under the 2008 Equity Compensation Plan, dated June 9, 2011, between the Registrant and Sanford A. Ibrahim | |
*+10.8 | 2011 Performance Based Restricted Stock Unit Agreement under the 2008 Equity Compensation Plan, dated June 9, 2011, between the Registrant and C. Robert Quint | |
*+10.9 | 2011 Stock Option Agreement under the 2008 Equity Compensation Plan, dated June 9, 2011, between the Registrant and Sanford A. Ibrahim | |
*+10.10 | 2011 Stock Option Agreement under the 2008 Equity Compensation Plan, dated June 9, 2011, between the Registrant and C. Robert Quint | |
*11 | Statement re: Computation of Per Share Earnings | |
*31 | Rule 13a – 14(a) Certifications | |
*32 | Section 1350 Certifications | |
*101 | Pursuant to Rule 405 of Regulation S-T, the following financial information from Radian Group Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, is formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010, (ii) Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2011 and 2010, (iii) Condensed Consolidated Statements of Changes in Common Shareholders' Equity for the year ended December 31, 2010 and the six months ended June 30, 2011, (iv) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2011 and 2010, and (v) the Notes to Condensed Consolidated Financial Statements. |
Radian Group Inc. | |
August 9, 2011 | /s/ C. ROBERT QUINT |
C. Robert Quint | |
Executive Vice President and Chief Financial Officer | |
/s/ CATHERINE M. JACKSON | |
Catherine M. Jackson | |
Senior Vice President, Controller |
Exhibit No. | Exhibit Name | |
+10.1 | Employment Agreement between the Registrant and S.A. Ibrahim, dated April 5, 2011 (incorporated by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K dated April 5, 2011 and filed on April 7, 2011) | |
+10.2 | Amendments to Incentive Awards under 2008 Executive Long-Term Incentive Cash Plan, dated April 5, 2011 (incorporated by reference to Exhibit 99.2 to the Registrant's Current Report on Form 8-K dated April 5, 2011 and filed on April 7, 2011) | |
+10.3 | Amended and Restated Radian Group Inc. 2008 Equity Compensation Plan (incorporated by reference to Exhibit 10.1 to Registrant’s Registration Statement on Form S-8, filed on May 23, 2011) | |
+10.4 | Amended and Restated Radian Group Inc. 2008 Executive Long-Term Incentive Cash Plan (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K dated May 10, 2011 and filed on May 16, 2011) | |
*+10.5 | Form of 2011 Performance Based Restricted Stock Unit Agreement under the 2008 Equity Compensation Plan | |
*+10.6 | Form of 2011 Stock Option Agreement under the 2008 Equity Compensation Plan | |
*+10.7 | 2011 Performance Based Restricted Stock Unit Agreement under the 2008 Equity Compensation Plan, dated June 9, 2011, between the Registrant and Sanford A. Ibrahim | |
*+10.8 | 2011 Performance Based Restricted Stock Unit Agreement under the 2008 Equity Compensation Plan, dated June 9, 2011, between the Registrant and C. Robert Quint | |
*+10.9 | 2011 Stock Option Agreement under the 2008 Equity Compensation Plan, dated June 9, 2011, between the Registrant and Sanford A. Ibrahim | |
*+10.10 | 2011 Stock Option Agreement under the 2008 Equity Compensation Plan, dated June 9, 2011, between the Registrant and C. Robert Quint | |
*11 | Statement re: Computation of Per Share Earnings | |
*31 | Rule 13a – 14(a) Certifications | |
*32 | Section 1350 Certifications | |
*101 | Pursuant to Rule 405 of Regulation S-T, the following financial information from Radian Group Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, is formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010, (ii) Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2011 and 2010, (iii) Condensed Consolidated Statements of Changes in Common Shareholders' Equity for the year ended December 31, 2010 and the six months ended June 30, 2011, (iv) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2011 and 2010, and (v) the Notes to Condensed Consolidated Financial Statements. |
Performance (increments of +/- point differential) | Vesting |
Maximum at 50% above Target Award | 200% |
+1% TSR above Target Award | 102% |
Target Award: Median TSR of Peer Group | 100% |
-1% TSR below Target Award | 97% |
Threshold at -34% below Target Award | 0% |
Acknowledged and Agreed by Award Recipient: Signature:_____________________________________ Print Name:_____________________________________ Date:_____________________________________ |
1. | Grant of Performance-Based Restricted Stock Units. |
2. | Vesting. |
3. | Restricted Stock Units Account. |
4. | Conversion of Restricted Stock Units. |
5. | Certain Corporate Changes. |
6. | Restrictive Covenants. |
7. | No Stockholder Rights. |
8. | Retention Rights. |
9. | Cancellation or Amendment. |
10. | Notice. |
11. | Incorporation of Plan by Reference. |
12. | Income Taxes; Withholding Taxes. |
13. | Governing Law. |
14. | Grant Subject to Applicable Laws and Company Policies. |
15. | Assignment. |
16. | Section 409A. |
1. | Calculation of TSR. Vesting will be based on relative total shareholder return (“TSR”), which means the Company's |
2. | Vesting Based on Comparative TSR to the Median Peer Group TSR. The Restricted Stock Units will vest based |
Performance (increments of +/- point differential) | Vesting |
Maximum at 50% above Target Award | 200%* |
+1% TSR above Target Award | 102% |
Target Award: Median TSR of Peer Group | 100% |
-1% TSR below Target Award | 97% |
Threshold at -34% below Target Award | 0% |
3. | General Vesting Terms. Any fractional Restricted Stock Unit resulting from the vesting of the Restricted Stock Units |
4. | Limitation on Vesting. Notwithstanding the foregoing, in no event shall the number of Restricted Stock Units that |
1. | Grant of Performance-Based Restricted Stock Units. |
2. | Vesting. |
8. | Retention Rights. |
9. | Cancellation or Amendment. |
10. | Notice. |
11. | Incorporation of Plan by Reference. |
12. | Income Taxes; Withholding Taxes. |
13. | Governing Law. |
14. | Grant Subject to Applicable Laws and Company Policies. |
15. | Assignment. |
16. | Section 409A. |
1. | Calculation of TSR. Vesting will be based on relative total shareholder return (“TSR”), which means the Company's TSR relative to the median TSR of the Peer Group (as defined in Section 2(c) below). At the end of the Performance Period, the TSR for the Company, and for each company in the Peer Group, shall be calculated by dividing the Closing Average Share Value (as defined below) by the Opening Average Share Value (as defined below). |
Performance (increments of +/- point differential) | Vesting |
Maximum at 50% above Target Award | 200% |
+1% TSR above Target Award | 102% |
Target Award: Median TSR of Peer Group | 100% |
-1% TSR below Target Award | 97% |
Threshold at -34% below Target Award | 0% |
Acknowledged and Agreed by Award Recipient: Signature:/s/ S.A. Ibrahim________________________ Print Name:S.A. Ibrahim__________________________ Date:08/09/2011___________________________ |
Acknowledged and Agreed by Award Recipient: Signature:/s/ C. Robert Quint______________________ Print Name:C. Robert Quint________________________ Date:08/09/2011____________________________ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands, except per-share amounts and market prices) | 2011 | 2010 | 2011 | 2010 | |||||||||||
Net income (loss) | $ | 137,115 | $ | (475,080 | ) | $ | 240,121 | $ | (785,435 | ) | |||||
Average diluted stock options outstanding | 1,030 | — | 1,030 | — | |||||||||||
Average exercise price per share | $ | 3.10 | $ | — | $ | 3.10 | $ | — | |||||||
Average market price per share—diluted basis | $ | 5.09 | $ | — | $ | 6.29 | $ | — | |||||||
Average common shares outstanding | 132,185 | 110,282 | 132,185 | 96,420 | |||||||||||
Increase in share due to potential exercise of common stock equivalents—diluted basis (1) | 1,429 | — | 1,539 | — | |||||||||||
Adjusted shares outstanding—diluted | 133,614 | 110,282 | 133,724 | 96,420 | |||||||||||
Net income (loss) per share—basic | $ | 1.04 | $ | (4.31 | ) | $ | 1.82 | $ | (8.15 | ) | |||||
Net income (loss) per share—diluted | $ | 1.03 | $ | (4.31 | ) | $ | 1.80 | $ | (8.15 | ) |
(1) | For the three and six months ended June 30, 2011, 3,268,525 shares of our common stock equivalents issued under our stock-based compensation plans were not included in the calculation of diluted net income per share as of such date because they were anti-dilutive. As a result of our net loss for the three and six months ended June 30, 2010, 4,427,985 shares of our common stock equivalents issued under our stock-based compensations plans were not included in the calculation of diluted net loss per share because they were anti-dilutive. |
Date: August 9, 2011 | /s/ SANFORD A. IBRAHIM |
Sanford A. Ibrahim Chief Executive Officer |
Date: August 9, 2011 | /s/ C. ROBERT QUINT |
C. Robert Quint Chief Financial Officer |
Date: August 9, 2011 | /s/ S. A. IBRAHIM |
Sanford A. Ibrahim | |
/s/ C. ROBERT QUINT | |
C. Robert Quint |
Balance Sheet Parentheticals (USD $)
In Thousands, except Share data |
Jun. 30, 2011
|
Dec. 31, 2010
|
||||||
---|---|---|---|---|---|---|---|---|
Fixed-maturities held to maturity—at fair value | $ 8,282 | $ 11,416 | ||||||
Variable interest entity (“VIE”) securities | 100,691 | 83,184 | ||||||
Variable interest entity (“VIE”) short term investments | 149,984 | 149,981 | ||||||
Allowance for doubtful accounts | 0 | 50,000 | ||||||
Accumulated depreciation | 95,204 | 92,451 | ||||||
VIE derivative assets | 4,653 | 10,855 | ||||||
VIE Other assets | 115,716 | 112,426 | ||||||
VIE non-recourse debt | 3,195 | 9,514 | ||||||
VIE derivative liabilities | 18,831 | 19,226 | ||||||
VIE accounts payable and other liabs | 686 | 887 | ||||||
Par value | $ 0.001 | $ 0.001 | ||||||
Shares authorized | 325,000,000 | 325,000,000 | ||||||
Shares issued | 150,574,956 | 150,507,853 | ||||||
Shares outstanding | 133,113,518 | 133,049,213 | ||||||
Treasury stock shares | 17,461,438 | 17,458,640 | ||||||
Debt Securities [Member]
|
||||||||
Available-for-sale Debt Securities, Amortized Cost Basis | 160,085 | 340,795 | ||||||
Equity Securities [Member]
|
||||||||
Available-for-sale Equity Securities, Amortized Cost Basis | $ 160,038 | [1] | $ 160,242 | [2] | ||||
|
Condensed Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Premiums written—insurance: | ||||
Direct | $ 174,008 | $ 194,757 | $ 364,849 | $ 379,035 |
Assumed | (11,788) | (7,923) | (10,164) | (9,171) |
Ceded | (9,442) | (26,933) | (19,158) | (54,462) |
Net premiums written | 152,778 | 159,901 | 335,527 | 315,402 |
Decrease in unearned premiums | 36,156 | 43,545 | 56,430 | 86,312 |
Net premiums earned—insurance | 188,934 | 203,446 | 391,957 | 401,714 |
Net investment income | 43,823 | 48,619 | 86,063 | 93,977 |
Net gains on investments | 44,236 | 57,262 | 81,671 | 115,210 |
Total other-than-temporary impairment ('OTTI') losses | (11) | (38) | (11) | (56) |
Losses recognized in other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Net impairment losses recognized in earnings | (11) | (38) | (11) | (56) |
Change in fair value of derivative instruments | 188,726 | (524,606) | 432,618 | (602,560) |
Net gains (losses) on other financial instruments | 5,047 | (63,200) | 80,298 | (164,764) |
Gain on sale of affiliate | 0 | 34,815 | 0 | 34,815 |
Other income | 1,196 | (2,072) | 2,644 | 3,703 |
Total revenues | 471,951 | (245,774) | 1,075,240 | (117,961) |
Expenses: | ||||
Provision for losses | 263,566 | 435,166 | 690,939 | 979,046 |
Change in reserve for premium deficiency | (3,102) | (7,354) | (4,485) | (8,585) |
Policy acquisition costs | 14,387 | 16,797 | 28,518 | 31,665 |
Other operating expenses | 45,954 | 35,165 | 92,173 | 100,221 |
Interest expense | 16,079 | 8,245 | 33,103 | 19,049 |
Total expenses | 336,884 | 488,019 | 840,248 | 1,121,396 |
Equity in net income of affiliates | 0 | 6,570 | 65 | 14,668 |
Pretax income (loss) | 135,067 | (727,223) | 235,057 | (1,224,689) |
Income tax benefit | (2,048) | (252,143) | (5,064) | (439,254) |
Net income (loss) | $ 137,115 | $ (475,080) | $ 240,121 | $ (785,435) |
Basic net income (loss) per share | $ 1.04 | $ (4.31) | $ 1.82 | $ (8.15) |
Diluted net income (loss) per share | $ 1.03 | $ (4.31) | $ 1.80 | $ (8.15) |
Weighted-average number of common shares outstanding—basic | 132,185 | 110,282 | 132,185 | 96,420 |
Weighted-average number of common and common equivalent shares outstanding—diluted | 133,614 | 110,282 | 133,724 | 96,420 |
Dividends per share | $ 0.0025 | $ 0.0025 | $ 0.0050 | $ 0.0050 |
Note 15 - Commitments and Contingencies Guarantor Obligations (Details) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Guarantor Obligations [Line Items] | ||
Number of Guaranteed Structured Transactions For Radian Guaranty | 2 | |
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 176.8 | $ 103.4 |
Percentage Investment Interest In Foreign Holding Company | 45.00% |
Note 7 - Losses and LAE - Mortgage Insurance Losses and LAE for Mortgage Insurance (Details) (USD $)
In Thousands |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Reserve for Losses and Loss Adjustment Expenses | $ 3,343,624 | $ 3,596,735 |
Property, Liability and Casualty Insurance Segment [Member]
|
||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Reserve for Losses and Loss Adjustment Expenses | 3,343,624 | 3,596,735 |
Mortgage Insurance Segment [Member]
|
||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Reserve for Losses and Loss Adjustment Expenses | 3,268,582 | 3,524,971 |
Financial Guaranty Segment [Member]
|
||
Liability for Future Policy Benefit, by Product Segment [Line Items] | ||
Reserve for Losses and Loss Adjustment Expenses | $ 75,042 | $ 71,764 |
Note 1 - Condensed Consolidated Financial Statements Level 3 (Tables)
|
6 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
|||||||||||||||||||||||||
Condensed Consolidated Financial Statements Basis Of Presentation [Abstract] | |||||||||||||||||||||||||
Capital And Liquidity [Table Text Block] |
|
||||||||||||||||||||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | Basic net income (loss) per share is based on the weighted-average number of common shares outstanding, while diluted net income (loss) per share is based on the weighted-average number of common shares outstanding and common share equivalents that would be issuable upon the exercise of stock options and other stock-based compensation. For the three and six months ended June 30, 2011, 3,268,525 shares of our common stock equivalents issued under our stock-based compensation plans were not included in the calculation of diluted net income per share as of such dates because they were anti-dilutive. As a result of our net loss for the three and six months ended June 30, 2010, 4,427,985 shares of our common stock equivalents issued under our stock-based compensations plans were not included in the calculation of diluted net loss per share as of such dates because they were anti-dilutive. |
Document and Entity Information (USD $)
In Thousands, except Share data |
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Jul. 29, 2011
|
|
Document and Entity Information [Line Items] | ||
Entity Registrant Name | Radian Group Inc. | |
Entity Central Index Key | 0000890926 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2011 | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 133,105,845 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Public Float | $ 563,070 |
Note 4 - Fair Value of Financial Instruments Level 3 (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impact of Non-Performance Risk Fair Value Disclosure [Table Text Block] | The following table quantifies the impact of our non-performance risk on our derivative assets, derivative liabilities (in aggregate by type, excluding assumed financial guaranty derivatives) and VIE liabilities presented in our condensed consolidated balance sheets. Radian Group's five-year CDS spread is presented as an illustration of the market's view of our non-performance risk; the CDS spread actually used in the valuation of specific fair value liabilities is typically based on the remaining term of the instrument.
