Note 4 - Fair Value of Financial Instruments Level 3 (Tables)

6 Months Ended

Jun. 30, 2012

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 and 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.

(In basis points)	June 30, 2012	December 31, 2011	June 30, 2011	December 31, 2010
Radian Group’s five-year CDS spread	1,780	2,732	968	465

(In millions)	Fair Value Liability before Consideration of Radian Non-Performance Risk June 30, 2012		Impact of Radian Non-Performance Risk June 30, 2012		Fair Value (Asset) Liability Recorded June 30, 2012
Product
Corporate CDOs	$	258.4	$	259.2	$	(0.8	)
Non-Corporate CDO-related (1)	915.0		797.8		117.2
NIMS-related (2)	13.0		7.2		5.8
Total	$	1,186.4	$	1,064.2	$	122.2

(In millions)	Fair Value Liability before Consideration of Radian Non-Performance Risk December 31, 2011		Impact of Radian Non-Performance Risk December 31, 2011		Fair Value Liability Recorded December 31, 2011
Product
Corporate CDOs	$	463.1	$	458.0	$	5.1
Non-Corporate CDO-related (1)	1,520.2		1,405.3		114.9
NIMS-related (2)	17.4		9.6		7.8
Total	$	2,000.7	$	1,872.9	$	127.8

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(1) Includes the net fair value liability recorded within derivative assets and derivative liabilities, and the net fair value liabilities included in our consolidated VIEs.

(2) Includes NIMS VIE debt and NIMS derivative assets.

Schedule of Additional Quantitative Information for Fair Value Measurement of Level III Assets and Liabilities [Table Text Block]

The following table summarizes the significant unobservable inputs used in our recurring Level III fair value measurements as of June 30, 2012:

(In millions)	Fair Value June 30, 2012 (1)		Valuation Technique	Unobservable Input	Range/ Weighted Average
Level III Investments:
State and municipal obligations	$	19.6	Discounted cash flow	Discount rate				8.9	%
				Expected loss				19.0	%
Other investments	75.4		Discounted cash flow	Discount rate				2.3	%
				Expected loss				—	%
Level III Derivative Assets:
Corporate CDOs	9.4		Base correlation model	Radian correlation to corporate index				85.0	%
				Average credit spread	0.2	%	-	4.2	%
				Own credit spread (2)	12.7	%	-	22.6	%
CDOs of CMBS	1.4		Discounted cash flow	Radian correlation to CMBS transaction index	72.0	%	-	85.0	%
				Own credit spread (2)	12.7	%	-	22.6	%
TruPs CDOs	1.5		Discounted cash flow	Principal recovery				55.0	%
				Principal recovery (stressed)				50.0	%
				Probability of conditional liquidity payment	0.4	%	-	32.0	%
				Own credit spread (2)	12.7	%	-	22.6	%
NIMS derivative assets	1.7		Discounted cash flow	NIMS credit spread				43.0	%
				Own credit spread				22.9	%
Level III Derivative Liabilities:
Corporate CDOs	8.6		Base correlation model	Radian correlation to corporate index				85.0	%
				Average credit spread	0.2	%	-	4.2	%
				Own credit spread (2)	12.7	%	-	22.6	%
CDOs of CMBS	59.4		Discounted cash flow	Radian correlation to CMBS transaction index	72.0	%	-	85.0	%
				Own credit spread (2)	12.7	%	-	22.6	%
TruPs CDOs and TruPs-related VIE liabilities	86.8		Discounted cash flow	Principal recovery				55.0	%
				Principal recovery (stressed)				50.0	%
				Probability of conditional liquidity payment	0.4	%	-	32.0	%
				Own credit spread (2)	—	%	-	22.6	%
Other non-corporate CDOs and derivative transactions	65.0		Risk-based model	Average life (in years)	<1		-	20
				Own credit spread (2)	12.7	%	-	22.6	%
Level III VIE Liabilities:
NIMS VIE	7.5		Discounted cash flow	NIMS credit spread				43.0	%
				Own credit spread (2)	15.1	%	-	23.4	%

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(1) Excludes certain assets and liabilities for which we do not develop quantitative unobservable inputs. The fair value estimates for these assets and liabilities are developed using third-party pricing information, generally without adjustment.