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The cumulative impact attributable to the market's perception of our non-performance risk increased by $188.7 million during the first six months of 2011, as presented in the table above. This increase was primarily the result of the widening of Radian Group's CDS spreads during this period. |
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Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | We established a fair value hierarchy by prioritizing the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements). The three levels of the fair value hierarchy under this standard are described below: Level I—Unadjusted quoted prices or valuations in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level II—Quoted prices or valuations in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; and Level III—Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. The level of market activity in determining the fair value hierarchy is based on the availability of observable inputs market participants would use to price an asset or a liability, including market value price observations. For markets in which inputs are not observable or limited, we use significant judgment and assumptions that a typical market participant would use to evaluate the market price of an asset or liability. These assets and liabilities are classified in Level III of our fair value hierarchy. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At June 30, 2011, our total Level III assets were approximately 4.5% of total assets measured at fair value and total Level III liabilities accounted for 100% of total liabilities measured at fair value. Available for sale securities, trading securities, VIE debt, derivative instruments, and certain other assets are recorded at fair value. All derivative instruments and contracts are recognized in our condensed consolidated balance sheets as either derivative assets or derivative liabilities. All changes in the fair value of trading securities, VIE debt, derivative instruments and certain other assets are included in our condensed consolidated statements of operations. All changes in the fair value of available for sale securities are recorded in accumulated other comprehensive income (loss). The following is a list of those assets and liabilities that are measured at fair value by hierarchy level as of June 30, 2011:
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The following is a list of those assets and liabilities that are measured at fair value by hierarchy level as of December 31, 2010:
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Fair Value, Assets and Liabilites Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | The following is a rollforward of Level III assets and liabilities measured at fair value for the quarter ended June 30, 2011:
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The following is a rollforward of Level III assets and liabilities measured at fair value for the six months ended June 30, 2011:
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There were no investment transfers between Level I and Level II during the first six months of 2011 or 2010. The following is a rollforward of Level III assets and liabilities measured at fair value for the quarter ended June 30, 2010:
The following is a rollforward of Level III assets and liabilities measured at fair value for the six months ended June 30, 2010:
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Fair Value, by Balance Sheet Grouping [Table Text Block] | Other Fair Value Disclosure The carrying value and estimated fair value of other selected assets and liabilities not carried at fair value on our condensed consolidated balance sheets were as follows:
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Note 5 - VIEs Schedule of Variable Interest Entities (Details) (USD $)
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3 Months Ended | 6 Months Ended | |||||||||||||||
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Dec. 31, 2010
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||
Trading Securities | $ 4,445,335,000 | $ 4,445,335,000 | $ 4,562,821,000 | ||||||||||||||
Short-term Investments | 1,130,268,000 | 1,130,268,000 | 1,537,498,000 | ||||||||||||||
Derivative Assets | 27,266,000 | 27,266,000 | 26,212,000 | ||||||||||||||
Other Assets | 352,335,000 | 352,335,000 | 323,320,000 | ||||||||||||||
Unearned premiums | 629,813,000 | 629,813,000 | 686,364,000 | ||||||||||||||
Reserve for losses and LAE | 3,343,624,000 | 3,343,624,000 | 3,596,735,000 | ||||||||||||||
Derivative liabilities | 313,708,000 | 313,708,000 | 723,579,000 | ||||||||||||||
Variable interest entity debt | 393,740,000 | 393,740,000 | 520,114,000 | ||||||||||||||
Accounts Payable and Accrued Liabilities | 301,031,000 | 301,031,000 | 258,791,000 | ||||||||||||||
Income Statement Related Disclosures [Abstract] | |||||||||||||||||
Premiums Earned, Net | 188,934,000 | 203,446,000 | 391,957,000 | 401,714,000 | |||||||||||||
Net Investment Income, Insurance Entity | 43,823,000 | 48,619,000 | 86,063,000 | 93,977,000 | |||||||||||||
Gain (Loss) on Investments | 44,236,000 | 57,262,000 | 81,671,000 | 115,210,000 | |||||||||||||
Gain (Loss) on Derivative Instruments, Net, Pretax | 188,726,000 | (524,606,000) | 432,618,000 | (602,560,000) | |||||||||||||
Net gains (losses) on other financial instruments | 5,047,000 | (63,200,000) | 80,298,000 | (164,764,000) | |||||||||||||
Other Income | 1,196,000 | (2,072,000) | 2,644,000 | 3,703,000 | |||||||||||||
Incurred Claims, Property, Casualty and Liability | 263,566,000 | 435,166,000 | 690,939,000 | 979,046,000 | |||||||||||||
Other Cost and Expense, Operating | 45,954,000 | 35,165,000 | 92,173,000 | 100,221,000 | |||||||||||||
Interest expense | 16,079,000 | 8,245,000 | 33,103,000 | 19,049,000 | |||||||||||||
NIMS [Member]
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||
Exposure For NIMS Bonds Purchased | 900,000 | 900,000 | |||||||||||||||
Derivative Assets | 4,700,000 | 4,700,000 | 10,800,000 | ||||||||||||||
Variable interest entity debt | 56,200,000 | 56,200,000 | 141,000,000 | ||||||||||||||
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure, Amount | 58,700,000 | [1] | 58,700,000 | [1] | 135,800,000 | [1] | |||||||||||
Number Of NIMS Bonds Purchased | 1 | ||||||||||||||||
Average Remaining Maturity in Years of Existing NIMS Transactions | 1 | 1 | |||||||||||||||
Income Statement Related Disclosures [Abstract] | |||||||||||||||||
Net Investment Income, Insurance Entity | 300,000 | 0 | |||||||||||||||
Gain (Loss) on Derivative Instruments, Net, Pretax | (1,500,000) | (500,000) | |||||||||||||||
Net gains (losses) on other financial instruments | 1,800,000 | (38,700,000) | |||||||||||||||
VIE Cash Flow Related Disclosures [Abstract] | |||||||||||||||||
Net Cash Outflow for VIEs | 78,100,000 | 73,500,000 | |||||||||||||||
Consolidated Committed Preferred Custodial Trust Securities [Member]
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||
Short-term Investments | 150,000,000 | 150,000,000 | 150,000,000 | ||||||||||||||
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure, Amount | 150,000,000 | [2] | 150,000,000 | [2] | 150,000,000 | [2] | |||||||||||
Income Statement Related Disclosures [Abstract] | |||||||||||||||||
Net Investment Income, Insurance Entity | 100,000 | 0 | |||||||||||||||
Gain (Loss) on Derivative Instruments, Net, Pretax | 0 | 0 | |||||||||||||||
Net gains (losses) on other financial instruments | 0 | (21,600,000) | |||||||||||||||
Other Cost and Expense, Operating | 100,000 | 200,000 | |||||||||||||||
VIE Cash Flow Related Disclosures [Abstract] | |||||||||||||||||
Net Cash Outflow for VIEs | 0 | 39,000,000 | |||||||||||||||
Consolidated Financial Guaranty Insurance Contracts [Member]
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||
Trading Securities | 100,700,000 | 100,700,000 | 83,200,000 | ||||||||||||||
Derivative Assets | 0 | 0 | 0 | ||||||||||||||
Premiums Receivable, Fair Value Disclosure | 0 | 0 | 0 | ||||||||||||||
Other Assets | 115,700,000 | 115,700,000 | 112,400,000 | ||||||||||||||
Unearned premiums | 0 | 0 | 0 | ||||||||||||||
Reserve for losses and LAE | 0 | 0 | 0 | ||||||||||||||
Derivative liabilities | 18,831,000 | [3] | 18,831,000 | [3] | 19,226,000 | ||||||||||||
Variable interest entity debt | 337,500,000 | 337,500,000 | 379,100,000 | ||||||||||||||
Accounts Payable and Accrued Liabilities | 700,000 | 700,000 | 800,000 | ||||||||||||||
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure, Amount | 581,800,000 | [1] | 581,800,000 | [1] | 584,600,000 | [1] | |||||||||||
Number Of Consolidated CDO Of ABS Transactions | 1 | 1 | |||||||||||||||
Number Of Consolidated Other Financial Guaranty Transactions | 2 | 2 | |||||||||||||||
Income Statement Related Disclosures [Abstract] | |||||||||||||||||
Premiums Earned, Net | 0 | 0 | |||||||||||||||
Net Investment Income, Insurance Entity | 4,100,000 | 5,600,000 | |||||||||||||||
Gain (Loss) on Investments | 20,000,000 | 14,600,000 | |||||||||||||||
Gain (Loss) on Derivative Instruments, Net, Pretax | (4,900,000) | (10,700,000) | |||||||||||||||
Net gains (losses) on other financial instruments | 45,300,000 | (113,100,000) | |||||||||||||||
Incurred Claims, Property, Casualty and Liability | 0 | 0 | |||||||||||||||
Other Cost and Expense, Operating | 1,500,000 | 1,800,000 | |||||||||||||||
VIE Cash Flow Related Disclosures [Abstract] | |||||||||||||||||
Net Cash Outflow for VIEs | 400,000 | 1,100,000 | |||||||||||||||
Unconsolidated Committed Preferred Custodial Trust Securities [Member]
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||
Number Of Committed Preferred Custodial Trusts Not Consolidated Prior To The Second Quarter Of The Prior Year | 1 | 1 | |||||||||||||||
Income Statement Related Disclosures [Abstract] | |||||||||||||||||
Net Investment Income, Insurance Entity | 0 | 0 | [4] | ||||||||||||||
Gain (Loss) on Derivative Instruments, Net, Pretax | (6,300,000) | [4] | |||||||||||||||
Net gains (losses) on other financial instruments | 0 | ||||||||||||||||
VIE Cash Flow Related Disclosures [Abstract] | |||||||||||||||||
Net Cash Outflow for VIEs | 900,000 | [4] | |||||||||||||||
Unconsolidated Financial Guaranty Insurance Contracts [Member]
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||
Trading Securities | 0 | 0 | 0 | ||||||||||||||
Derivative Assets | 5,600,000 | 5,600,000 | 6,000,000 | ||||||||||||||
Premiums Receivable, Fair Value Disclosure | 4,300,000 | 4,300,000 | 5,200,000 | ||||||||||||||
Other Assets | 0 | 0 | 0 | ||||||||||||||
Unearned premiums | 4,600,000 | 4,600,000 | 6,000,000 | ||||||||||||||
Reserve for losses and LAE | 14,400,000 | 14,400,000 | 15,000,000 | ||||||||||||||
Derivative liabilities | 258,500,000 | 258,500,000 | 585,900,000 | ||||||||||||||
Variable interest entity debt | 0 | 0 | 0 | ||||||||||||||
Accounts Payable and Accrued Liabilities | 0 | 0 | 0 | ||||||||||||||
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure, Amount | 6,610,400,000 | [1] | 6,610,400,000 | [1] | 6,874,200,000 | [1] | |||||||||||
Income Statement Related Disclosures [Abstract] | |||||||||||||||||
Premiums Earned, Net | 1,600,000 | 1,300,000 | |||||||||||||||
Net Investment Income, Insurance Entity | 0 | 0 | |||||||||||||||
Gain (Loss) on Investments | 0 | 0 | |||||||||||||||
Gain (Loss) on Derivative Instruments, Net, Pretax | 330,000,000 | (360,600,000) | |||||||||||||||
Net gains (losses) on other financial instruments | 0 | 0 | |||||||||||||||
Incurred Claims, Property, Casualty and Liability | (100,000) | 6,600,000 | |||||||||||||||
Other Cost and Expense, Operating | 0 | 0 | |||||||||||||||
VIE Cash Flow Related Disclosures [Abstract] | |||||||||||||||||
Net Cash Outflow for VIEs | $ 3,800,000 | $ (36,000,000) | |||||||||||||||
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Note 5 - VIEs Level 1 (Notes)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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VIEs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities [Text Block] | VIEs The following information provides additional information related to our consolidated and unconsolidated VIEs. NIMS VIEs We consolidate all of the assets and liabilities associated with NIMS VIEs, due to provisions in our contracts that allow us to purchase assets of these VIEs and thus direct the activities that most significantly impact the economic performance of each VIE. For this reason, we have concluded that we have the power to most significantly impact the economic performance of these VIEs. As the guarantor of either all or a significant portion of the debt issued by each NIMS VIE, we have the obligation to absorb losses that are significant to the VIEs. As a result, we have also concluded that we are the primary beneficiary of these VIEs. The consolidated NIMS assets are accounted for as derivatives and represent assets to be used to settle the obligation of the VIEs. We elected the fair value option as it relates to the NIMS VIE debt, and therefore, the consolidated NIMS VIE debt is recorded at fair value. Our VIE debt includes amounts for which third parties do not have recourse to us. Our continued involvement with the NIMS VIEs also includes a risk mitigation initiative, under which we purchased one NIMS bond during the first six months of 2011, with $0.9 million face value and a purchase price approximately equal to our fair value liability at the time of purchase. This purchase effectively eliminates the guarantee that we had issued to the VIE with respect to such bond and limits our liability to the discounted purchase price. In total, our net cash outflow related to NIMS during 2011 has been primarily as a result of claim payments. The average remaining maturity of our existing NIMS transactions is approximately one year. The following tables provide a summary of our maximum exposure to losses, and the financial impact on our condensed consolidated balance sheets, our condensed consolidated statements of operations and our condensed consolidated statements of cash flows as of and for the periods indicated, as it relates to our consolidated NIMS VIEs:
_______________
Put Options on CPS Radian Group and its subsidiaries have purchased by tender offer and privately negotiated transactions substantially all of the face amount of the CPS issued by the custodial trusts. Our continued involvement with these VIEs has included the payment of a put premium representing the spread between the assets of each trust and the relevant CPS, which has typically been de minimis. We eliminate the premium associated with the purchased CPS. Based on our involvement in these trusts, combined with the put options Radian Asset Assurance Inc. ("Radian Asset Assurance") holds on these trusts (which together are considered in the determination of the primary beneficiary), we concluded that we are the party that directs the activities that most significantly influence the economic performance of these VIEs and has the right to receive benefits that would be significant to these VIEs. This determination was based on a qualitative analysis which demonstrates that we have a variable interest in each of these VIEs, and therefore, we concluded that we are the primary beneficiary. As such, the assets and liabilities of these trusts were consolidated at their respective fair values, net of liabilities to us. The assets of the consolidated trusts are reported in short-term investments. During 2011, our net cash outflow related to our involvement with these VIEs was de minimis. The following tables provide a summary of our maximum exposure to losses, and the financial impact on our condensed consolidated balance sheets, our condensed consolidated statements of operations and our condensed consolidated statements of cash flows as of and for the periods indicated, as it relates to our consolidated and unconsolidated CPS VIEs:
_____________
_________________________
Financial Guaranty Insurance Contracts We consolidate the assets and liabilities associated with one CDO of ABS transaction. Due to provisions in our contracts that allow us to direct the collateral manager to sell the underlying assets of the transaction, we concluded that we have the power to direct the activities that most significantly impact the economic performance of this VIE. In addition, as the guarantor of certain classes of debt issued by this VIE, we have the obligation to absorb losses that are significant to this VIE. The consolidated CDO of ABS VIE assets are accounted for as trading securities and represent assets to be used to settle the obligation of this VIE. While the assets of this VIE may only be used to settle the obligations of the trust, due to our guarantee, the creditors have recourse to our general credit for this consolidated VIE debt. We also consolidate the assets and liabilities associated with two other financial guaranty transactions, in which we provided guarantees for VIEs that own manufactured housing loans, and which prior to their consolidation, had been accounted for as insurance contracts. Due to the contractual provisions that allow us to replace and appoint the servicer who manages the collateral underlying the assets of the transactions, we concluded that we have the power to direct the activities of these VIEs. In addition, as the guarantor of certain classes of debt issued by these VIEs, we have the obligation to absorb losses that could be significant to these VIEs. The assets of these VIEs may only be used to settle the obligations of the trusts, while due to the nature of our guarantees, creditors have recourse to our general credit as it relates to the VIE debt. However, due to the seniority of the bonds we insure in these transactions, we do not expect to incur a loss from our involvement with these two VIEs; as such, we did not have a net liability recorded for these transactions as of June 30, 2011. Our interests in VIEs for which we are not the primary beneficiary may be accounted for as insurance, reinsurance or credit derivatives. For insurance contracts, we record reserves for losses and LAE, and for derivative interests, we record cumulative changes in fair value as a corresponding derivative asset or derivative liability. Our primary involvement with these VIEs relates to transactions in which we provide a financial guaranty to one or more classes of beneficial interest holders in the VIE. Underlying collateral in the VIEs includes residential and commercial mortgages, manufactured housing loans, consumer receivables and other financial assets sold to a VIE and repackaged into securities or similar beneficial interests. In continually assessing our involvement with VIEs, we consider certain events such as the VIE's failure to meet certain contractual conditions, such as performance tests and triggers, servicer termination events and events of default, that should they occur, may provide us with additional control rights over the VIE. These events would cause us to reassess our initial determination of whether we are the primary beneficiary of a VIE. In addition, changes to its governance structure that would allow us to direct the activities of a VIE or our acquisition of additional financial interests in the VIE would also cause us to reassess our determination of whether we are the primary beneficiary of a VIE. Since many of our financial guaranty contracts provide us with substantial control rights over the activities of VIEs upon the occurrence of default or other performance triggers described above, we expect that additional VIEs may be consolidated by us if these events occur. The following tables provide a summary of our maximum exposure to losses, and the financial impact on our condensed consolidated balance sheets, our condensed consolidated statements of operations and our condensed consolidated statements of cash flows as of and for the periods indicated, as it relates to our consolidated and unconsolidated financial guaranty insurance contracts and credit derivative VIEs:
_______________
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Note 5 - VIEs Level 3 (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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VIEs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Interest Margin Securities VIES [Table Text Block] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Committed Preferred Custodial Trust Securities VIEs [Table Text Block] | The following tables provide a summary of our maximum exposure to losses, and the financial impact on our condensed consolidated balance sheets, our condensed consolidated statements of operations and our condensed consolidated statements of cash flows as of and for the periods indicated, as it relates to our consolidated and unconsolidated CPS VIEs:
_____________
_________________________
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Financial Guaranty Insurance Contracts VIEs [Table Text Block] | The following tables provide a summary of our maximum exposure to losses, and the financial impact on our condensed consolidated balance sheets, our condensed consolidated statements of operations and our condensed consolidated statements of cash flows as of and for the periods indicated, as it relates to our consolidated and unconsolidated financial guaranty insurance contracts and credit derivative VIEs:
_______________
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Note 4 - Fair Value of Financial Instruments Impact of Non-Performance Risk on Fair Value Disclosure (Details) (Fair Value, Concentration of Risk, Market Risk Management, Additional Details [Member], USD $)
In Millions, unless otherwise specified |
6 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
years
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Dec. 31, 2010
|
Jun. 30, 2010
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Dec. 31, 2009
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|||||||
Fair Value Concentration of Risk Disclosure Items [Line Items] | ||||||||||
Radian Group's five year CDS Spread (in basis points) | 968 | 465 | 701 | 1,530 | ||||||
Number of Years for CDS Spread Related to Non Performance Risk In Fair Value Disclosure | 5 | |||||||||
Corporate CDOs | $ (6.1) | $ (105.6) | ||||||||
Non Corporate CDO Related | (390.2) | [1] | (762.1) | [1] | ||||||
NIMs related | (51.5) | [2] | (129.3) | [2] | ||||||
Derivative Assets (Liabilities), at Fair Value, Net | (447.8) | (997.0) | ||||||||
Fair Value Liability, Net of Assets Before Non Performance Risk Impact [Member]
|
||||||||||
Fair Value Concentration of Risk Disclosure Items [Line Items] | ||||||||||
Corporate CDOs | (220.2) | (387.1) | ||||||||
Non Corporate CDO Related | (1,579.1) | [1] | (1,696.2) | [1] | ||||||
NIMs related | (57.6) | [2] | (134.1) | [2] | ||||||
Derivative Assets (Liabilities), at Fair Value, Net | (1,856.9) | (2,217.4) | ||||||||
Impact of Non Performance Risk [Member]
|
||||||||||
Fair Value Concentration of Risk Disclosure Items [Line Items] | ||||||||||
Corporate CDOs | 214.1 | 281.5 | ||||||||
Non Corporate CDO Related | 1,188.9 | [1] | 934.1 | [1] | ||||||
NIMs related | 6.1 | [2] | 4.8 | [2] | ||||||
Derivative Assets (Liabilities), at Fair Value, Net | $ 1,409.1 | $ 1,220.4 | ||||||||
|
Note 2 - Segment Reporting Schedule of Segment Reporting Information by Segment (Details) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Dec. 31, 2010
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|
Revenues [Abstract] | |||||
Net premiums written-insurance | $ 152,778 | $ 159,901 | $ 335,527 | $ 315,402 | |
Net premiums earned-insurance | 188,934 | 203,446 | 391,957 | 401,714 | |
Net investment income | 43,823 | 48,619 | 86,063 | 93,977 | |
Net gains on investments | 44,236 | 57,262 | 81,671 | 115,210 | |
Net impairment losses recognized in earnings | (11) | (38) | (11) | (56) | |
Change in fair value of derivative instruments | 188,726 | (524,606) | 432,618 | (602,560) | |
Net gains (losses) on other financial instruments | 5,047 | (63,200) | 80,298 | (164,764) | |
Gain on sale of affiliate | 0 | 34,815 | 0 | 34,815 | |
Other income | 1,196 | (2,072) | 2,644 | 3,703 | |
Total revenues | 471,951 | (245,774) | 1,075,240 | (117,961) | |
Costs and Expenses [Abstract] | |||||
Provision for losses | 263,566 | 435,166 | 690,939 | 979,046 | |
Change in reserve for premium deficiency | (3,102) | (7,354) | (4,485) | (8,585) | |
Policy acquisition costs | 14,387 | 16,797 | 28,518 | 31,665 | |
Other operating expenses | 45,954 | 35,165 | 92,173 | 100,221 | |
Interest expense | 16,079 | 8,245 | 33,103 | 19,049 | |
Total expenses | 336,884 | 488,019 | 840,248 | 1,121,396 | |
Equity in net income of affiliates | 0 | 6,570 | 65 | 14,668 | |
Pretax income (loss) | 135,067 | (727,223) | 235,057 | (1,224,689) | |
Income tax provision (benefit) | (2,048) | (252,143) | (5,064) | (439,254) | |
Net income (loss) | 137,115 | (475,080) | 240,121 | (785,435) | |
Deferred policy acquisition costs | 138,926 | 138,926 | 148,326 | ||
Total assets | 6,928,796 | 6,928,796 | 7,620,887 | ||
Unearned premiums | 629,813 | 629,813 | 686,364 | ||
Reserve for losses and LAE | 3,343,624 | 3,343,624 | 3,596,735 | ||
Variable interest entity debt | 393,740 | 393,740 | 520,114 | ||
Derivative liabilities | 313,708 | 313,708 | 723,579 | ||
Mortgage Insurance Segment
|
|||||
Revenues [Abstract] | |||||
Net premiums written-insurance | 164,194 | 167,909 | 345,040 | 324,941 | |
Net premiums earned-insurance | 164,325 | 179,992 | 350,459 | 357,331 | |
Net investment income | 24,853 | 28,544 | 51,686 | 54,903 | |
Net gains on investments | 27,425 | 34,441 | 45,187 | 63,222 | |
Net impairment losses recognized in earnings | (11) | (38) | (11) | (56) | |
Change in fair value of derivative instruments | 258 | (1,310) | (136) | (1,033) | |
Net gains (losses) on other financial instruments | (631) | (7,973) | 1,835 | (38,173) | |
Other income | 1,124 | 1,623 | 2,524 | 3,422 | |
Total revenues | 217,343 | 235,279 | 451,544 | 439,616 | |
Costs and Expenses [Abstract] | |||||
Provision for losses | 269,992 | 427,622 | 683,965 | 956,713 | |
Change in reserve for premium deficiency | (3,102) | (7,354) | (4,485) | (8,585) | |
Policy acquisition costs | 8,601 | 12,113 | 18,817 | 22,617 | |
Other operating expenses | 33,913 | 25,639 | 68,050 | 71,872 | |
Interest expense | 146 | 1,549 | 9,935 | 3,669 | |
Total expenses | 309,550 | 459,569 | 776,282 | 1,046,286 | |
Equity in net income of affiliates | 0 | 0 | 0 | 0 | |
Pretax income (loss) | (92,207) | (224,290) | (324,738) | (606,670) | |
Income tax provision (benefit) | 5,374 | (71,763) | 8,875 | (217,610) | |
Net income (loss) | (97,581) | (152,527) | (333,613) | (389,060) | |
Segment Reporting Information, Cash and Investments Including Restricted Cash | 3,334,789 | 3,886,819 | 3,334,789 | 3,886,819 | |
Deferred policy acquisition costs | 44,509 | 35,220 | 44,509 | 35,220 | |
Total assets | 3,688,720 | 5,367,065 | 3,688,720 | 5,367,065 | |
Unearned premiums | 191,737 | 207,354 | 191,737 | 207,354 | |
Reserve for losses and LAE | 3,268,582 | 3,656,746 | 3,268,582 | 3,656,746 | |
Variable interest entity debt | 56,239 | 253,178 | 56,239 | 253,178 | |
Derivative liabilities | 0 | 358 | 0 | 358 | |
Financial Guaranty Segment
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Revenues [Abstract] | |||||
Net premiums written-insurance | (11,416) | (8,008) | (9,513) | (9,539) | |
Net premiums earned-insurance | 24,609 | 23,454 | 41,498 | 44,383 | |
Net investment income | 18,970 | 20,075 | 34,377 | 39,074 | |
Net gains on investments | 16,811 | 22,821 | 36,484 | 51,988 | |
Net impairment losses recognized in earnings | 0 | 0 | 0 | 0 | |
Change in fair value of derivative instruments | 188,468 | (523,296) | 432,754 | (601,527) | |
Net gains (losses) on other financial instruments | 5,678 | (55,227) | 78,463 | (126,591) | |
Other income | 72 | (3,695) | 120 | 218 | |
Total revenues | 254,608 | (515,868) | 623,696 | (592,455) | |
Costs and Expenses [Abstract] | |||||
Provision for losses | (6,426) | 7,544 | 6,974 | 22,333 | |
Change in reserve for premium deficiency | 0 | 0 | 0 | 0 | |
Policy acquisition costs | 5,786 | 4,684 | 9,701 | 9,048 | |
Other operating expenses | 12,041 | 9,476 | 24,123 | 28,149 | |
Interest expense | 15,933 | 6,696 | 23,168 | 15,380 | |
Total expenses | 27,334 | 28,400 | 63,966 | 74,910 | |
Equity in net income of affiliates | 0 | 0 | 65 | 78 | |
Pretax income (loss) | 227,274 | (544,268) | 559,795 | (667,287) | |
Income tax provision (benefit) | (7,422) | (194,848) | (13,939) | (238,889) | |
Net income (loss) | 234,696 | (349,420) | 573,734 | (428,398) | |
Segment Reporting Information, Cash and Investments Including Restricted Cash | 2,703,740 | 3,390,788 | 2,703,740 | 3,390,788 | |
Deferred policy acquisition costs | 94,417 | 113,403 | 94,417 | 113,403 | |
Total assets | 3,240,076 | 3,981,423 | 3,240,076 | 3,981,423 | |
Unearned premiums | 438,076 | 529,321 | 438,076 | 529,321 | |
Reserve for losses and LAE | 75,042 | 124,494 | 75,042 | 124,494 | |
Variable interest entity debt | 337,501 | 374,460 | 337,501 | 374,460 | |
Derivative liabilities | 313,708 | 747,736 | 313,708 | 747,736 | |
Financial Services Segment
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Revenues [Abstract] | |||||
Net premiums written-insurance | 0 | 0 | |||
Net premiums earned-insurance | 0 | 0 | |||
Net investment income | 0 | 0 | |||
Net gains on investments | 0 | 0 | |||
Net impairment losses recognized in earnings | 0 | 0 | |||
Change in fair value of derivative instruments | 0 | 0 | |||
Net gains (losses) on other financial instruments | 0 | 0 | |||
Gain on sale of affiliate | 34,815 | 34,815 | |||
Other income | 0 | 63 | |||
Total revenues | 34,815 | 34,878 | |||
Costs and Expenses [Abstract] | |||||
Provision for losses | 0 | 0 | |||
Change in reserve for premium deficiency | 0 | 0 | |||
Policy acquisition costs | 0 | 0 | |||
Other operating expenses | 50 | 200 | |||
Interest expense | 0 | 0 | |||
Total expenses | 50 | 200 | |||
Equity in net income of affiliates | 6,570 | 14,590 | |||
Pretax income (loss) | 41,335 | 49,268 | |||
Income tax provision (benefit) | 14,468 | 17,245 | |||
Net income (loss) | 0 | 26,867 | 0 | 32,023 | |
Segment Reporting Information, Cash and Investments Including Restricted Cash | 0 | 0 | |||
Deferred policy acquisition costs | 0 | 0 | |||
Total assets | 0 | 0 | |||
Unearned premiums | 0 | 0 | |||
Reserve for losses and LAE | 0 | 0 | |||
Variable interest entity debt | 0 | 0 | |||
Derivative liabilities | $ 0 | $ 0 |
Note 3 - Derivative Instruments Level 3 (Tables)
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Jun. 30, 2011
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Derivative Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | The following table sets forth our gross unrealized gains and gross unrealized losses on derivative assets and liabilities as of the dates indicated. Certain contracts are in an asset position because the net present value of the contractual premium we receive exceeds the net present value of our estimate of the expected future premiums that a financial guarantor of similar credit quality to us would charge to provide the same credit protection, assuming a transfer of our obligation to such financial guarantor as of the measurement date.
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Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance [Table Text Block] | The components of the gains (losses) included in change in fair value of derivative instruments are as follows:
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Schedule of Derivative Instruments [Table Text Block] | The following table shows selected information about our derivative contracts:
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Note 10 - Long-Term Debt Level 1 (Notes)
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Jun. 30, 2011
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Long-term Debt, Unclassified [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt [Text Block] | Long-Term Debt The composition of our long-term debt at June 30, 2011, and December 31, 2010, was as follows:
We repaid the remaining balance of our 7.75% debentures upon maturity in June 2011. |
Note 1 - Condensed Consolidated Financial Statements Level 1 (Notes)
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Jun. 30, 2011
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Condensed Consolidated Financial Statements Basis Of Presentation [Abstract] | |||||||||||||||||||||||||||||
Consolidation, Policy [Text Block] | Condensed Consolidated Financial Statements—Basis of Presentation Our condensed consolidated financial statements include the accounts of Radian Group Inc. and its subsidiaries. We refer to Radian Group Inc. together with its consolidated subsidiaries as "Radian," "we," "us" or "our," unless the context requires otherwise. We generally refer to Radian Group Inc. alone, without its consolidated subsidiaries, as "Radian Group." Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and include the accounts of all wholly-owned subsidiaries. Companies in which we, or one of our subsidiaries, own interests ranging from 20% to 50%, are accounted for in accordance with the equity method of accounting. VIEs where we are the primary beneficiary are consolidated. See Note 5 for further information. All intercompany accounts and transactions, and intercompany profits and losses, have been eliminated. We have condensed or omitted certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP pursuant to the instructions of Article 10 of Regulation S-X of the Securities and Exchange Commission ("SEC"). The financial information presented for interim periods is unaudited; however, such information reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the financial position, results of operations, and cash flows for the interim periods. These interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2010. The total assets for our mortgage insurance segment as of June 30, 2010, reflected in Note 2 have been revised to conform to the presentation in the audited financial statements for the year ended December 31, 2010. The supplemental disclosure of income taxes paid for June 30, 2010, on our condensed consolidated statements of cash flows has been corrected from the amount reported in our 10Q for the quarter ended June 30, 2010. This error had no impact on any of our financial statements or any per-share amounts. The year-end condensed balance sheet data was derived from our audited financial statements, but does not include all disclosures required by GAAP. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. While the amounts included in our condensed consolidated financial statements include our best estimates and assumptions, actual results may vary materially. Our future performance and financial condition is subject to significant risks and uncertainties, including but not limited to, the following:
It is possible that the actual outcome of one or more of our plans or forecasts could be materially different, or that one or more of our estimates about the potential effects of the risks and uncertainties above or described elsewhere in this report, could prove to be materially different than our actual results. If one or more possible adverse outcomes were realized, there could be material adverse effects on our financial position, results of operations and cash flows. Basic net income (loss) per share is based on the weighted-average number of common shares outstanding, while diluted net income (loss) per share is based on the weighted-average number of common shares outstanding and common share equivalents that would be issuable upon the exercise of stock options and other stock-based compensation. For the three and six months ended June 30, 2011, 3,268,525 shares of our common stock equivalents issued under our stock-based compensation plans were not included in the calculation of diluted net income per share as of such dates because they were anti-dilutive. As a result of our net loss for the three and six months ended June 30, 2010, 4,427,985 shares of our common stock equivalents issued under our stock-based compensations plans were not included in the calculation of diluted net loss per share as of such dates because they were anti-dilutive. We have reflected in Note 4 the additional disclosures required by the update to the accounting standard regarding fair value measurements and disclosures effective January 1, 2011. The 2010 information has been revised to be consistent with the 2011 disclosure. |
Note 15 - Commitments and Contingencies Level 3 (Tables)
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Jun. 30, 2011
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Commitments and Contingencies [Abstract] | |
Purchase Commitment, Excluding Long-term Commitment [Table Text Block] | As part of the non-investment-grade allocation component of our investment program, we have committed to invest $90.0 million in alternative investments ($10.3 million of unfunded commitments at June 30, 2011) that are primarily private equity securities. These commitments have capital calls expected through 2015, with the possibility of additional calls through 2017, and certain fixed expiration dates or other termination clauses |
Schedule of Guarantor Obligations [Table Text Block] | Securities regulations became effective in 2005 that impose enhanced disclosure requirements on issuers of ABS (including mortgage-backed securities ("MBS")). To allow our customers to comply with these regulations, we typically were required, depending on the amount of credit enhancement we were providing, to provide (1) audited financial statements for the insurance subsidiary participating in the transaction, or (2) a full and unconditional holding-company-level guarantee for our insurance subsidiaries' obligations in such transactions. Radian Group has guaranteed two structured transactions for Radian Guaranty involving approximately $176.8 million of remaining credit exposure as of June 30, 2011. On March 1, 2011, we sold our 45% interest in the holding company of a Brazilian insurance company, which specializes in surety and agricultural insurance, to another owner for a nominal purchase price. This holding company and its subsidiaries are subject to regulation by The Superintendence of Private Insurance, the regulatory agency responsible for the supervision and control of the insurance market in Brazil. Although we wrote off our entire interest in this company in 2005 and have sold our ownership interest, under Brazilian law, it is possible that we could become liable for our proportionate share of the liabilities of the company related to the period in which we were a significant shareholder, if the company was to become insolvent and had insufficient capital to satisfy its outstanding liabilities. Our share of the liabilities of the company attributable to this period was approximately $103.4 million as of December 31, 2010 |
Contract Underwriting [Table Text Block] | Our mortgage insurance business provides an outsourced underwriting service to its customers known as contract underwriting. Typically, we agree that if we make a material error in underwriting a loan, we will provide a remedy to the customer, by purchasing the loan or placing additional mortgage insurance coverage on the loan, or by indemnifying the customer against loss up to a maximum specified amount. By providing these remedies, we assume some credit risk and interest-rate risk if an error is found during the limited remedy period in the agreements governing our provision of contract underwriting services. Recently, we limited the recourse available to our contract underwriting customers to apply only to those loans issued after the date of this change that we are simultaneously underwriting for compliance with secondary market compliance and for potential mortgage insurance. In the first half of 2011, we paid losses related to contract underwriting remedies of approximately $4.4 million. Rising mortgage interest rates or further economic uncertainty may expose the mortgage insurance business to an increase in such costs. In the first half of 2011, our provision for contract underwriting expenses was approximately $7.2 million and our reserve for contract underwriting obligations at June 30, 2011, was $5.3 million. We monitor this risk and negotiate our underwriting fee structure and recourse agreements on a client-by-client basis. We also routinely audit the performance of our contract underwriters |
Schedule of Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits by Title of Individual and Type of Deferred Compensation [Table Text Block] | Under change of control agreements with certain of our officers, upon a change of control of Radian Group or Radian Asset Assurance, as the case may be, we are required to fund an irrevocable rabbi trust to the extent of our obligations under these agreements. The total maximum amount that we would be required to place in trust is approximately $6.8 million as of June 30, 2011. In addition, in the event of a change of control of Radian Group under certain of our long term cash-based incentive plans, we would be required to pay approximately $14.9 million to plan participants as of June 30, 2011. We have incentive, retention and severance agreements with certain employees in our financial guaranty business. The total cost expected to be incurred under these agreements is $8.7 million, of which $4.6 million has not been recorded as of June 30, 2011. The remaining cost for these agreements is expected to be recorded by the end of 2012. |
Schedule of Loss Contingencies by Contingency [Table Text Block] | On June 26, 2008, we filed a complaint for declaratory judgment in the U.S. District Court for the Eastern District of Pennsylvania, naming IndyMac Bank (“IndyMac”), Deutsche Bank National Trust Company (“Deutsche Bank”), Financial Guaranty Insurance Company (“FGIC”), Ambac Assurance Corporation (“Ambac”) and MBIA Insurance Corporation (“MBIA”) as defendants. The suit involved three of our pool policies covering second-lien mortgages, entered into in late 2006 and early 2007 with respect to loans originated by IndyMac. We were in a second loss position behind IndyMac and in front of three defendant financial guaranty companies. We alleged that the representations and warranties made to us to induce us to issue the policies were materially false, and that as a result, the policies should be void. The total amount of our claim liability for all three pool policies was approximately $77 million and represented the aggregate risk in force related to these policies. In March 2009, FGIC, Ambac, and MBIA served us with demands to arbitrate certain issues relating to the same three pool policies that were the subject of our declaratory judgment complaint. In July 2009, the court declined to dismiss our declaratory judgment action, but stayed the action to permit the arbitrations to proceed first. In August 2009, we settled our dispute with Ambac and Deutsche Bank with respect to one of the disputed pool policies, which policy represented approximately $27 million of the total claim liability. In January 2010, we settled our dispute with MBIA and Deutsche Bank with respect to another of the disputed pool policies, which policy represented approximately $21 million of the total claim liability, and in June 2011, we settled with FGIC and Deutsche Bank regarding the third disputed pool policy, which policy represented the remaining $29 million of the total claim liability. In the aggregate, we settled our $77 million of total claim liability under the three pool policies for approximately $44 million. Following these settlements, in July 2011, the declaratory judgment action against IndyMac, Ambac, MBIA, FGIC and Deutsche Bank, and the arbitrations commenced by Ambac, MBIA and FGIC were dismissed with prejudice. On August 13, 2010, American Home Mortgage Servicing, Inc. ("AHMSI") filed a complaint against Radian Guaranty in the United States District Court for the Central District of California, on its own behalf and as servicer for certain RMBS insured by Radian Guaranty under 27 separate bulk primary mortgage insurance policies. AHMSI contends that in 2008, it mistakenly sent cancellation notices to Radian Guaranty for certain loans covered under these policies, and that Radian Guaranty wrongfully refused to reinstate coverage for these loans after AHMSI discovered the error. According to AHMSI, Radian Guaranty's refusal to reinstate coverage was in breach of its contractual duties under the policies and in bad faith. AHMSI is seeking money damages and injunctive relief requiring Radian Guaranty to reinstate full coverage on all loans insured under the policies. On October 18, 2010, Radian Guaranty filed a motion to dismiss this case, which the court granted on December 16, 2010, stating that AHMSI failed to establish that it is the real party in interest. On January 5, 2011, AHMSI filed an amended complaint that included the trustees of the securities as additional plaintiffs to the complaint. On May 31, 2011, Radian answered the amended complaint and, subsequently, filed a counterclaim seeking a declaratory judgment that, among other things, it is not in breach of its contractual duties. Radian has also filed a third party complaint against Sand Canyon Corporation, the servicer who allegedly made the error that led to the cancellation of the certificates of insurance, seeking indemnity and/or contribution. |
Note 7 - Losses and LAE - Mortgage Insurance Level 1 (Notes)
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Losses and LAE Mortgage Insurance [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liability for Future Policy Benefits and Unpaid Claims Disclosure [Text Block] | Losses and LAE Our reserve for losses and LAE, as of the dates indicated, consisted of:
The following table presents information relating to our mortgage insurance reserves for losses and LAE as of the dates indicated:
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Our loss reserves were reduced in the second quarter of 2011, primarily as a result of a decrease in our total inventory of defaults, as the volume of paid claims, cures, and insurance rescissions and claim denials outpaced new default notices received in the period, as described below. Reserves established for new default notices received in the current year were the primary driver of our total incurred loss for both the three and six months ended June 30, 2011. In addition, our results for the six months ended June 30, 2011, were negatively affected by an increase in our incurred but not recorded ("IBNR") reserve estimate in the first quarter of 2011, related to an increase in our estimate of future reinstatements of previously rescinded policies and denied claims. Of the $246.8 million prior year adverse development experienced in 2011, $103.2 million related to an increase in both our actual and estimated reinstatements of policies and claims previously rescinded or denied in prior years, while the balance related primarily to the greater than anticipated impact from the aging of underlying defaulted loans on our default to claim rate. With continuing declines in home values, persistently high unemployment and delays by servicers in either modifying loans or foreclosing on properties, the ability to cure or otherwise resolve a delinquent loan has exceeded our expected timeframe. Consequently, in recent years, our default inventory has experienced an increase in its weighted average age, and as we apply higher estimated default to claim rates on our more aged delinquent loans, this has resulted in higher reserves. The protracted amount of time it has taken for servicers to resolve certain aged loans has extended the period of uncertainty with regard to our ultimate claim liability beyond what we predicted as of the prior year end. As a consequence, our aggregate weighted average default to claim rate assumption (net of denials and rescissions) used in estimating our reserve for losses was 43% at June 30, 2011, compared to 40% at December 31, 2010. Our default to claim rate estimate varies depending on the age of the underlying defaulted loans, as measured by the number of monthly payments missed. As of June 30, 2011, our default to claim rate estimate, net of our estimate for insurance rescissions and claims denials, ranged from 19% for insured loans that had missed two to three monthly payments, to 51% for such loans that had missed 12 or more monthly payments. During the three months ended June 30, 2011, changes in the composition of our delinquent loan inventory have had less of an impact on reserve development and incurred losses compared to recent quarters, which has helped moderate the impact of these changes on incurred losses related to prior year defaults. Our reserve for losses includes the impact of our estimated rescissions and denials, which remain elevated compared to levels experienced prior to 2009. Rescissions and denials reduced our loss reserves as of June 30, 2011, and December 31, 2010, by approximately $(655) million and $(922) million, respectively. The amount of estimated rescissions and denials incorporated into our reserve analysis at any point in time is affected by a number of factors, including not only our estimated rate of rescissions and denials on future claims, but also the volume and attributes of our defaulted insured loans, our estimated default to claim rate, and our estimated claim severity, among other assumptions. We expect the amount of estimated rescissions and denials embedded within our reserve analysis to decrease over time, as the defaults related to the poor underwriting periods of 2005 through 2008 decline as a proportion of our total default portfolio and as we realize the results through actual rescissions and denials, or the commutations of insured loans. Our reported rescission and denial activity in any given period is subject to future challenges by our lender customers. Our IBNR reserve estimate, which includes an estimate of the future reinstatements of previously rescinded policies and denied claims, was $115.6 million and $39.5 million at June 30, 2011, and December 31, 2010, respectively. The change in this estimate primarily reflects recent trends in insurance rescissions and claim denial activity as a result of lenders challenging a greater number of rescissions and denials and the overall challenges being more substantive in nature (i.e., producing new or additional information that supports a reinstatement of coverage or a claim payment). As a result, we expect that an increasingly larger portion of previously rescinded policies will be reinstated and previously denied claims will be resubmitted with the required documentation and ultimately paid. The following table illustrates the amount of first-lien claims submitted to us for payment that were rescinded or denied, for the periods indicated, net of reinstatements within each period:
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The following table illustrates the total amount of first-lien claims submitted to us for payment that were rescinded in the years noted, and then subsequently were challenged ("rebutted") by the lenders and policyholders, but not reinstated, as of June 30, 2011. Some portion of these claims may be reinstated in subsequent periods.