(2) Represents the range of our CDS spread that a typical market participant might use in the valuation analysis based on the remaining term of the investment.

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

The following is a list of those assets and liabilities that are measured at fair value by hierarchy level as of June 30, 2012:

	Level I		Level II		Level III		Total
Assets and Liabilities at Fair Value
Investment Portfolio:
U.S. government and agency securities	$	235.2	$	717.5	$	—	$	952.7
State and municipal obligations	—		834.4		19.6		854.0
Money market instruments	468.9		—		—		468.9
Corporate bonds and notes	—		836.0		—		836.0
Residential mortgage-backed securities (“RMBS”)	—		968.7		—		968.7
CMBS	—		185.2		—		185.2
CDO	—		—		—		—
Other ABS	—		128.9		4.8		133.7
Foreign government securities	—		109.1		—		109.1
Hybrid securities	—		353.9		—		353.9
Equity securities (1)	94.5		156.0		2.0		252.5
Other investments (2)	—		2.4		76.5		78.9
Total Investments at Fair Value (3)	798.6		4,292.1		102.9		5,193.6
Derivative Assets	—		—		14.2		14.2
Other Assets (4)	—		—		100.7		100.7
Total Assets at Fair Value	$	798.6	$	4,292.1	$	217.8	$	5,308.5
Derivative Liabilities	$	—	$	—	$	220.0	$	220.0
VIE debt (5)	—		—		107.8		107.8
Total Liabilities at Fair Value	$	—	$	—	$	327.8	$	327.8

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(1) Comprising 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) Comprising TruPs ($0.7 million) and short-term CDs ($1.7 million) included within Level II, and lottery annuities ($1.1 million) and a guaranteed investment contract held by a consolidated VIE ($75.4 million) within Level III.

(3) Does not include fixed-maturities held to maturity ($2.5 million) and certain other invested assets ($59.1 million), primarily invested in limited partnerships, accounted for as cost-method investments and not measured at fair value.

(4) Primarily comprising manufactured housing loan collateral related to two consolidated financial guaranty VIEs.

(5) Comprising consolidated debt related to NIMS VIEs ($7.5 million) and amounts related to financial guaranty VIEs ($100.3 million).

The following is a list of those assets and liabilities that are measured at fair value by hierarchy level as of December 31, 2011:

(In millions)	Level I		Level II		Level III		Total
Assets and Liabilities at Fair Value
Investment Portfolio:
U.S. government and agency securities	$	386.9	$	723.6	$	—	$	1,110.5
State and municipal obligations	—		985.0		62.5		1,047.5
Money market instruments	723.2		—		—		723.2
Corporate bonds and notes	—		700.5		—		700.5
RMBS	—		884.7		45.5		930.2
CMBS	—		190.4		35.4		225.8
CDO	—		—		5.5		5.5
Other ABS	—		97.0		2.9		99.9
Foreign government securities	—		102.9		—		102.9
Hybrid securities	—		341.5		4.8		346.3
Equity securities (1)	116.0		152.4		0.8		269.2
Other investments (2)	—		151.6		6.8		158.4
Total Investments at Fair Value (3)	1,226.1		4,329.6		164.2		5,719.9
Derivative Assets	—		0.2		17.0		17.2
Other Assets (4)	—		—		104.0		104.0
Total Assets at Fair Value	$	1,226.1	$	4,329.8	$	285.2	$	5,841.1
Derivative Liabilities	$	—	$	—	$	126.0	$	126.0
VIE debt (5)	—		—		228.2		228.2
Total Liabilities at Fair Value	$	—	$	—	$	354.2	$	354.2

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(1) Comprising 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) Comprising short-term commercial paper within Committed Preferred Custodial Trust Securities (“CPS”) trusts ($150.0 million) and short-term CDs ($1.6 million) included within Level II, and lottery annuities ($1.6 million) and TruPs held by consolidated VIEs ($5.2 million) included within Level III.