While the total potential claim amount of non-overturned rebuttals outstanding represents all challenged rescissions for which coverage has not been reinstated, our ongoing, active discussions with our lender customers typically involves only a small number of these non-overturned rebuttals. Absent litigation or other legal proceedings in which we are not successful, we do not expect that these discussions are likely to result in settlements that would materially impact our liquidity or results of operations. We also accrue for the premiums that we expect to refund to our lender customers in connection with our estimated insurance rescission activity. Our accrued liability for such refunds, which is included within accounts payable and accrued expenses on our condensed consolidated balance sheets, was $45.2 million and $43.5 million as of June 30, 2011, and December 31, 2010, respectively. The following table shows the cumulative denial and rescission rates, net of reinstatements, as of June 30, 2011, on our total first-lien portfolio for each quarter in which the claims were received for the periods indicated:
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We considered the sensitivity of first-lien loss reserve estimates at June 30, 2011, by assessing the potential changes resulting from a parallel shift in severity and default to claim rate. For example, assuming all other factors remain constant, for every one percentage point change in primary claim severity (which we estimate to be 27% of unpaid principal balance at June 30, 2011), we estimated that our loss reserves would change by approximately $96 million at June 30, 2011. For every one percentage point change in pool claim severity (which we estimate to be 46% of unpaid principal balance at June 30, 2011), we estimated that our loss reserves would change by approximately $8 million at June 30, 2011. For every one percentage point change in our overall default to claim rate (which we estimate to be 43% at June 30, 2011, including our assumptions related to rescissions and denials), we estimated a $69 million change in our loss reserves at June 30, 2011. |
Note 12 - Income Taxes Level 1 (Notes)
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6 Months Ended |
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Jun. 30, 2011
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Income Taxes [Abstract] | |
Income Tax Disclosure [Text Block] | Income Taxes We provide for income taxes in accordance with the provisions of the accounting standard regarding accounting for income taxes. As required under this standard, our deferred tax assets and liabilities are recognized under the balance sheet method, which recognizes the future tax effect of temporary differences between the amounts recorded in our condensed consolidated financial statements and the tax bases of these amounts. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be realized or settled. In 2010, in accordance with the accounting standard regarding the accounting and disclosure of income taxes in interim periods, we used an annualized effective tax rate to compute our tax expense each quarter. We adjusted this annualized effective tax rate each quarter by the following discrete items: (i) net gains or losses resulting from the change in fair value of our derivatives and other financial instruments, (ii) investment gains or losses, (iii) the liabilities recorded under the accounting standard regarding accounting for uncertainty in income taxes, and (iv) prior year provision-to-filed tax return adjustments. Given the impact on our pre-tax results of net gains or losses resulting from our derivative transactions and our investment portfolio, and the continued uncertainty around our ability to rely on short-term financial projections, which directly affects our ability to estimate an effective tax rate for the full year of 2011, we booked our income tax benefit based on actual results of operations as of June 30, 2011. For federal income tax purposes, we have approximately $1.7 billion of net operating loss ("NOL") carryforwards as of June 30, 2011. To the extent not utilized, the NOL carryforwards will expire during tax years 2028 through 2031. To protect our ability to utilize our NOLs and other tax assets from an "ownership change" under U.S. federal income tax rules, we adopted certain tax benefit preservation measures, including amendments to our certificate of incorporation and by-laws and the adoption of a tax benefit preservation plan. As of June 30, 2011, before consideration of our valuation allowance, we had deferred tax assets ("DTA"), net of deferred tax liabilities, of approximately $797.2 million. We are required to establish a valuation allowance against our DTA when it is more likely than not that all or some portion of our DTA will not be realized. At each balance sheet date, we assess our need for a valuation allowance and this assessment is based on all available evidence, both positive and negative, and requires management to exercise judgment and make assumptions regarding whether such DTA will be realized in future periods. Future realization of our DTA will ultimately depend on the existence of sufficient taxable income of the appropriate character (ordinary income or capital gains) within the applicable carryback and carryforward periods provided under the tax law. The primary sources of negative evidence that we considered are our cumulative losses in recent years, and the continued uncertainty around our future operating results. We also considered several sources of positive evidence when assessing the need for a valuation allowance such as future reversals of existing taxable temporary differences, future projections of taxable income, taxable income within the applicable carryback periods, and potential tax planning strategies. In making our assessment of the more likely than not standard, the weight assigned to the effect of both negative and positive evidence is commensurate with the extent to which such evidence can be objectively verified. A valuation allowance of approximately $769.7 million and $851.9 million was recorded against our net DTA of approximately $797.2 million and $879.4 million at June 30, 2011 and December 31, 2010, respectively. The remaining DTA of approximately $27.5 million represents our NOL carryback, which we expect to utilize in the coming months as a result of our anticipated settlement with the Internal Revenue Service ("IRS") relating to tax years 2000 through 2007. |
Note 15 - Commitments and Contingencies Contract Underwriting (Details) (USD $)
In Millions |
6 Months Ended |
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Jun. 30, 2011
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Contract Underwriting [Line Items] | |
Lossed Paid For Contract Underwriting Remedies | $ 4.4 |
Provision For Contract underwriting Expense | 7.2 |
Reserve For Contract Underwriting Obligations | $ 5.3 |
Note 8 - Reserve for Premium Deficiency Level 1 (Notes)
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Jun. 30, 2011
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Reserve for Premium Deficiency [Text Block] | Reserve for Premium Deficiency We perform a quarterly evaluation of the expected profitability of our existing mortgage insurance portfolio, by business line, over the remaining life of the portfolio. A premium deficiency reserve ("PDR") is established when the present value of expected losses and expenses for a particular product line exceeds the present value of expected future premiums and existing reserves for that product line. Expenses include consideration of maintenance costs associated with maintaining records relating to insurance contracts and with the processing of premium collections. We consider our first-lien and second-lien mortgage ("second-lien") insured portfolios to be separate lines of business because they are managed separately, priced differently and have a different customer base. Numerous factors affect our ultimate default to claim rates, including home price changes, unemployment, the impact of our loss mitigation efforts and interest rates, as well as potential benefits associated with lender and governmental initiatives to modify loans and ultimately reduce foreclosures. To assess the need for a PDR on our first-lien insurance portfolio, we develop loss projections based on modeled loan defaults related to our current risk in force. This projection is based on recent trends in default experience, severity, and rates of defaulted loans moving to claim (such default to claim rates are net of our estimates of rescissions and denials), as well as recent trends in the rate at which loans are prepaid. As of June 30, 2011, our modeled loan default projections for our first-lien insured portfolio assume that the rate at which current loans will default will remain consistent with those rates observed at December 31, 2010, for the next twelve months, and will gradually return to normal historical levels over the subsequent two years. Because we increased our estimated losses on current loans, our net projected premium excess decreased during the quarter ended June 30, 2011. The following table illustrates our net projected premium excess on our first-lien portfolio as of the dates indicated:
For our first-lien insurance business, because the combination of the net present value of expected premiums and already established reserves (net of reinsurance recoverables) exceeds the net present value of expected losses and expenses, a first-lien PDR was not required as of June 30, 2011. Expected losses are based on an assumed paid claim rate of approximately 11.4% on our total first-lien insurance portfolio (5.6% on performing loans and 42.8% on defaulted loans). Assuming all other factors remained constant, a 20% change in the expected gross default to claim rate would result in a 13.1% assumed paid claim rate on our total first-lien portfolio (6.4% for performing loans and 49.5% for defaulted loans), and the net present value of expected losses would increase by approximately $643 million. Given this sensitivity, again assuming all other factors remained constant, our expected gross default to claim rate would have to increase by approximately 40% to result in expected losses that would approximate our premium excess as of June 30, 2011. New business originated since the beginning of 2009 is expected to be profitable, which has contributed to the overall expected net profitability of our first-lien portfolio. In addition, estimated rescissions and denials on insured loans are expected to partially offset the impact of expected defaults and claims. In the third quarter of 2007, we established a reserve for premium deficiency on our second-lien business. We were required to establish a PDR because the net present value of the expected future losses and expenses exceeded our expected future premiums. Since that time, our PDR has been reduced as the risk is reduced (either through attrition or terminations of transactions), claims have been paid, or changes have occurred to our initial assumptions. The following table reconciles our mortgage insurance segment's beginning and ending second-lien PDR for the periods indicated:
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Note 10 - Long-Term Debt Level 3 (Tables)
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Jun. 30, 2011
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Long-term Debt, Unclassified [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments [Table Text Block] | The composition of our long-term debt at June 30, 2011, and December 31, 2010, was as follows:
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Note 6 - Investments Level 1 (Notes)
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block] | Investments Our held to maturity and available for sale securities within our investment portfolio consisted of the following as of the dates indicated:
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During the second quarter of 2011, we sold all of our interests in certain bonds held in our available for sale portfolio that were issued as part of securitizations collateralized by the Master Settlement Agreement ("MSA") among certain domestic tobacco manufacturers and 46 states and certain territories, realizing a loss on the sale of $53.7 million on proceeds received of $94.3 million. In December 2010, Moody's Investor Service ("Moody's") took certain ratings actions on a category of tobacco settlement bonds, including placing 67 classes in 19 transactions under review for possible downgrade due primarily to a decline in the most recent annual MSA payment to the trusts. While Moody's has not yet completed their review, our decision to sell these bonds was in response to additional negative developments during the quarter. Specifically, the MSA payments in April 2011 were the lowest in five years, primarily due to a decline in cigarette consumption that exceeded historical and expected levels, which caused several states to announce, in May 2011, that they expected to draw on liquidity reserves later this year to cover shortfalls in cash flows on these bonds. Although we expected the present value of cash flows ultimately to be collected from each security to be sufficient to recover our amortized cost basis, we concluded that the risk profile of these bonds no longer suited our current portfolio objectives, and as a result, changed our prior intent to hold these bonds and instead disposed of these securities during the quarter. The trading securities within our investment portfolio, which are recorded at fair value, consisted of the following as of the dates indicated:
______________________ (1) As of June 30, 2011, our trading portfolio included no securities of the five Eurozone countries (Portugal, Ireland, Italy, Greece and Spain). As of December 31, 2010, our trading portfolio exposure to these nations consisted of $15.5 million of Italian securities. The following tables show the gross unrealized losses and fair value of our investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of the dates indicated:
During the first six months of 2011 and 2010, there were no credit losses recognized in earnings. At June 30, 2011, we did not have the intent to sell any debt securities in an unrealized loss position, and we determined that it is more likely than not that we will not be required to sell the securities before recovery of their cost basis. Impairments due to credit deterioration that result in a conclusion that the present value of cash flows expected to be collected will not be sufficient to recover the amortized cost basis of the security are considered other-than-temporary. Other declines in fair value (for example, due to interest rate changes, sector credit rating changes or company-specific rating changes) that result in a conclusion that the present value of cash flows expected to be collected will not be sufficient to recover the amortized cost basis of the security, also may serve as a basis to conclude that an OTTI has occurred. To the extent we determine that a security is deemed to be other-than-temporarily impaired, an impairment loss is recognized. We have securities that have been in an unrealized loss position for 12 months or more that we did not consider to be other-than-temporarily impaired as of June 30, 2011, due to the qualitative factors explained below. State and Municipal Obligations The majority of the unrealized losses of 12 months or greater duration as of June 30, 2011 were caused by interest rate or credit spread movement and relate to our investments in tax advantaged municipal bonds, most of which also carry bond insurance. We do not believe it is more likely than not that we will be required to sell these investments before recovery of our amortized cost basis, nor did we intend, as of June 30, 2011, to sell these investments. Therefore, we did not consider these investments to be other-than-temporarily impaired at June 30, 2011. For all investment categories, unrealized losses of less than 12 months in duration were generally attributable to interest rate or credit spread movements. All securities were evaluated in accordance with our impairment recognition policy covering various time and price decline scenarios. The contractual maturities of fixed-maturity investments are as follows:
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Note 6 - Investments Realized Gain (Loss) on Sale of Available For Sale Securities (Details) (USD $)
In Millions, unless otherwise specified |
6 Months Ended | ||
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Jun. 30, 2011
months
years
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Dec. 31, 2010
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Jun. 30, 2011
Categories of Investments, Marketable Securities, Available-for-sale Securities [Member]
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Gain (Loss) on Investments [Line Items] | |||
Numer Of States Included In The Master Settlement Agreement With Domestic Tobacco Manufacturers | 46 | ||
Available-for-sale Securities, Gross Realized Gain (Loss) | $ 53.7 | ||
Available-for-sale Securities, Gross Realized Gains (Losses), Sale Proceeds | $ 94.3 | ||
Number Of Classes Of Tobacco Bonds Moodys Took Rating Actions On | 67 | ||
Number Of Transactions Within The Classes Of Tobacco Bonds Moodys Took Rating Actions On | 19 | ||
Number Of Years Since April 2011 That Master Settlement Agreement Payments Have Been At Their Lowest Levels | 5 |
Statement Changes Stockholder Equity Parentheticals (USD $)
In Thousands |
6 Months Ended | |
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Jun. 30, 2011
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Jun. 30, 2010
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Unrealized foreign currency translation adjustment, tax | $ 0 | $ 2,684 |
Foreign currency translation reclassification adjustment for net gains included in net loss, tax | 11,617 | 240 |
Net foreign currency translation adjustment, tax | 11,617 | 2,444 |
Unrealized holding gains arising during period, tax | 0 | 11,165 |
Reclassification adjustment for net gains included in net loss, tax | 17,307 | 673 |
Net unrealized gain on investments, tax | $ 17,307 | $ 10,492 |
Note 2 - Segment Reporting Level 1 (Notes)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Disclosure [Text Block] | Segment Reporting Our mortgage insurance and financial guaranty segments are strategic business units that are managed separately. We allocate corporate income and expenses to our mortgage insurance and financial guaranty segments based on either an allocated percentage of time spent or internally allocated capital. We allocate corporate cash and investments to our segments based on internally allocated capital. The results for each segment for each reporting period can cause significant volatility in allocated capital. Prior to January 1, 2011, we also had a third reportable segment—financial services. Our financial services segment had consisted mainly of our ownership interest in Credit-Based Asset Servicing and Securitization LLC ("C-BASS"), which was a credit-based consumer asset business. We wrote off our entire investment in C-BASS in 2007. C-BASS filed for Chapter 11 bankruptcy protection on November 12, 2010, and was subsequently liquidated. Our equity interest in C-BASS, and a related note receivable from C-BASS that had also been previously written off, were extinguished pursuant to the Plan of Liquidation that was confirmed on April 25, 2011. In addition, until May 3, 2010, when we sold our remaining interest therein, our financial services segment included our interest in Sherman Financial Group LLC, a consumer asset and servicing firm specializing in credit card and bankruptcy-plan consumer assets. Consequently, as of January 1, 2011, we no longer had any on-going activity in this reporting segment. Summarized financial information concerning our current and previous operating segments, as of and for the periods indicated, are as follows:
A reconciliation of segment net income (loss) to consolidated net income (loss) is as follows:
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Note 3 - Derivative Instruments Fair Values Derivatives, Balance Sheet Location by Derivative Contract Type (Details) (USD $)
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Jun. 30, 2011
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Dec. 31, 2010
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Derivatives, Fair Value [Line Items] | ||
Derivative Assets | $ 27,266,000 | $ 26,212,000 |
Derivative liabilities | 313,708,000 | 723,579,000 |
Derivative, Fair Value, Net | (286,400,000) | (697,400,000) |
Financial Guaranty Credit Derivatives [Member]
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Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 22,210,000 | 14,480,000 |
Derivative liabilities | 294,877,000 | 704,353,000 |
Financial Guaranty VIE Derivative Liabilities [Member]
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Derivatives, Fair Value [Line Items] | ||
Derivative liabilities | 18,831,000 | 19,226,000 |
Net Interest Margin Securities [Member]
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Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 4,653,000 | 10,815,000 |
Other Contract [Member]
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Derivatives, Fair Value [Line Items] | ||
Derivative Assets | $ 403,000 | $ 917,000 |
Note 9 - Financial Guaranty Insurance Contracts Level 3 (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Adjustments to Premium Earned for Financial Guaranty Contracts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments to Premiums Earned Financial Guaranty Contracts [Table Text Block] | Premiums earned were affected by the following for the periods indicated:
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Financial Guarantee Insurance Contracts, Future Expected Premium Revenue to be Recognized [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Guarantee Insurance Contracts Future Premium Revenue to be Recognized [Table Text Block] | The following table shows the expected contractual premium revenue from our existing financial guaranty portfolio, assuming no prepayments or refundings of any financial guaranty obligations, as of June 30, 2011:
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Financial Guarantee Insurance Contracts, Premium Receivable [Roll Forward] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rollforward of Financial Guaranty NPV of Premiums Receivable [Table Text Block] | The following table shows the rollforward of the net present value of premiums receivable for the periods indicated:
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Financial Guarantee Insurance Contracts, Premium Receivable, Premium Expected to be Collected [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Premiums To Be Collected On Financial Guaranty Contracts [Table Text Block] | The following table shows the nominal (non-discounted) premiums, net of commissions that are expected to be collected on financial guaranty contracts with installment premiums, included in premiums receivable as of June 30, 2011:
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Schedule of Insured Financial Obligations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Insured Financial Obligations with Credit Deterioration [Table Text Block] | The following table includes information as of June 30, 2011, regarding our financial guaranty claim liabilities, segregated by the surveillance categories that we use in monitoring the risks related to these contracts:
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Schedule Of Premium Received Over Contract Period [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Premium Receivable and Unearned with Accretion Detail and Weighted Average Risk-Free Rate [Table Text Block] | The present values of premiums receivable and unearned premiums that are received on an installment basis as of the dates indicated are as follows:
The accretion of these balances is included in premiums written and premiums earned for premiums receivable and policy acquisition costs for commissions on our condensed consolidated statement of operations. The amounts of the accretion included in premiums written, premiums earned and policy acquisition costs for the periods indicated are as follows:
The weighted-average risk-free rate used to discount the premiums receivable and premiums to be collected was 2.6% at June 30, 2011. |
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Significant Components Of Change In Financial Guaranty Claim Liability [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Liability for Unpaid Claims and Claims Adjustment Expense [Table Text Block] | The following table shows the significant components of the change in our financial guaranty claim liability for the periods indicated:
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Weighted Average Risk Free Rates For Financial Guaranty [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule or Description of Weighted Average Discount Rate [Table Text Block] | The weighted-average risk-free rates used to discount the gross claim liability and gross potential recoveries were as follows as of the dates indicated:
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Note 9 - Financial Guaranty Insurance Contracts Schedule of Insured Financial Obligations with Credit Deterioration for Financial Guarantee Insurance Contracts (Details) (USD $)
In Millions, except Share data, unless otherwise specified |
6 Months Ended |
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Jun. 30, 2011
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Schedule of Insured Financial Obligations with Credit Deterioration [Line Items] | |
Number of policies | 304 |
Remaining weighted-average contract period (in years) | 21 |
Principal | $ 1,856.5 |
Interest | 1,038.4 |
Total insured contractual payments outstanding | 2,894.9 |
Gross claim liability | 290.3 |
Gross potential recoveries | 175.5 |
Discount, Net | 29.8 |
Net claim liability | 85.0 |
Unearned premium revenue | 35.3 |
Claim liability reported in the balance sheet | 70.8 |
Reinsurance recoverable | 0 |
Performing
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Schedule of Insured Financial Obligations with Credit Deterioration [Line Items] | |
Number of policies | 9 |
Remaining weighted-average contract period (in years) | 23 |
Principal | 28.6 |
Interest | 10.5 |
Total insured contractual payments outstanding | 39.1 |
Gross claim liability | 0.4 |
Gross potential recoveries | 0 |
Discount, Net | 0.1 |
Net claim liability | 0.3 |
Unearned premium revenue | 0.1 |
Claim liability reported in the balance sheet | 0.2 |
Reinsurance recoverable | 0 |
Special Mention
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Schedule of Insured Financial Obligations with Credit Deterioration [Line Items] | |
Number of policies | 134 |
Remaining weighted-average contract period (in years) | 19 |
Principal | 1,058.5 |
Interest | 611.4 |
Total insured contractual payments outstanding | 1,669.9 |
Gross claim liability | 16.7 |
Gross potential recoveries | 0.6 |
Discount, Net | 5.4 |
Net claim liability | 10.7 |
Unearned premium revenue | 27.2 |
Claim liability reported in the balance sheet | 3.2 |
Reinsurance recoverable | 0 |
Intensified Surveillance
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Schedule of Insured Financial Obligations with Credit Deterioration [Line Items] | |
Number of policies | 59 |
Remaining weighted-average contract period (in years) | 22 |
Principal | 373.9 |
Interest | 209.8 |
Total insured contractual payments outstanding | 583.7 |
Gross claim liability | 124.5 |
Gross potential recoveries | 62.8 |
Discount, Net | 20.1 |
Net claim liability | 41.6 |
Unearned premium revenue | 8.0 |
Claim liability reported in the balance sheet | 35.0 |
Reinsurance recoverable | 0 |
Case Reserve
|
|
Schedule of Insured Financial Obligations with Credit Deterioration [Line Items] | |
Number of policies | 102 |
Remaining weighted-average contract period (in years) | 25 |
Principal | 395.5 |
Interest | 206.7 |
Total insured contractual payments outstanding | 602.2 |
Gross claim liability | 148.7 |
Gross potential recoveries | 112.1 |
Discount, Net | 4.2 |
Net claim liability | 32.4 |
Unearned premium revenue | 0 |
Claim liability reported in the balance sheet | 32.4 |
Reinsurance recoverable | $ 0 |
Note 9 - Financial Guaranty Insurance Contracts Future Premiums Net of Commission on Financial Guaranty Contracts (Details) (USD $)
In Millions |
Jun. 30, 2011
|
---|---|
Future Expected Premium Payments Net To Be Recognized [Line Items] | |
Third quarter 2011 | $ 1.5 |
Fourth quarter 2011 | 0.9 |
2011 Total | 2.4 |
2012 | 5.7 |
2013 | 3.3 |
2014 | 1.6 |
2015 | 3.0 |
2011-2015 Total | 16.0 |
2016-2020 | 11.3 |
2021-2025 | 7.7 |
2026-2030 | 5.0 |
After 2030 | 6.9 |
Total | $ 46.9 |
Note 6 - Investments Schedule of Contractual Maturities (Details) (USD $)
In Thousands |
Jun. 30, 2011
|
Dec. 31, 2010
|
|||||
---|---|---|---|---|---|---|---|
Total Debt Securities [Line Items] | |||||||
Held-to-maturity securities | $ 7,781 | $ 10,773 | |||||
Held-to-maturity Securities, Fair Value Disclosure | 8,282 | 11,416 | |||||
Available-for-sale Securities, Debt Securities | 149,146 | 273,799 | |||||
Debt Securities [Member]
|
|||||||
Total Debt Securities [Line Items] | |||||||
Held-to-maturity securities | 7,781 | ||||||
Held-to-maturity Securities, Fair Value Disclosure | 8,282 | ||||||
Available-for-sale Debt Securities, Amortized Cost Basis | 160,085 | ||||||
Available-for-sale Securities, Debt Securities | 149,146 | ||||||
Non Asset Backed Security Investments, Contractual Maturities [Member]
|
|||||||
Total Debt Securities [Line Items] | |||||||
Held-to-maturity Securities, Debt Maturities, within One Year, Net Carrying Amount | 1,876 | [1] | |||||
Held-to-maturity Securities, Debt Maturities, within One Year, Fair Value | 1,912 | [1] | |||||
Available-for-sale Securities, Debt Maturities, within One Year, Amortized Cost Basis | 2,197 | [1] | |||||
Available-for-sale Securities, Debt Maturities, within One Year, Fair Value | 2,165 | [1] | |||||
Held-to-maturity Securities, Debt Maturities, after One Through Five Years, Net Carrying Amount | 2,528 | [1] | |||||
Held-to-maturity Securities, Debt Maturities, after One Through Five Years, Fair Value | 2,689 | [1] | |||||
Available-for-sale Securities, Debt Maturities, after One Through Five Years, Amortized Cost Basis | 15,788 | [1] | |||||
Available-for-sale Securities, Debt Maturities, after One Through Five Years, Fair Value | 16,282 | [1] | |||||
Held-to-maturity Securities, Debt Maturities, after Five Through Ten Years, Net Carrying Amount | 3,074 | [1] | |||||
Held-to-maturity Securities, Debt Maturities, after Five Through Ten Years, Fair Value | 3,390 | [1] | |||||
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years, Amortized Cost Basis | 7,236 | [1] | |||||
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years, Fair Value | 7,413 | [1] | |||||
Held-to-maturity Securities, Debt Maturities, after Ten Years, Net Carrying Amount | 303 | [1] | |||||
Held-to-maturity Securities, Debt Maturities, after Ten Years, Fair Value | 291 | [1] | |||||
Available-for-sale Securities, Debt Maturities, after Ten Years, Amortized Cost Basis | 127,705 | [1] | |||||
Available-for-sale Securities, Debt Maturities, after Ten Years, Fair Value | 115,922 | [1] | |||||
RMBS [Member]
|
|||||||
Total Debt Securities [Line Items] | |||||||
Available-for-sale Debt Securities, Amortized Cost Basis | 3,453 | [2] | |||||
Available-for-sale Securities, Debt Securities | 3,504 | [2] | |||||
CMBS [Member]
|
|||||||
Total Debt Securities [Line Items] | |||||||
Available-for-sale Debt Securities, Amortized Cost Basis | 2,679 | [2] | |||||
Available-for-sale Securities, Debt Securities | 2,695 | [2] | |||||
Other ABS [Member]
|
|||||||
Total Debt Securities [Line Items] | |||||||
Available-for-sale Debt Securities, Amortized Cost Basis | 1,027 | [2] | |||||
Available-for-sale Securities, Debt Securities | $ 1,165 | [2] | |||||
|
Note 9 - Financial Guaranty Insurance Contracts Schedule of Significant Components Of Change In Financial Guaranty Claim Liability (Details) (Financial Guaranty Segment [Member], USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Financial Guaranty Segment [Member]
|
||||
Claim liability at beginning of period | $ 80,600,000 | $ 133,400,000 | $ 67,400,000 | $ 121,800,000 |
Increase in gross claim liability | 22,400,000 | 33,800,000 | 41,700,000 | 73,900,000 |
Increase in gross potential recoveries | (30,000,000) | (22,500,000) | (33,200,000) | (45,900,000) |
Increase in discount | (2,500,000) | (4,600,000) | (5,800,000) | (7,100,000) |
Decrease in unearned premiums | 3,400,000 | 1,000,000 | 4,000,000 | 2,000,000 |
Incurred losses and LAE | (6,700,000) | 7,700,000 | 6,700,000 | 22,900,000 |
Paid losses and LAE | (3,100,000) | (21,800,000) | (3,300,000) | (25,400,000) |
Claim liability at end of period | 70,800,000 | 119,300,000 | 70,800,000 | 119,300,000 |
Components of incurred losses and LAE [Abstract] | ||||
Claim liability established in current period | 0 | 300,000 | 0 | 1,200,000 |
Changes in existing claim liabilities | (6,700,000) | 7,400,000 | 6,700,000 | 21,700,000 |
Total incurred losses and LAE | (6,700,000) | 7,700,000 | 6,700,000 | 22,900,000 |
Components of increase in discount [Abstract] | ||||
Increase In Discount Related To Claim Liabilities Established For Financial Guaranty Contracts Current Period | 0 | (200,000) | (100,000) | (2,300,000) |
Increase In Discount Related To Existing Claim Liabilites For Financial Guaranty Contracts | (2,500,000) | (4,400,000) | (5,700,000) | (4,800,000) |
Total increase in discount | $ (2,500,000) | $ (4,600,000) | $ (5,800,000) | $ (7,100,000) |
Note 3 - Derivative Instruments Level 1 (Notes)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Derivative Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Text Block] | Derivative Instruments The following table sets forth our gross unrealized gains and gross unrealized losses on derivative assets and liabilities as of the dates indicated. Certain contracts are in an asset position because the net present value of the contractual premium we receive exceeds the net present value of our estimate of the expected future premiums that a financial guarantor of similar credit quality to us would charge to provide the same credit protection, assuming a transfer of our obligation to such financial guarantor as of the measurement date.
The notional value of our derivative contracts at June 30, 2011, and December 31, 2010, was $39.5 billion and $41.6 billion, respectively. The components of the gains (losses) included in change in fair value of derivative instruments are as follows:
The valuation of derivative instruments may result in significant volatility from period to period in gains and losses as reported on our condensed consolidated statements of operations. Generally, these gains and losses result from changes in corporate credit or asset-backed spreads and changes in the creditworthiness of underlying corporate entities or the credit performance of the assets underlying asset-backed securities ("ABS"). Additionally, when determining the fair value of our liabilities, we are required to incorporate into the fair value of those liabilities an adjustment that reflects our own non-performance risk and consequently, changes in the market's perception of our non-performance risk also result in gains and losses on our derivative instruments. Any incurred gains or losses on our financial guaranty contracts that are accounted for as derivatives are recognized as a change in fair value of derivative instruments. See Note 4 for information on our fair value of financial instruments. The following table shows selected information about our derivative contracts:
________________
|
Note 3 - Derivative Instruments Derivative Contract (Details) (USD $)
|
Jun. 30, 2011
|
Dec. 31, 2010
|
|||||
---|---|---|---|---|---|---|---|
Derivatives, Fair Value [Line Items] | |||||||
Number of Credit Risk Derivatives Held | 412 | ||||||
Notional Amount of Derivatives | $ 39,474,200,000 | $ 41,600,000,000 | |||||
Financial Guaranty VIE Derivative Liabilities | (313,708,000) | (723,579,000) | |||||
Derivative Assets | 27,266,000 | 26,212,000 | |||||
Derivative, Fair Value, Net | (286,400,000) | (697,400,000) | |||||
Consolidated Financial Guaranty Insurance Contracts [Member]
|
|||||||
Derivatives, Fair Value [Line Items] | |||||||
Financial Guaranty VIE Derivative Liabilities | (18,831,000) | [1] | (19,226,000) | ||||
Derivative Assets | 0 | 0 | |||||
NIMS related and other [Member]
|
|||||||
Derivatives, Fair Value [Line Items] | |||||||
Number of Credit Risk Derivatives Held | 0 | [2] | |||||
Notional Amount of Derivatives | 0 | [2] | |||||
Derivative Assets | 5,100,000 | [2] | |||||
Corporate collateralized debt obligations (CDO's)[Member]
|
|||||||
Derivatives, Fair Value [Line Items] | |||||||
Number of Credit Risk Derivatives Held | 79 | ||||||
Notional Amount of Derivatives | 31,854,300,000 | ||||||
Derivative, Fair Value, Net | (6,100,000) | ||||||
Non Corporate CDOS and other derivative transactions[Member]
|
|||||||
Derivatives, Fair Value [Line Items] | |||||||
Number of Credit Risk Derivatives Held | 59 | ||||||
Notional Amount of Derivatives | 6,417,200,000 | ||||||
Derivative, Fair Value, Net | (249,600,000) | ||||||
Trust Preferred Securities (TruPs) [Member]
|
|||||||
Derivatives, Fair Value [Line Items] | |||||||
Number of Credit Risk Derivatives Held | 19 | ||||||
Notional Amount of Derivatives | 1,977,200,000 | ||||||
Derivative, Fair Value, Net | (77,700,000) | ||||||
CDOS of commercial mortgage backed securities (CMBS)[Member]
|
|||||||
Derivatives, Fair Value [Line Items] | |||||||
Number of Credit Risk Derivatives Held | 4 | ||||||
Notional Amount of Derivatives | 1,831,000,000 | ||||||
Derivative, Fair Value, Net | (70,300,000) | ||||||
Structured finance [Member]
|
|||||||
Derivatives, Fair Value [Line Items] | |||||||
Number of Credit Risk Derivatives Held | 9 | ||||||
Notional Amount of Derivatives | 815,000,000 | ||||||
Derivative, Fair Value, Net | (62,000,000) | ||||||
Public finance [Member]
|
|||||||
Derivatives, Fair Value [Line Items] | |||||||
Number of Credit Risk Derivatives Held | 27 | ||||||
Notional Amount of Derivatives | 1,794,000,000 | ||||||
Derivative, Fair Value, Net | (39,600,000) | ||||||
Total Assumed [Member]
|
|||||||
Derivatives, Fair Value [Line Items] | |||||||
Number of Credit Risk Derivatives Held | 274 | ||||||
Notional Amount of Derivatives | 1,202,700,000 | ||||||
Derivative, Fair Value, Net | (17,000,000) | ||||||
Assumed structured finance [Member]
|
|||||||
Derivatives, Fair Value [Line Items] | |||||||
Number of Credit Risk Derivatives Held | 264 | ||||||
Notional Amount of Derivatives | 1,036,100,000 | ||||||
Derivative, Fair Value, Net | (15,500,000) | ||||||
Assumed public finance [Member]
|
|||||||
Derivatives, Fair Value [Line Items] | |||||||
Number of Credit Risk Derivatives Held | 10 | ||||||
Notional Amount of Derivatives | 166,600,000 | ||||||
Derivative, Fair Value, Net | (1,500,000) | ||||||
Financial Guaranty VIE derivative liabilities [Member]
|
|||||||
Derivatives, Fair Value [Line Items] | |||||||
Number of Credit Risk Derivatives Held | 0 | [1] | |||||
Notional Amount of Derivatives | 0 | [1] | |||||
Financial Guaranty VIE Derivative Liabilities | (18,831,000) | (19,226,000) | |||||
Other Contract [Member]
|
|||||||
Derivatives, Fair Value [Line Items] | |||||||
Derivative Assets | $ 403,000 | $ 917,000 | |||||
|
Note 6 - Investments Level 3 (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Debt And Equity Securities [Table Text Block] | Our held to maturity and available for sale securities within our investment portfolio consisted of the following as of the dates indicated:
______________________
______________________
|
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Trading Securities (and Certain Trading Assets) [Table Text Block] | The trading securities within our investment portfolio, which are recorded at fair value, consisted of the following as of the dates indicated:
______________________ (1) As of June 30, 2011, our trading portfolio included no securities of the five Eurozone countries (Portugal, Ireland, Italy, Greece and Spain). As of December 31, 2010, our trading portfolio exposure to these nations consisted of $15.5 million of Italian securities. |
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Schedule Of Unrealized Losses [Table Text Block] | The following tables show the gross unrealized losses and fair value of our investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of the dates indicated:
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Investments Classified by Contractual Maturity Date [Table Text Block] | . The contractual maturities of fixed-maturity investments are as follows:
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Schedule of Realized Gain (Loss) [Table Text Block] | During the second quarter of 2011, we sold all of our interests in certain bonds held in our available for sale portfolio that were issued as part of securitizations collateralized by the Master Settlement Agreement ("MSA") among certain domestic tobacco manufacturers and 46 states and certain territories, realizing a loss on the sale of $53.7 million on proceeds received of $94.3 million. In December 2010, Moody's Investor Service ("Moody's") took certain ratings actions on a category of tobacco settlement bonds, including placing 67 classes in 19 transactions under review for possible downgrade due primarily to a decline in the most recent annual MSA payment to the trusts. While Moody's has not yet completed their review, our decision to sell these bonds was in response to additional negative developments during the quarter. Specifically, the MSA payments in April 2011 were the lowest in five years, primarily due to a decline in cigarette consumption that exceeded historical and expected levels, which caused several states to announce, in May 2011, that they expected to draw on liquidity reserves later this year to cover shortfalls in cash flows on these bonds. Although we expected the present value of cash flows ultimately to be collected from each security to be sufficient to recover our amortized cost basis, we concluded that the risk profile of these bonds no longer suited our current portfolio objectives, and as a result, changed our prior intent to hold these bonds and instead disposed of these securities during the quarter. |
Note 10 - Long-Term Debt Schedule of Long Term Debt (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2011
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Dec. 31, 2010
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Debt Instrument [Line Items] | ||
Long-term Debt | $ 811,319 | $ 964,788 |
7.75% Debentures due 2011 [Member]
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Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 7.75% | |
Long-term Debt | 0 | 160,344 |
5.625% Senior Notes due 2013 [Member]
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Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 5.63% | |
Long-term Debt | 253,285 | 254,305 |
5.375% Senior Notes due 2015 [Member]
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Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 5.38% | |
Long-term Debt | 249,795 | 249,772 |
3.00% Convertible Senior Notes due 2017 [Member]
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Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 3.00% | |
Long-term Debt | $ 308,239 | $ 300,367 |
Note 9 - Financial Guaranty Insurance Contracts Adjustments To Premiums Earned For Financial Guaranty Contracts (Details) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Adjustments To Premiums Earned For Financial Guaranty Contracts [Line Items] | ||||
Refundings | $ 9.3 | $ 10.2 | $ 14.1 | $ 19.7 |
Recaptures/commutations | 2.8 | 0 | 2.8 | 0 |
Unearned premium acceleration upon establishment of case reserves | 1.3 | 0.4 | 1.3 | 0.7 |
Foreign exchange revaluation, gross of commissions | 0.7 | (1.1) | 2.0 | (2.8) |
Adjustments to installment premiums, gross of commissions | 0.1 | (0.4) | 0.3 | (0.4) |
Other | 0 | 2.1 | 0 | 2.1 |
Total Adjustment To Premiums Earned For Financial Guaranty Contracts | $ 14.2 | $ 11.2 | $ 20.5 | $ 19.3 |
Note 11 - Comprehensive Income (Loss) Level 3 (Tables)
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Comprehensive (Loss) Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Comprehensive Income (Loss) [Table Text Block] | Our total comprehensive income (loss), as calculated per the accounting standard regarding reporting comprehensive income, was as follows for the periods indicated:
______________________
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Note 3 - Derivative Instruments Change in Fair Value of Derivative Instruments (Details) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) on Derivative Instruments, Net, Pretax | $ 188,726 | $ (524,606) | $ 432,618 | $ (602,560) |
Net Premiums Earned On Derivatives [Member]
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Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) on Derivative Instruments, Net, Pretax | 10,473 | 11,953 | 21,356 | 24,116 |
Financial Guaranty Credit Derivatives [Member]
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Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) on Derivative Instruments, Net, Pretax | 181,938 | (524,249) | 416,512 | (608,300) |
Financial Guaranty VIE Derivative Liabilities [Member]
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Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) on Derivative Instruments, Net, Pretax | (3,978) | (7,469) | (4,890) | (10,683) |
NIMS [Member]
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Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) on Derivative Instruments, Net, Pretax | 377 | (271) | (1,502) | (485) |
Mortgage Insurance Domestic And International CDS[Member]
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Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) on Derivative Instruments, Net, Pretax | 0 | (358) | 0 | (358) |
Put Options On CPS[Member]
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Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) on Derivative Instruments, Net, Pretax | 0 | (4,212) | 0 | (6,329) |
Other Contract [Member]
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Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) on Derivative Instruments, Net, Pretax | $ (84) | $ 0 | $ 1,142 | $ (521) |
Note 8 - Reserve for Premium Deficiency Level 3 (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Reserve for Premium Deficiency [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
First Lien Portfolio Premium Excess [Table Text Block] | The following table illustrates our net projected premium excess on our first-lien portfolio as of the dates indicated:
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Second Lien Premium Deficiency Reserve [Table Text Block] | The following table reconciles our mortgage insurance segment's beginning and ending second-lien PDR for the periods indicated:
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Note 11 - Comprehensive Income (Loss) Level 1 (Notes)
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Jun. 30, 2011
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Comprehensive (Loss) Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss) Note [Text Block] | Comprehensive Income (Loss) Our total comprehensive income (loss), as calculated per the accounting standard regarding reporting comprehensive income, was as follows for the periods indicated:
______________________
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Note 8 - Reserve for Premium Deficiency First Lien Portfolio (Details) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2011
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Dec. 31, 2010
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First Lien Portfolio Premium Excess [Line Items] | ||
Number Of Months In Future At Which Current Default Rates Will Hold With Those Rates Observed At Prior Year End | 12 | |
Number Of Years Beyond The Next Twelve Months That It Will Take For Loan Defaults To Return To Normal Historical Levels | 2 | |
Mortgage Insurance Segment [Member] | Total First Lien Loans [Member]
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First Lien Expected Losses Assumptions [Abstract] | ||
Expected Paid Claim Rate In Our First Lien PDR | 11.40% | |
Expected Paid Claim Rate On Our First Lien Portfolio When Shocked By Twenty Percent | 13.10% | |
Mortgage Insurance Segment [Member] | Performing Loans [Member]
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First Lien Expected Losses Assumptions [Abstract] | ||
Expected Paid Claim Rate In Our First Lien PDR | 5.60% | |
Expected Paid Claim Rate On Our First Lien Portfolio When Shocked By Twenty Percent | 6.40% | |
Mortgage Insurance Segment [Member] | Nonperforming Loans [Member]
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First Lien Expected Losses Assumptions [Abstract] | ||
Expected Paid Claim Rate In Our First Lien PDR | 42.80% | |
Expected Paid Claim Rate On Our First Lien Portfolio When Shocked By Twenty Percent | 49.50% | |
Mortgage Insurance Segment [Member] | First Lien Portfolio for PDR Disclosure [Member]
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First Lien Portfolio Premium Excess [Line Items] | ||
Net Present Value Of Expected Premiums | $ 2,705 | $ 2,806 |
Net Present Value Of Expected Losses And Expenses | (4,584) | (4,537) |
Reserve For Premiums And Losses Established Net Of Reinsurance Recoverables | 3,099 | 3,276 |
Net projected premium excess | 1,220 | 1,545 |
Mortgage Insurance Segment [Member]
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First Lien Expected Losses Assumptions [Abstract] | ||
Percentage Change In Expected Gross Default To Claim Rate Used In Performing A Sensitivity Analysis On Our First Lien Portfolio | 20.00% | |
Amount By Which NPV Of Expected Losses Would Increase Based On A Twenty Percent Change In Expected Gross Default To Claim Rate | $ 643 | |
Percentage By Which Our Expected Gross Default To Claim Rate Would Have To Increase In Order To Increase Losses In An Amount That Would Approximate The Current Premium Excess | 40.00% |
Note 15 - Commitments and Contingencies Employee Related Obligations (Details) (USD $)
In Millions |
Jun. 30, 2011
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Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |
Deferred Compensation Cash-based Arrangements, Liability, Current and Noncurrent | $ 6.8 |
Other Deferred Compensation Arrangements, Liability, Current and Noncurrent | 14.9 |
Total Incentive Retention And Severance Agreement Expenses Expected To Be Incurred | 8.7 |
Unrecorded Incentive Retention And Severance Agreement Expenses | $ 4.6 |
Note 9 - Financial Guaranty Insurance Contracts Rollforward of NPV of Financial Guaranty Premiums (Details) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Rollforward of Premiums Receivable [Line Items] | ||||
Balance at beginning of period | $ 43.8 | $ 51.1 | $ 44.0 | $ 54.4 |
Premium payments received | (1.2) | (2.1) | (2.5) | (3.7) |
Accretion of premium receivable | 0.3 | 0.4 | 0.5 | 0.7 |
Adjustments to installment premiums | (0.1) | (0.4) | (0.2) | (0.7) |
Recaptures/commutations | (6.0) | (1.8) | (6.0) | (1.8) |
Foreign exchange revaluation impact | 0.5 | (0.8) | 1.5 | (2.5) |
Balance at end of period | $ 37.3 | $ 46.4 | $ 37.3 | $ 46.4 |
Note 4 - Fair Value of Financial Instruments Level 1 (Notes)
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Fair Value of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Text Block] | Fair Value of Financial Instruments Our fair value measurements are intended to reflect the assumptions market participants would use in pricing an asset or liability based on the best information available. Assumptions include the risks inherent in a particular valuation technique (such as a pricing model) and the risks inherent in the inputs to the model. We define fair value as the current amount that would be exchanged to sell an asset or transfer a liability, other than in a forced liquidation. In the event that our investments or derivative contracts were sold or transferred in a forced liquidation, the amounts received or paid may be materially different than those determined in accordance with the accounting standard regarding fair value measurements. There have been no significant changes to our fair value methodologies during the six months ended June 30, 2011. When determining the fair value of our liabilities, we are required to incorporate into the fair value of those liabilities an adjustment that reflects our own non-performance risk. Radian Group's five-year credit default swap ("CDS") spread is the only observable quantitative measure of our non-performance risk and is used by typical market participants to determine the likelihood of default. As Radian Group's CDS spread tightens or widens, it has the effect of increasing or decreasing, respectively, the fair value of our liabilities. The following table quantifies the impact of our non-performance risk on our derivative assets, derivative liabilities (in aggregate by type, excluding assumed financial guaranty derivatives) and VIE liabilities presented in our condensed consolidated balance sheets. Radian Group's five-year CDS spread is presented as an illustration of the market's view of our non-performance risk; the CDS spread actually used in the valuation of specific fair value liabilities is typically based on the remaining term of the instrument.
________________
The cumulative impact attributable to the market's perception of our non-performance risk increased by $188.7 million during the first six months of 2011, as presented in the table above. This increase was primarily the result of the widening of Radian Group's CDS spreads during this period. We established a fair value hierarchy by prioritizing the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements). The three levels of the fair value hierarchy under this standard are described below: Level I—Unadjusted quoted prices or valuations in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level II—Quoted prices or valuations in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; and Level III—Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. The level of market activity in determining the fair value hierarchy is based on the availability of observable inputs market participants would use to price an asset or a liability, including market value price observations. For markets in which inputs are not observable or limited, we use significant judgment and assumptions that a typical market participant would use to evaluate the market price of an asset or liability. These assets and liabilities are classified in Level III of our fair value hierarchy. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At June 30, 2011, our total Level III assets were approximately 4.5% of total assets measured at fair value and total Level III liabilities accounted for 100% of total liabilities measured at fair value. Available for sale securities, trading securities, VIE debt, derivative instruments, and certain other assets are recorded at fair value. All derivative instruments and contracts are recognized in our condensed consolidated balance sheets as either derivative assets or derivative liabilities. All changes in the fair value of trading securities, VIE debt, derivative instruments and certain other assets are included in our condensed consolidated statements of operations. All changes in the fair value of available for sale securities are recorded in accumulated other comprehensive income (loss). The following is a list of those assets and liabilities that are measured at fair value by hierarchy level as of June 30, 2011:
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The following is a list of those assets and liabilities that are measured at fair value by hierarchy level as of December 31, 2010:
______________________
The following is a rollforward of Level III assets and liabilities measured at fair value for the quarter ended June 30, 2011:
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The following is a rollforward of Level III assets and liabilities measured at fair value for the six months ended June 30, 2011:
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There were no investment transfers between Level I and Level II during the first six months of 2011 or 2010. The following is a rollforward of Level III assets and liabilities measured at fair value for the quarter ended June 30, 2010:
The following is a rollforward of Level III assets and liabilities measured at fair value for the six months ended June 30, 2010:
Other Fair Value Disclosure The carrying value and estimated fair value of other selected assets and liabilities not carried at fair value on our condensed consolidated balance sheets were as follows:
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Note 14 - Selected Financial Information of Registrant - Radian Group Level 1 (Notes)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Selected Financial Information of Registrant Radian Group [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information of Parent Company Only Disclosure [Text Block] | Selected Financial Information of Registrant—Radian Group The following is selected financial information for Radian Group:
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Note 9 - Financial Guaranty Insurance Contracts Weighted Average Risk Free Rates For Financial Guaranty (Details)
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3 Months Ended | 6 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Mar. 31, 2011
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Mar. 31, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Dec. 31, 2010
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Dec. 31, 2009
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Weighted Average Discount Rate [Line Items] | ||||||
Weighted Average Discount Rate, Percent | 4.11% | 4.39% | 3.97% | 3.88% | 3.69% | 4.34% |
Note 9 - Financial Guaranty Insurance Contracts Future Premium Revenues For Financial Guaranty Contracts (Details) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Future Premium Revenue To Be Recognized [Line Items] | ||||
Accretion of premium receivable | $ 0.3 | $ 0.4 | $ 0.5 | $ 0.7 |
Financial Guarantee Insurance Contracts, Future Expected Premium Revenue to be Recognized During Third Quarter Following Balance Sheet Date [Member]
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||||
Future Premium Revenue To Be Recognized [Line Items] | ||||
Unearned premiums | 428.3 | 428.3 | ||
Amortization of Unearned Premium | 9.8 | |||
Accretion of premium receivable | 0.3 | |||
Total Premium Revenue to be recognized | 10.1 | |||
Financial Guarantee Insurance Contracts, Future Expected Premium Revenue to be Recognized During Fourth Quarter Following Balance Sheet Date [Member]
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||||
Future Premium Revenue To Be Recognized [Line Items] | ||||
Unearned premiums | 417.8 | 417.8 | ||
Amortization of Unearned Premium | 10.5 | |||
Accretion of premium receivable | 0.3 | |||
Total Premium Revenue to be recognized | 10.8 | |||
Financial Guarantee Insurance Contracts, Future Expected Premium Revenue to be Recognized During Current Year [Member]
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||||
Future Premium Revenue To Be Recognized [Line Items] | ||||
Unearned premiums | 417.8 | 417.8 | ||
Amortization of Unearned Premium | 20.3 | |||
Accretion of premium receivable | 0.6 | |||
Total Premium Revenue to be recognized | 20.9 | |||
Financial Guarantee Insurance Contracts, Future Expected Premium Revenue to be Recognized more than One and Within Two Years From Balance Sheet Date [Member]
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||||
Future Premium Revenue To Be Recognized [Line Items] | ||||
Unearned premiums | 381.8 | 381.8 | ||
Amortization of Unearned Premium | 36.0 | |||
Accretion of premium receivable | 1.1 | |||
Total Premium Revenue to be recognized | 37.1 | |||
Financial Guarantee Insurance Contracts, Future Expected Premium Revenue to be Recognized more than Two and Within Three Years From Balance Sheet Date [Member]
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||||
Future Premium Revenue To Be Recognized [Line Items] | ||||
Unearned premiums | 346.5 | 346.5 | ||
Amortization of Unearned Premium | 35.3 | |||
Accretion of premium receivable | 1.0 | |||
Total Premium Revenue to be recognized | 36.3 | |||
Financial Guarantee Insurance Contracts, Future Expected Premium Revenue to be Recognized more than Three and Within Four Years From Balance Sheet Date [Member]
|
||||
Future Premium Revenue To Be Recognized [Line Items] | ||||
Unearned premiums | 312.9 | 312.9 | ||
Amortization of Unearned Premium | 33.6 | |||
Accretion of premium receivable | 0.9 | |||
Total Premium Revenue to be recognized | 34.5 | |||
Financial Guarantee Insurance Contracts, Future Expected Premium Revenue to be Recognized more than Four and Within Five Years From Balance Sheet Date [Member]
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||||
Future Premium Revenue To Be Recognized [Line Items] | ||||
Unearned premiums | 282.7 | 282.7 | ||
Amortization of Unearned Premium | 30.2 | |||
Accretion of premium receivable | 0.8 | |||
Total Premium Revenue to be recognized | 31.0 | |||
Financial Guarantee Insurance Contracts, Future Expected Premium Revenue to be Recognized Within Five Years [Member]
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||||
Future Premium Revenue To Be Recognized [Line Items] | ||||
Unearned premiums | 282.7 | 282.7 | ||
Amortization of Unearned Premium | 155.4 | |||
Accretion of premium receivable | 4.4 | |||
Total Premium Revenue to be recognized | 159.8 | |||
Financial Guarantee Insurance Contracts, Future Expected Premium Revenue to be Recognized more than Five and Within Ten Years From Balance Sheet Date [Member]
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||||
Future Premium Revenue To Be Recognized [Line Items] | ||||
Unearned premiums | 162.4 | 162.4 | ||
Amortization of Unearned Premium | 120.3 | |||
Accretion of premium receivable | 3.3 | |||
Total Premium Revenue to be recognized | 123.6 | |||
Financial Guarantee Insurance Contracts, Future Expected Premium Revenue to be Recognized more than Ten and Within Fifteen Years From Balance Sheet Date [Member]
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||||
Future Premium Revenue To Be Recognized [Line Items] | ||||
Unearned premiums | 80.9 | 80.9 | ||
Amortization of Unearned Premium | 81.5 | |||
Accretion of premium receivable | 2.2 | |||
Total Premium Revenue to be recognized | 83.7 | |||
Financial Guarantee Insurance Contracts, Future Expected Premium Revenue to be Recognized more than Fifteen and Within Twenty Years From Balance Sheet Date [Member]
|
||||
Future Premium Revenue To Be Recognized [Line Items] | ||||
Unearned premiums | 33.6 | 33.6 | ||
Amortization of Unearned Premium | 47.3 | |||
Accretion of premium receivable | 1.3 | |||
Total Premium Revenue to be recognized | 48.6 | |||
Financial Guarantee Insurance Contracts, Future Expected Premium Revenue to be Recognized After Twenty Years From Balance Sheet Date [Member]
|
||||
Future Premium Revenue To Be Recognized [Line Items] | ||||
Unearned premiums | 0 | 0 | ||
Amortization of Unearned Premium | 33.6 | |||
Accretion of premium receivable | 1.6 | |||
Total Premium Revenue to be recognized | 35.2 | |||
Financial Guarantee Insurance Contracts Future Expected Premium Revenue to be Recognized [Member]
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||||
Future Premium Revenue To Be Recognized [Line Items] | ||||
Amortization of Unearned Premium | 438.1 | |||
Accretion of premium receivable | 12.8 | |||
Total Premium Revenue to be recognized | $ 450.9 |
Note 2 - Segment Reporting Reconciliation of Net Income (Details) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net income (loss) | $ 137,115 | $ (475,080) | $ 240,121 | $ (785,435) |
Mortgage Insurance Segment [Member]
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||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net income (loss) | (97,581) | (152,527) | (333,613) | (389,060) |
Financial Guaranty Segment
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||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net income (loss) | 234,696 | (349,420) | 573,734 | (428,398) |
Financial Services Segment
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||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net income (loss) | $ 0 | $ 26,867 | $ 0 | $ 32,023 |
Note 15 - Commitments and Contingencies Legal Proceedings (Details) (USD $)
|
6 Months Ended | 8 Months Ended | 6 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
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Dec. 31, 2008
Insurance Claims [Member]
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Aug. 31, 2009
Insurance Claims [Member]
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Aug. 01, 2011
Insurance Claims [Member]
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Jun. 30, 2011
Insurance Claims [Member]
years
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Jun. 30, 2011
Total Claim For Three Pool Policies Involved In Litigation [Member]
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Dec. 31, 2008
Total Claim For Three Pool Policies Involved In Litigation [Member]
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Aug. 31, 2009
August 2009 Claim [Member]
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Dec. 31, 2009
January 2010 Claim [Member]
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Jun. 30, 2011
June 2011 Claim [Member]
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|
Loss Contingencies [Line Items] | ||||||||||
Estimated Litigation Liability | $ 77,000,000 | $ 27,000,000 | $ 21,000,000 | $ 29,000,000 | ||||||
Number Of Disputed Pool Policies Covering Second Lien Mortgages Involved In A Lawsuit | 3 | |||||||||
Number Of Defendant Financial Guaranty Companies Involved In The Lawsuit That Are Subordinated To Our Position | 3 | |||||||||
Litigation Settlement, Gross | $ 44,000,000 | |||||||||
Number Of Disputed Pool Policies Covering Second Lien Mortgages Settled With Certain Defendants | 1 | |||||||||
Number Of RMBS Bulk Primary Mortgage Insurance Policies Involved In Pending or Threatened Litigation | 27 | |||||||||
Number Of Home Mortgage Loans Involved In Pending Litigation | 140 | |||||||||
Under Our Master Insurance Policy Any Suit Or Action Arising From Any Right Of The Insured Under The Policy Must Be Commenced Within This Number Of Years After Such Right First Arose | 2 | |||||||||
Under Our Master Insurance Policy Any Suit Or Action Arising From Any Right Of Certain Other Policies Must Be Commenced Within This Number Of Years After Such Right First Arose | 3 |
Note 7 - Losses and LAE - Mortgage Insurance Level 3 (Tables)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Losses and LAE Mortgage Insurance [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Reserves By Segment [Table Text Block] | Our reserve for losses and LAE, as of the dates indicated, consisted of:
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Schedule of Liability for Unpaid Claims and Claims Adjustment Expense [Table Text Block] | The following table presents information relating to our mortgage insurance reserves for losses and LAE as of the dates indicated:
_________________________
Our loss reserves were reduced in the second quarter of 2011, primarily as a result of a decrease in our total inventory of defaults, as the volume of paid claims, cures, and insurance rescissions and claim denials outpaced new default notices received in the period, as described below. Reserves established for new default notices received in the current year were the primary driver of our total incurred loss for both the three and six months ended June 30, 2011. In addition, our results for the six months ended June 30, 2011, were negatively affected by an increase in our incurred but not recorded ("IBNR") reserve estimate in the first quarter of 2011, related to an increase in our estimate of future reinstatements of previously rescinded policies and denied claims. Of the $246.8 million prior year adverse development experienced in 2011, $103.2 million related to an increase in both our actual and estimated reinstatements of policies and claims previously rescinded or denied in prior years, while the balance related primarily to the greater than anticipated impact from the aging of underlying defaulted loans on our default to claim rate. With continuing declines in home values, persistently high unemployment and delays by servicers in either modifying loans or foreclosing on properties, the ability to cure or otherwise resolve a delinquent loan has exceeded our expected timeframe. Consequently, in recent years, our default inventory has experienced an increase in its weighted average age, and as we apply higher estimated default to claim rates on our more aged delinquent loans, this has resulted in higher reserves. The protracted amount of time it has taken for servicers to resolve certain aged loans has extended the period of uncertainty with regard to our ultimate claim liability beyond what we predicted as of the prior year end. As a consequence, our aggregate weighted average default to claim rate assumption (net of denials and rescissions) used in estimating our reserve for losses was 43% at June 30, 2011, compared to 40% at December 31, 2010. Our default to claim rate estimate varies depending on the age of the underlying defaulted loans, as measured by the number of monthly payments missed. As of June 30, 2011, our default to claim rate estimate, net of our estimate for insurance rescissions and claims denials, ranged from 19% for insured loans that had missed two to three monthly payments, to 51% for such loans that had missed 12 or more monthly payments. During the three months ended June 30, 2011, changes in the composition of our delinquent loan inventory have had less of an impact on reserve development and incurred losses compared to recent quarters, which has helped moderate the impact of these changes on incurred losses related to prior year defaults. Our reserve for losses includes the impact of our estimated rescissions and denials, which remain elevated compared to levels experienced prior to 2009. Rescissions and denials reduced our loss reserves as of June 30, 2011, and December 31, 2010, by approximately $(655) million and $(922) million, respectively. The amount of estimated rescissions and denials incorporated into our reserve analysis at any point in time is affected by a number of factors, including not only our estimated rate of rescissions and denials on future claims, but also the volume and attributes of our defaulted insured loans, our estimated default to claim rate, and our estimated claim severity, among other assumptions. We expect the amount of estimated rescissions and denials embedded within our reserve analysis to decrease over time, as the defaults related to the poor underwriting periods of 2005 through 2008 decline as a proportion of our total default portfolio and as we realize the results through actual rescissions and denials, or the commutations of insured loans. Our reported rescission and denial activity in any given period is subject to future challenges by our lender customers. Our IBNR reserve estimate, which includes an estimate of the future reinstatements of previously rescinded policies and denied claims, was $115.6 million and $39.5 million at June 30, 2011, and December 31, 2010, respectively. The change in this estimate primarily reflects recent trends in insurance rescissions and claim denial activity as a result of lenders challenging a greater number of rescissions and denials and the overall challenges being more substantive in nature (i.e., producing new or additional information that supports a reinstatement of coverage or a claim payment). As a result, we expect that an increasingly larger portion of previously rescinded policies will be reinstated and previously denied claims will be resubmitted with the required documentation and ultimately paid. |
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Rescissions And Denials [Table Text Block] | The following table illustrates the amount of first-lien claims submitted to us for payment that were rescinded or denied, for the periods indicated, net of reinstatements within each period:
______________________
The following table illustrates the total amount of first-lien claims submitted to us for payment that were rescinded in the years noted, and then subsequently were challenged ("rebutted") by the lenders and policyholders, but not reinstated, as of June 30, 2011. Some portion of these claims may be reinstated in subsequent periods.
While the total potential claim amount of non-overturned rebuttals outstanding represents all challenged rescissions for which coverage has not been reinstated, our ongoing, active discussions with our lender customers typically involves only a small number of these non-overturned rebuttals. Absent litigation or other legal proceedings in which we are not successful, we do not expect that these discussions are likely to result in settlements that would materially impact our liquidity or results of operations. We also accrue for the premiums that we expect to refund to our lender customers in connection with our estimated insurance rescission activity. Our accrued liability for such refunds, which is included within accounts payable and accrued expenses on our condensed consolidated balance sheets, was $45.2 million and $43.5 million as of June 30, 2011, and December 31, 2010, respectively. The following table shows the cumulative denial and rescission rates, net of reinstatements, as of June 30, 2011, on our total first-lien portfolio for each quarter in which the claims were received for the periods indicated:
______________________
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Condensed Consolidated Statements of Changes in Common Stockholders' Equity (USD $)
In Thousands |
Total
|
Common Stock
|
Treasury Stock
|
Additional Paid-in Capital
|
Retained Earnings
|
Foreign Currency Translation Adjustment
|
Unrealized Holding Gains/(Losses)
|
Other Change in Stockholders Equity [Member]
|
Total Stockholders Equity
|
---|---|---|---|---|---|---|---|---|---|
Balance, at Dec. 31, 2009 | $ 100 | $ (889,496) | $ 1,363,255 | $ 1,602,143 | $ 18,285 | $ (72,802) | $ (16,491) | $ 2,004,994 | |
Comprehensive Income (Loss) | |||||||||
Net income (loss) | (785,435) | (785,435) | (785,435) | ||||||
Unrealized foreign currency translation adjustment, net of tax | (3,986) | ||||||||
Less: Reclassification adjustment for liquidation of foreign subsidiary and net gains on sales, net of tax | (447) | ||||||||
Net foreign currency translation adjustment, net of tax | (4,433) | (4,433) | |||||||
Unrealized holding gains arising during the period, net of tax | 20,736 | ||||||||
Less: Reclassification adjustment for net gains included in net income, net of tax | (1,250) | ||||||||
Net unrealized gain on investments, net of tax | 19,486 | 19,486 | |||||||
Comprehensive Income (Loss) Net of Tax | (770,382) | ||||||||
Sherman unrealized loss included in net loss | (16,761) | 16,761 | |||||||
Repurchases of common stock under incentive plans | (2,484) | 108 | (2,376) | ||||||
Issuance of common stock - stock offering | 50 | 526,135 | 526,185 | ||||||
Issuance of common stock under benefit plans | 1,938 | 1,938 | |||||||
Amortization of restricted stock | 2,854 | 2,854 | |||||||
Stock-based compensation expense | 191 | 191 | |||||||
Dividends declared | (536) | (536) | |||||||
Balance, at Jun. 30, 2010 | 150 | (891,980) | 1,894,481 | 816,172 | 13,852 | (53,316) | 270 | 1,779,629 | |
Balance, at Dec. 31, 2010 | 859,780 | 150 | (892,012) | 1,963,092 | (204,926) | 21,094 | (27,857) | 239 | 859,780 |
Comprehensive Income (Loss) | |||||||||
Net income (loss) | 240,121 | 240,121 | 240,121 | ||||||
Unrealized foreign currency translation adjustment, net of tax | 6,520 | ||||||||
Less: Reclassification adjustment for liquidation of foreign subsidiary and net gains on sales, net of tax | 27,954 | ||||||||
Net foreign currency translation adjustment, net of tax | (21,434) | (21,434) | |||||||
Unrealized holding gains arising during the period, net of tax | 13,615 | ||||||||
Less: Reclassification adjustment for net gains included in net income, net of tax | (34,938) | ||||||||
Net unrealized gain on investments, net of tax | 48,553 | 48,553 | |||||||
Comprehensive Income (Loss) Net of Tax | 267,240 | ||||||||
Repurchases of common stock under incentive plans | (24) | (24) | |||||||
Issuance of common stock under benefit plans | 1 | 404 | 405 | ||||||
Amortization of restricted stock | 1,603 | 1,603 | |||||||
Additional convertible debt issuance costs, net | (22) | (22) | |||||||
Stock-based compensation expense | 995 | 995 | |||||||
Dividends declared | (333) | (334) | (667) | ||||||
Balance, at Jun. 30, 2011 | $ 1,129,310 | $ 151 | $ (892,036) | $ 1,965,739 | $ 34,861 | $ (340) | $ 20,696 | $ 239 | $ 1,129,310 |
Note 15 - Commitments and Contingencies Level 1 (Notes)
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | 15. Commitments and Contingencies On June 26, 2008, we filed a complaint for declaratory judgment in the U.S. District Court for the Eastern District of Pennsylvania, naming IndyMac Bank (“IndyMac”), Deutsche Bank National Trust Company (“Deutsche Bank”), Financial Guaranty Insurance Company (“FGIC”), Ambac Assurance Corporation (“Ambac”) and MBIA Insurance Corporation (“MBIA”) as defendants. The suit involved three of our pool policies covering second-lien mortgages, entered into in late 2006 and early 2007 with respect to loans originated by IndyMac. We were in a second loss position behind IndyMac and in front of three defendant financial guaranty companies. We alleged that the representations and warranties made to us to induce us to issue the policies were materially false, and that as a result, the policies should be void. The total amount of our claim liability for all three pool policies was approximately $77 million and represented the aggregate risk in force related to these policies. In March 2009, FGIC, Ambac, and MBIA served us with demands to arbitrate certain issues relating to the same three pool policies that were the subject of our declaratory judgment complaint. In July 2009, the court declined to dismiss our declaratory judgment action, but stayed the action to permit the arbitrations to proceed first. In August 2009, we settled our dispute with Ambac and Deutsche Bank with respect to one of the disputed pool policies, which policy represented approximately $27 million of the total claim liability. In January 2010, we settled our dispute with MBIA and Deutsche Bank with respect to another of the disputed pool policies, which policy represented approximately $21 million of the total claim liability, and in June 2011, we settled with FGIC and Deutsche Bank regarding the third disputed pool policy, which policy represented the remaining $29 million of the total claim liability. In the aggregate, we settled our $77 million of total claim liability under the three pool policies for approximately $44 million. Following these settlements, in July 2011, the declaratory judgment action against IndyMac, Ambac, MBIA, FGIC and Deutsche Bank, and the arbitrations commenced by Ambac, MBIA and FGIC were dismissed with prejudice. On August 13, 2010, American Home Mortgage Servicing, Inc. ("AHMSI") filed a complaint against Radian Guaranty in the United States District Court for the Central District of California, on its own behalf and as servicer for certain RMBS insured by Radian Guaranty under 27 separate bulk primary mortgage insurance policies. AHMSI contends that in 2008, it mistakenly sent cancellation notices to Radian Guaranty for certain loans covered under these policies, and that Radian Guaranty wrongfully refused to reinstate coverage for these loans after AHMSI discovered the error. According to AHMSI, Radian Guaranty's refusal to reinstate coverage was in breach of its contractual duties under the policies and in bad faith. AHMSI is seeking money damages and injunctive relief requiring Radian Guaranty to reinstate full coverage on all loans insured under the policies. On October 18, 2010, Radian Guaranty filed a motion to dismiss this case, which the court granted on December 16, 2010, stating that AHMSI failed to establish that it is the real party in interest. On January 5, 2011, AHMSI filed an amended complaint that included the trustees of the securities as additional plaintiffs to the complaint. On May 31, 2011, Radian answered the amended complaint and, subsequently, filed a counterclaim seeking a declaratory judgment that, among other things, it is not in breach of its contractual duties. Radian has also filed a third party complaint against Sand Canyon Corporation, the servicer who allegedly made the error that led to the cancellation of the certificates of insurance, seeking indemnity and/or contribution. On August 1, 2011, Radian Guaranty filed a lawsuit against Quicken Loans Inc. in the United States District Court for the Eastern District of Pennsylvania. Radian Guaranty's complaint seeks a declaratory judgment that it properly rescinded mortgage insurance coverage under Radian Guaranty's master policy and delegated underwriting endorsement for approximately 140 home mortgage loans originated by Quicken based upon deficiencies and improprieties in the underwriting process. The elevated levels of our rate of rescissions and denials have led to an increased risk of litigation by lenders and policyholders challenging our right to rescind coverage or deny claims. Under our master insurance policy, any suit or action arising from any right of the insured under the policy must be commenced within two years after such right first arose and within three years for certain other policies, including certain pool insurance policies. Recently, we have faced an increasing number of challenges from certain lender customers regarding our insurance rescissions and claim denials, which have resulted in some reversals of our decisions regarding rescissions or denials. We are currently in discussions with these customers regarding rescissions or denials which, if not resolved, could result in arbitration or additional judicial proceedings. Although we believe that our rescissions and denials are justified under our policies, if we are not successful in defending the rescissions or denials in any potential legal actions, we may need to reassume the risk on, and increase loss reserves for, those policies or pay additional claims. See Note 7 for further information. In addition to the above litigation, we are involved in litigation that has arisen in the normal course of our business. We are contesting the allegations in each such pending action and believe, based on current knowledge and after consultation with counsel, that the outcome of such litigation will not have a material adverse effect on our consolidated financial position and results of operations. Securities regulations became effective in 2005 that impose enhanced disclosure requirements on issuers of ABS (including mortgage-backed securities ("MBS")). To allow our customers to comply with these regulations, we typically were required, depending on the amount of credit enhancement we were providing, to provide (1) audited financial statements for the insurance subsidiary participating in the transaction, or (2) a full and unconditional holding-company-level guarantee for our insurance subsidiaries' obligations in such transactions. Radian Group has guaranteed two structured transactions for Radian Guaranty involving approximately $176.8 million of remaining credit exposure as of June 30, 2011. On March 1, 2011, we sold our 45% interest in the holding company of a Brazilian insurance company, which specializes in surety and agricultural insurance, to another owner for a nominal purchase price. This holding company and its subsidiaries are subject to regulation by The Superintendence of Private Insurance, the regulatory agency responsible for the supervision and control of the insurance market in Brazil. Although we wrote off our entire interest in this company in 2005 and have sold our ownership interest, under Brazilian law, it is possible that we could become liable for our proportionate share of the liabilities of the company related to the period in which we were a significant shareholder, if the company was to become insolvent and had insufficient capital to satisfy its outstanding liabilities. Our share of the liabilities of the company attributable to this period was approximately $103.4 million as of December 31, 2010. As part of the non-investment-grade allocation component of our investment program, we have committed to invest $90.0 million in alternative investments ($10.3 million of unfunded commitments at June 30, 2011) that are primarily private equity securities. These commitments have capital calls expected through 2015, with the possibility of additional calls through 2017, and certain fixed expiration dates or other termination clauses. Our mortgage insurance business provides an outsourced underwriting service to its customers known as contract underwriting. Typically, we agree that if we make a material error in underwriting a loan, we will provide a remedy to the customer, by purchasing the loan or placing additional mortgage insurance coverage on the loan, or by indemnifying the customer against loss up to a maximum specified amount. By providing these remedies, we assume some credit risk and interest-rate risk if an error is found during the limited remedy period in the agreements governing our provision of contract underwriting services. Recently, we limited the recourse available to our contract underwriting customers to apply only to those loans issued after the date of this change that we are simultaneously underwriting for compliance with secondary market compliance and for potential mortgage insurance. In the first half of 2011, we paid losses related to contract underwriting remedies of approximately $4.4 million. Rising mortgage interest rates or further economic uncertainty may expose the mortgage insurance business to an increase in such costs. In the first half of 2011, our provision for contract underwriting expenses was approximately $7.2 million and our reserve for contract underwriting obligations at June 30, 2011, was $5.3 million. We monitor this risk and negotiate our underwriting fee structure and recourse agreements on a client-by-client basis. We also routinely audit the performance of our contract underwriters. Under change of control agreements with certain of our officers, upon a change of control of Radian Group or Radian Asset Assurance, as the case may be, we are required to fund an irrevocable rabbi trust to the extent of our obligations under these agreements. The total maximum amount that we would be required to place in trust is approximately $6.8 million as of June 30, 2011. In addition, in the event of a change of control of Radian Group under certain of our long term cash-based incentive plans, we would be required to pay approximately $14.9 million to plan participants as of June 30, 2011. We have incentive, retention and severance agreements with certain employees in our financial guaranty business. The total cost expected to be incurred under these agreements is $8.7 million, of which $4.6 million has not been recorded as of June 30, 2011. The remaining cost for these agreements is expected to be recorded by the end of 2012. |
Note 4 - Fair Value of Financial Instruments Fair Value Assets Liabilities by Hierarchy Level (Details) (USD $)
|
Jun. 30, 2011
|
Dec. 31, 2010
|
||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Derivative Assets | $ 27,266,000 | $ 26,212,000 | ||||||||||||||||||||
Variable interest entity debt | 393,740,000 | 520,114,000 | ||||||||||||||||||||
Derivative liabilities | 313,708,000 | 723,579,000 | ||||||||||||||||||||
Held-to-maturity Securities, Fair Value Disclosure | 8,282,000 | 11,416,000 | ||||||||||||||||||||
US government and agency securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 618,200,000 | 1,075,000,000 | ||||||||||||||||||||
US government and agency securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 672,600,000 | 731,400,000 | ||||||||||||||||||||
US government and agency securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 0 | 0 | ||||||||||||||||||||
US government and agency securities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 1,290,800,000 | 1,806,400,000 | ||||||||||||||||||||
State and municipal obligations [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 0 | 0 | ||||||||||||||||||||
State and municipal obligations [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 1,015,100,000 | 1,159,700,000 | ||||||||||||||||||||
State and municipal obligations [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 23,600,000 | 23,200,000 | ||||||||||||||||||||
State and municipal obligations [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 1,038,700,000 | 1,182,900,000 | ||||||||||||||||||||
Money market instruments [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 360,400,000 | 310,900,000 | ||||||||||||||||||||
Money market instruments [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 0 | 0 | ||||||||||||||||||||
Money market instruments [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 0 | 0 | ||||||||||||||||||||
Money market instruments [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 360,400,000 | 310,900,000 | ||||||||||||||||||||
Corporate bonds and notes [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 0 | 0 | ||||||||||||||||||||
Corporate bonds and notes [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 865,200,000 | 1,060,400,000 | ||||||||||||||||||||
Corporate bonds and notes [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 0 | 0 | ||||||||||||||||||||
Corporate bonds and notes [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 865,200,000 | 1,060,400,000 | ||||||||||||||||||||
RMBS [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 0 | 0 | ||||||||||||||||||||
RMBS [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 954,600,000 | 913,500,000 | ||||||||||||||||||||
RMBS [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 61,400,000 | 52,500,000 | ||||||||||||||||||||
RMBS [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 1,016,000,000 | 966,000,000 | ||||||||||||||||||||
CMBS [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 0 | 0 | ||||||||||||||||||||
CMBS [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 190,400,000 | 173,600,000 | ||||||||||||||||||||
CMBS [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 29,400,000 | 23,000,000 | ||||||||||||||||||||
CMBS [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 219,800,000 | 196,600,000 | ||||||||||||||||||||
CDO [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 0 | 0 | ||||||||||||||||||||
CDO [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 0 | 0 | ||||||||||||||||||||
CDO [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 3,900,000 | 2,400,000 | ||||||||||||||||||||
CDO [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 3,900,000 | 2,400,000 | ||||||||||||||||||||
Other ABS [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 0 | 0 | ||||||||||||||||||||
Other ABS [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 114,100,000 | 131,100,000 | ||||||||||||||||||||
Other ABS [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 2,000,000 | 3,300,000 | ||||||||||||||||||||
Other ABS [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 116,100,000 | 134,400,000 | ||||||||||||||||||||
Foreign government securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 0 | 0 | ||||||||||||||||||||
Foreign government securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 101,600,000 | 83,500,000 | ||||||||||||||||||||
Foreign government securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 0 | 0 | ||||||||||||||||||||
Foreign government securities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 101,600,000 | 83,500,000 | ||||||||||||||||||||
Hybrid securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 0 | 0 | ||||||||||||||||||||
Hybrid securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 367,800,000 | 318,900,000 | ||||||||||||||||||||
Hybrid securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 0 | 0 | ||||||||||||||||||||
Hybrid securities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 367,800,000 | 318,900,000 | ||||||||||||||||||||
Equity securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 176,900,000 | [1] | 168,400,000 | [1] | ||||||||||||||||||
Equity securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 198,500,000 | [1] | 168,600,000 | [1] | ||||||||||||||||||
Equity securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 5,600,000 | [1] | 2,900,000 | [1] | ||||||||||||||||||
Equity securities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 381,000,000 | [1] | 339,900,000 | [1] | ||||||||||||||||||
Other investments [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 0 | [2] | 0 | [3] | ||||||||||||||||||
Other investments [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 151,600,000 | [2] | 150,000,000 | [3] | ||||||||||||||||||
Other investments [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 5,800,000 | [2] | 4,600,000 | [3] | ||||||||||||||||||
Other investments [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 157,400,000 | [2] | 154,600,000 | [3] | ||||||||||||||||||
Investments [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 1,155,500,000 | [4] | 1,554,300,000 | [5] | ||||||||||||||||||
Investments [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 4,631,500,000 | [4] | 4,890,700,000 | [5] | ||||||||||||||||||
Investments [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 131,700,000 | [4] | 111,900,000 | [5] | ||||||||||||||||||
Investments [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Investments at Fair Value | 5,918,700,000 | [4] | 6,556,900,000 | [5] | ||||||||||||||||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Derivative Assets | 0 | 0 | ||||||||||||||||||||
Other Assets | 0 | [6] | 0 | [6] | ||||||||||||||||||
Assets, Fair Value Disclosure | 1,155,500,000 | 1,554,300,000 | ||||||||||||||||||||
Total Liabilities at Fair Value | 0 | 0 | ||||||||||||||||||||
Variable interest entity debt | 0 | [7] | 0 | [8] | ||||||||||||||||||
Derivative liabilities | 0 | 0 | ||||||||||||||||||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Derivative Assets | 400,000 | 0 | ||||||||||||||||||||
Other Assets | 0 | [6] | 0 | [6] | ||||||||||||||||||
Assets, Fair Value Disclosure | 4,631,900,000 | 4,890,700,000 | ||||||||||||||||||||
Total Liabilities at Fair Value | 0 | 0 | ||||||||||||||||||||
Variable interest entity debt | 0 | [7] | 0 | [8] | ||||||||||||||||||
Derivative liabilities | 0 | 0 | ||||||||||||||||||||
Committed Preferred Custodial Trust Securities | 150,000,000 | |||||||||||||||||||||
Financial Instruments, Owned, Short Term CD's, Fair Value Disclosure | 1,600,000 | |||||||||||||||||||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Derivative Assets | 26,900,000 | 26,200,000 | ||||||||||||||||||||
Other Assets | 113,700,000 | [6] | 109,700,000 | [6] | ||||||||||||||||||
Assets, Fair Value Disclosure | 272,300,000 | 247,800,000 | ||||||||||||||||||||
Total Liabilities at Fair Value | 707,400,000 | 1,243,700,000 | ||||||||||||||||||||
Variable interest entity debt | 393,700,000 | [7] | 520,100,000 | [8] | ||||||||||||||||||
Derivative liabilities | 313,700,000 | 723,600,000 | ||||||||||||||||||||
Lottery Annuities, Other Investments, Fair Value | 1,800,000 | |||||||||||||||||||||
Financial Instruments, TruPs Held By Consolidated VIEs, at Fair Value | 4,000,000 | |||||||||||||||||||||
Variable Interest Entity Debt, NIMS, at Fair Value | 56,200,000 | 141,000,000 | ||||||||||||||||||||
Variable Interest Entity Debt, Financial Guaranty Contracts, at Fair Value | 337,500,000 | 379,100,000 | ||||||||||||||||||||
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Derivative Assets | 27,300,000 | 26,200,000 | ||||||||||||||||||||
Other Assets | 113,700,000 | [6] | 109,700,000 | [6] | ||||||||||||||||||
Assets, Fair Value Disclosure | 6,059,700,000 | 6,692,800,000 | ||||||||||||||||||||
Total Liabilities at Fair Value | 707,400,000 | 1,243,700,000 | ||||||||||||||||||||
Variable interest entity debt | 393,700,000 | [7] | 520,100,000 | [8] | ||||||||||||||||||
Derivative liabilities | 313,700,000 | 723,600,000 | ||||||||||||||||||||
Fair Value, Measurements, Recurring [Member] | Carrying (Reported) Amount, Fair Value Disclosure [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Held-to-maturity Securities, Fair Value Disclosure | 7,781,000 | 10,773,000 | ||||||||||||||||||||
Short Term Investments (Carried at Cost) Fair Value Disclosure | 0 | 1,600,000 | ||||||||||||||||||||
Other invested assets fair value disclosure | 62,334,000 | 59,627,000 | ||||||||||||||||||||
Fair Value, Inputs, Level 2 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Lottery Annuities, Other Investments, Fair Value | 2,600,000 | |||||||||||||||||||||
Fair Value, Inputs, Level 3 [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Total Level III Assets | 4.49362% | |||||||||||||||||||||
Total Level III Liabilities | 100.00% | |||||||||||||||||||||
Financial Instruments, TruPs Held By Consolidated VIEs, at Fair Value | 2,000,000 | |||||||||||||||||||||
Number Of Consolidated Other Financial Guaranty Transactions | 2 | |||||||||||||||||||||
Unconsolidated Financial Guaranty Insurance Contracts [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Derivative Assets | 5,600,000 | 6,000,000 | ||||||||||||||||||||
Variable interest entity debt | 0 | 0 | ||||||||||||||||||||
Derivative liabilities | 258,500,000 | 585,900,000 | ||||||||||||||||||||
Consolidated Financial Guaranty Insurance Contracts [Member]
|
||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||
Derivative Assets | 0 | 0 | ||||||||||||||||||||
Variable interest entity debt | 337,500,000 | 379,100,000 | ||||||||||||||||||||
Derivative liabilities | $ 18,831,000 | [9] | $ 19,226,000 | |||||||||||||||||||
Number Of Consolidated Other Financial Guaranty Transactions | 2 | |||||||||||||||||||||
|
Note 2 - Segment Reporting Level 3 (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment [Table Text Block] |
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Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block] | A reconciliation of segment net income (loss) to consolidated net income (loss) is as follows:
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Note 15 - Commitments and Contingencies Purchase Committment, Excluding Long Term Committment (Details) (USD $)
In Millions |
Jun. 30, 2011
|
---|---|
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |
Purchase Commitment To Invest In Alternative Investments | $ 90.0 |
Purchase Commitment, Remaining Minimum Amount Committed | $ 10.3 |
Note 12 - Income Taxes Income Tax Details (Details) (USD $)
|
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Operating Loss Carryforwards [Line Items] | ||
Operating Loss Carryforwards | $ 1,700,000,000 | |
Deferred Tax Assets (Liabilities), Net | 797,200,000 | 879,400,000 |
Valuation Allowance, Amount | 769,700,000 | 851,900,000 |
Deferred tax assets, net | $ 27,531,000 | $ 27,531,000 |
Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Cash flows used in operating activities | $ (608,917) | $ (460,719) |
Cash flows from investing activities: | ||
Proceeds from sales of fixed-maturity investments available for sale | 101,648 | 69,946 |
Proceeds from sales of equity securities available for sale | 555 | 5,962 |
Proceeds from sales of trading securities | 2,444,549 | 918,017 |
Proceeds from redemptions of fixed-maturity investments available for sale | 28,032 | 30,492 |
Proceeds from redemptions of fixed-maturity investments held to maturity | 3,195 | 2,635 |
Purchases of trading securities | (2,206,653) | (1,338,204) |
Sales and redemptions of short-term investments, net | 407,494 | 91,768 |
Purchases of other invested assets, net | (2,717) | (955) |
Proceeds from the sale of investment in affiliate | 0 | 172,017 |
Purchases of property and equipment, net | (5,729) | (1,279) |
Net cash provided by (used in) investing activities | 770,374 | (49,601) |
Cash flows from financing activities: | ||
Dividends paid | (667) | (536) |
Redemption of long-term debt | (160,000) | (29,348) |
Issuance of common stock | 0 | 526,185 |
Net cash used in financing activities | (160,667) | 496,301 |
Effect of exchange rate changes on cash | (2) | (388) |
Increase (decrease) in cash | 788 | (14,407) |
Cash, beginning of period | 20,334 | 41,574 |
Cash, end of period | 21,122 | 27,167 |
Supplemental disclosures of cash flow information: | ||
Income taxes (received) paid | (1,275) | 1,725 |
Interest paid | $ 27,244 | $ 20,529 |
Note 9 - Financial Guaranty Insurance Contracts Level 1 (Notes)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Financial Guaranty Insurance Contracts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Guarantee Insurance Contracts [Text Block] | Financial Guaranty Insurance Contracts The following table includes information as of June 30, 2011, regarding our financial guaranty claim liabilities, segregated by the surveillance categories that we use in monitoring the risks related to these contracts:
Claim liabilities are established for a performing credit if the expected losses on the credit exceed the unearned premium revenue for the contract based on the present value of the expected net cash outflows. Included in accounts and notes receivable and unearned premiums on our condensed consolidated balance sheets are the present value of premiums receivable and unearned premiums that are received on an installment basis. The premiums receivable is net of commissions on assumed reinsurance business. The present values of premiums receivable and unearned premiums that are received on an installment basis as of the dates indicated are as follows:
The accretion of these balances is included in premiums written and premiums earned for premiums receivable and policy acquisition costs for commissions on our condensed consolidated statement of operations. The amounts of the accretion included in premiums written, premiums earned and policy acquisition costs for the periods indicated are as follows:
The weighted-average risk-free rate used to discount the premiums receivable and premiums to be collected was 2.6% at June 30, 2011. The following table shows the nominal (non-discounted) premiums, net of commissions that are expected to be collected on financial guaranty contracts with installment premiums, included in premiums receivable as of June 30, 2011:
The following table shows the rollforward of the net present value of premiums receivable for the periods indicated:
Premiums earned were affected by the following for the periods indicated:
The following table shows the expected contractual premium revenue from our existing financial guaranty portfolio, assuming no prepayments or refundings of any financial guaranty obligations, as of June 30, 2011:
The following table shows the significant components of the change in our financial guaranty claim liability for the periods indicated:
The weighted-average risk-free rates used to discount the gross claim liability and gross potential recoveries were as follows as of the dates indicated:
|
Note 7 - Losses and LAE - Mortgage Insurance Rescissions And Denials (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
|
Jun. 30, 2010
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Dec. 31, 2010
|
|||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Total First Lien Claims Rescinded Or Denied | $ 193.0 | [1] | $ 167.0 | [1] | $ 345.1 | [1] | $ 418.5 | [1] | |||||||||||
Accrued Liability For Premiums Expected To Be Refunded From Rescissions | 45.2 | 45.2 | 43.5 | ||||||||||||||||
Mortgage Insurance Segment [Member]
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|||||||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Incurred Losses Related To Prior Year Rescissions And Denials | 103.2 | ||||||||||||||||||
First Lien Claims First Loss Position [Member]
|
|||||||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Insurance Rescissions | 126.6 | 75.2 | 220.4 | 204.6 | |||||||||||||||
Claim Denials | 14.2 | 24.1 | 38.8 | 32.1 | |||||||||||||||
First Lien Claim Rescissions And Denials First Loss Position | 140.8 | [2] | 99.3 | [2] | 259.2 | [2] | 236.7 | [2] | |||||||||||
First Lien Claims Second Loss Position [Member]
|
|||||||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Insurance Rescissions | 41.2 | 47.6 | 72.2 | 158.0 | |||||||||||||||
Claim Denials | 11.0 | 20.1 | 13.7 | 23.8 | |||||||||||||||
First Lien Claim Rescissions And Denials Second Loss Position | 52.2 | [3] | 67.7 | [3] | 85.9 | [3] | 181.8 | [3] | |||||||||||
Origination Year 2011 [Member]
|
|||||||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Non Overturned Rebuttals On Rescinded First Lien Claims First Loss Position | 94.7 | ||||||||||||||||||
Non Overturned Rebuttals On Rescinded First Lien Claims Second Loss Position | 24.6 | ||||||||||||||||||
Total Non Overturned Rebuttals On Rescinded First Lien Claims | 119.3 | ||||||||||||||||||
Origination Year 2010 [Member]
|
|||||||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Non Overturned Rebuttals On Rescinded First Lien Claims First Loss Position | 160.3 | ||||||||||||||||||
Non Overturned Rebuttals On Rescinded First Lien Claims Second Loss Position | 61.5 | ||||||||||||||||||
Total Non Overturned Rebuttals On Rescinded First Lien Claims | 221.8 | ||||||||||||||||||
Origination Year 2009 [Member]
|
|||||||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Non Overturned Rebuttals On Rescinded First Lien Claims First Loss Position | 101.1 | ||||||||||||||||||
Non Overturned Rebuttals On Rescinded First Lien Claims Second Loss Position | 91.0 | ||||||||||||||||||
Total Non Overturned Rebuttals On Rescinded First Lien Claims | $ 192.1 | ||||||||||||||||||
Q1 2008 [Member]
|
|||||||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Claim Received Quarter | Q1 2008 | Q1 2008 | |||||||||||||||||
Cummulative Rescission Rate For Each Quarter | 12.20% | [4] | 12.20% | [4] | |||||||||||||||
Percentage Of Claims Resolved | 100.00% | [5] | 100.00% | [5] | |||||||||||||||
Q2 2008 [Member]
|
|||||||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Claim Received Quarter | Q2 2008 | Q2 2008 | |||||||||||||||||
Cummulative Rescission Rate For Each Quarter | 13.10% | [4] | 13.10% | [4] | |||||||||||||||
Percentage Of Claims Resolved | 100.00% | [5] | 100.00% | [5] | |||||||||||||||
Q3 2008 [Member]
|
|||||||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Claim Received Quarter | Q3 2008 | Q3 2008 | |||||||||||||||||
Cummulative Rescission Rate For Each Quarter | 19.20% | [4] | 19.20% | [4] | |||||||||||||||
Percentage Of Claims Resolved | 100.00% | [5] | 100.00% | [5] | |||||||||||||||
Q4 2008 [Member]
|
|||||||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Claim Received Quarter | Q4 2008 | Q4 2008 | |||||||||||||||||
Cummulative Rescission Rate For Each Quarter | 21.30% | [4] | 21.30% | [4] | |||||||||||||||
Percentage Of Claims Resolved | 100.00% | [5] | 100.00% | [5] | |||||||||||||||
Q1 2009 [Member]
|
|||||||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Claim Received Quarter | Q1 2009 | Q1 2009 | |||||||||||||||||
Cummulative Rescission Rate For Each Quarter | 24.20% | [4] | 24.20% | [4] | |||||||||||||||
Percentage Of Claims Resolved | 100.00% | [5] | 100.00% | [5] | |||||||||||||||
Q2 2009 [Member]
|
|||||||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Claim Received Quarter | Q2 2009 | Q2 2009 | |||||||||||||||||
Cummulative Rescission Rate For Each Quarter | 25.90% | [4] | 25.90% | [4] | |||||||||||||||
Percentage Of Claims Resolved | 99.00% | [5] | 99.00% | [5] | |||||||||||||||
Q3 2009 [Member]
|
|||||||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Claim Received Quarter | Q3 2009 | Q3 2009 | |||||||||||||||||
Cummulative Rescission Rate For Each Quarter | 23.30% | [4] | 23.30% | [4] | |||||||||||||||
Percentage Of Claims Resolved | 99.00% | [5] | 99.00% | [5] | |||||||||||||||
Q4 2009 [Member]
|
|||||||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Claim Received Quarter | Q4 2009 | Q4 2009 | |||||||||||||||||
Cummulative Rescission Rate For Each Quarter | 21.20% | [4] | 21.20% | [4] | |||||||||||||||
Percentage Of Claims Resolved | 98.00% | [5] | 98.00% | [5] | |||||||||||||||
Q1 2010 [Member]
|
|||||||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Claim Received Quarter | Q1 2010 | Q1 2010 | |||||||||||||||||
Cummulative Rescission Rate For Each Quarter | 19.10% | [4] | 19.10% | [4] | |||||||||||||||
Percentage Of Claims Resolved | 97.00% | [5] | 97.00% | [5] | |||||||||||||||
Q2 2010 [Member]
|
|||||||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Claim Received Quarter | Q2 2010 | Q2 2010 | |||||||||||||||||
Cummulative Rescission Rate For Each Quarter | 18.40% | [4] | 18.40% | [4] | |||||||||||||||
Percentage Of Claims Resolved | 96.00% | [5] | 96.00% | [5] | |||||||||||||||
Q3 2010 [Member]
|
|||||||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Claim Received Quarter | Q3 2010 | Q3 2010 | |||||||||||||||||
Cummulative Rescission Rate For Each Quarter | 15.60% | [4] | 15.60% | [4] | |||||||||||||||
Percentage Of Claims Resolved | 92.00% | [5] | 92.00% | [5] | |||||||||||||||
Q4 2010 [Member]
|
|||||||||||||||||||
Rescissions And Denials [Line Items] | |||||||||||||||||||
Claim Received Quarter | Q4 2010 | Q4 2010 | |||||||||||||||||
Cummulative Rescission Rate For Each Quarter | 15.20% | [4] | 15.20% | [4] | |||||||||||||||
Percentage Of Claims Resolved | 82.00% | [5] | 82.00% | [5] | |||||||||||||||
|
Note 9 - Financial Guaranty Insurance Contracts Schedule of Premium Received Over Contract Period (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
Mar. 31, 2011
|
Dec. 31, 2010
|
Mar. 31, 2010
|
Dec. 31, 2009
|
|
Premium Receivable | $ 37.3 | $ 46.4 | $ 37.3 | $ 46.4 | $ 43.8 | $ 44.0 | $ 51.1 | $ 54.4 |
Accretion of Premium Receivable and Unearned | 0.3 | 0.4 | 0.5 | 0.7 | ||||
Premium Receivable, Weighted Average Risk Free Discount Rate | 2.60% | |||||||
Unearned Premiums, Long Duration [Member]
|
||||||||
Unearned Premium | 42.8 | 42.8 | 60.5 | |||||
Premiums Written Accretion [Member]
|
||||||||
Accretion of Premium Receivable and Unearned | 0.3 | 0.4 | 0.6 | 0.8 | ||||
Premiums Earned Accretion [Member]
|
||||||||
Accretion of Premium Receivable and Unearned | 0.3 | 0.4 | 0.6 | 0.8 | ||||
Policy Acquisition Costs Accretion [Member]
|
||||||||
Accretion of Premium Receivable and Unearned | $ 0.1 | $ 0.1 | $ 0.2 | $ 0.2 |
Note 14 - Selected Financial Information of Registrant - Radian Group Selected Financial Information of Registrant (Details) (USD $)
In Thousands |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Condensed Financial Statements, Captions [Line Items] | ||
Total assets | $ 6,928,796 | $ 7,620,887 |
Long-term Debt | 811,319 | 964,788 |
Total liabilities | 5,799,486 | 6,761,107 |
Total stockholders’ equity | 1,129,310 | 859,780 |
Total liabilities and stockholders’ equity | 6,928,796 | 7,620,887 |
Parent Company [Member]
|
||
Condensed Financial Statements, Captions [Line Items] | ||
Investments in and Advances to Affiliates, Amount of Equity | 1,218,817 | 947,724 |
Total assets | 1,994,889 | 1,864,896 |
Long-term Debt | 811,319 | 964,788 |
Total liabilities | 865,579 | 1,005,116 |
Total stockholders’ equity | 1,129,310 | 859,780 |
Total liabilities and stockholders’ equity | $ 1,994,889 | $ 1,864,896 |
Note 14 - Selected Financial Information of Registrant - Radian Group Level 3 (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
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Selected Financial Information of Registrant Radian Group [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Financial Information Of Registrant [Table Text Block] | The following is selected financial information for Radian Group:
|
Note 13 - Recent Accounting Pronouncements Level 1 (Notes)
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Recent Accounting Pronouncements [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | Recent Accounting Pronouncements In June 2011, the Financial Accounting Standards Board (“FASB”) issued an update to the accounting standard regarding comprehensive income. This update eliminates the current presentation options related to comprehensive income and provides an entity with the option to present the components of net income, other comprehensive income and total comprehensive income, either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Regardless of which option an entity chooses, the entity is required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement(s) where the components of net income and the components of other comprehensive income are presented. This update is effective for fiscal years beginning after December 15, 2011. In May 2011, the FASB issued an update to the accounting standard regarding Fair Value Measurements and Disclosure. This update changes the language used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments: 1) clarify the FASB's intent about the application of existing fair value measurement and disclosure requirements, and 2) change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. This update is effective for fiscal years beginning after December 15, 2011. |
Condensed Consolidated Balance Sheets Statement (USD $)
In Thousands |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Investments | ||
Fixed-maturities held to maturity—at amortized cost (fair value $8,282 at June 30, 2011 and $11,416 at December 31, 2010) | $ 7,781 | $ 10,773 |
Fixed-maturities available for sale at fair value (amortized cost $160,085 at June 30, 2011 and $340,795 at December 31, 2010) | 149,146 | 273,799 |
Equity securities available for sale—at fair value (cost $160,038 at June 30, 2011and $160,242 at December 31, 2010) | 193,965 | 184,365 |
Trading securities—at fair value (including variable interest entity (“VIE”) securities of $100,691 at June 30, 2011 and $83,184 at December 31, 2010) | 4,445,335 | 4,562,821 |
Short-term investments at fair value (including VIE investments of $149,984 at June 30, 2011 and $149,981 at December 31, 2010) | 1,130,268 | 1,537,498 |
Other invested assets—at cost | 62,344 | 59,627 |
Total investments | 5,988,839 | 6,628,883 |
Cash | 21,122 | 20,334 |
Restricted cash | 28,568 | 31,413 |
Deferred policy acquisition costs | 138,926 | 148,326 |
Accrued investment income | 39,620 | 40,498 |
Accounts and notes receivable (less allowance of $0 at June 30, 2011 and $50,000 at December 31, 2010) | 109,017 | 116,452 |
Property and equipment, at cost (less accumulated depreciation of $95,204 at June 30, 2011 and $92,451 at December 31, 2010) | 15,999 | 13,024 |
Derivative assets (including VIE derivative assets of $4,653 at June 30, 2011 and $10,855 at December 31, 2010) | 27,266 | 26,212 |
Deferred income taxes, net | 27,531 | 27,531 |
Reinsurance recoverables | 179,573 | 244,894 |
Other assets (including VIE other assets of $115,716 at June 30, 2011 and $112,426 at December 31, 2010) | 352,335 | 323,320 |
Total assets | 6,928,796 | 7,620,887 |
Liabilities | ||
Unearned premiums | 629,813 | 686,364 |
Reserve for losses and loss adjustment expenses (“LAE”) | 3,343,624 | 3,596,735 |
Reserve for premium deficiency | 6,251 | 10,736 |
Long-term debt | 811,319 | 964,788 |
VIE debt—at fair value (including $3,195 at June 30, 2011 and $9,514 at December 31, 2010 of non-recourse debt) | 393,740 | 520,114 |
Derivative liabilities (including VIE derivative liabilities of $18,831 at June 30, 2011 and $19,226 at December 31, 2010) | 313,708 | 723,579 |
Accounts payable and accrued expenses (including VIE accounts payable of $686 at June 30, 2011 and $837 at December 31, 2010) | 301,031 | 258,791 |
Total liabilities | 5,799,486 | 6,761,107 |
Stockholders’ equity | ||
Common stock: par value $.001 per share; 325,000,000 shares authorized; 150,574,956 and 150,507,853 shares issued at June 30, 2011 and December 31, 2010, repectively; 133,113,518 and 133,049,213 shares outstanding at June 30, 2011 and December 31, 2010, respectively | 151 | 150 |
Treasury stock, at cost: 17,461,438 and 17,458,640 shares at June 30, 2011 and December 31, 2010, respectively | (892,036) | (892,012) |
Additional paid-in capital | 1,965,739 | 1,963,092 |
Retained Earnings (Deficit) | 34,861 | (204,926) |
Accumulated other comprehensive income (loss) | 20,595 | (6,524) |
Stockholders' Equity Attributable to Parent | 1,129,310 | 859,780 |
Total liabilities and stockholders’ equity | $ 6,928,796 | $ 7,620,887 |
Note 1 - Condensed Consolidated Financial Statements Capital and Liquidity (Details) (USD $)
|
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Dec. 31, 2010
|
|
Entity Information [Line Items] | ||
Subsidiary Expense Reimbursements | $ 59,300,000 | |
Parent Company [Member]
|
||
Entity Information [Line Items] | ||
Unrestricted Cash And Liquid Investments | 680,200,000 | 797,500,000 |
Committed Preferred Custodial Trust Securities | 150,000,000 | |
Subsidiary of Common Parent [Member]
|
||
Entity Information [Line Items] | ||
Statutory Accounting Practices, Statutory Capital and Surplus, Balance | 1,000,000,000 | 1,300,000,000 |
Statutory Accounting Practices, Statutory Net Loss Amount | 273,000,000 | |
Risk To Capital Ratio | 19.80% | 16.80% |
Insurance Risk Ceded To Affiliates | $ 2,000,000,000 | |
Government [Member]
|
||
Entity Information [Line Items] | ||
Minimum Regulatory Risk To Capital Ratio | 25.00% |