(3) Does not include fixed-maturities held to maturity ($2.6 million) and other invested assets ($61.0 million), primarily invested in limited partnerships, accounted for as cost-method investments and not measured at fair value.

(4) Comprising manufactured housing loan collateral related to two consolidated financial guaranty VIEs.

(5) Comprising consolidated debt related to NIMS VIEs ($9.4 million) and amounts related to financial guaranty VIEs ($218.8 million).

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, 2012:

(In millions)	Beginning Balance at April 1, 2012		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, 2012
Investments:
State and municipal obligations	$	58.1	$	(10.7	)	$	—	$	—	$	—	$	—		$	(27.8	)	$	19.6
RMBS	51.2		(0.1		)	—		—		—		51.1			—			—
CMBS	24.0		—			—		—		—		24.0			—			—
CDO	6.4		—			—		—		—		6.4			—			—
Other ABS	3.7		—			5.2		—		—		4.1			—			4.8
Hybrid securities	0.2		—			0.1		—		—		—			(0.3		)	—
Equity securities	2.1		(0.1		)	—		—		—		—			—			2.0
Other investments	7.1		0.4			75.0		—		—		6.0			—			76.5
Total Level III Investments	152.8		(10.5		)	80.3		—		—		91.6			(28.1		)	102.9
NIMS derivative assets	1.7		—			—		—		—		—			—			1.7
Other assets	101.3		5.9			—		—		—		6.5			—			100.7
Total Level III Assets	$	255.8	$	(4.6	)	$	80.3	$	—	$	—	$	98.1		$	(28.1	)	$	205.3
Derivative liabilities, net	$	187.7	$	(33.1	)	$	—	$	—	$	—	$	13.3		$	—		$	207.5
VIE debt	255.2		(68.4		)	—		—		—		215.8		(3)	—			107.8
Total Level III Liabilities, net	$	442.9	$	(101.5	)	$	—	$	—	$	—	$	229.1		$	—		$	315.3

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(1) Includes unrealized gains (losses) for the quarter ended June 30, 2012, relating to assets and liabilities still held at June 30, 2012, as follows: $0.4 million for investments, $3.2 million for other assets, $(56.8) million for derivative liabilities, and $(3.8) 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. During the period pricing from a third-party pricing source became available for one bond, accounting for a majority of the transfer out of Level III and into Level II.

(3) Primarily represents the settlement of our CDO of ABS.

The following is a rollforward of Level III assets and liabilities measured at fair value for the six months ended June 30, 2012:

(In millions)	Beginning Balance at January 1, 2012		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, 2012
Investments:
State and municipal obligations	$	62.5	$	(4.0	)	$	—	$	—	$	—	$	11.1		$	(27.8	)	$	19.6
RMBS	45.5		6.1			—		—		—		51.6			—			—
CMBS	35.4		(11.4		)	—		—		—		24.0			—			—
CDO	5.5		0.8			—		—		—		6.3			—			—
Other ABS	2.9		0.8			5.2		—		—		4.1			—			4.8
Hybrid securities	4.8		0.1			0.1		4.9		—		—			(0.1		)	—
Equity securities	0.8		0.5			—		—		—		—			0.7			2.0
Other investments	6.8		1.2			75.0		0.5		—		6.0			—			76.5
Total Level III Investments	164.2		(5.9		)	80.3		5.4		—		103.1			(27.2		)	102.9
NIMS derivative assets	1.6		—			0.1		—		—		—			—			1.7
Other assets	104.0		9.3			—		—		—		12.6			—			100.7
Total Level III Assets	$	269.8	$	3.4		$	80.4	$	5.4	$	—	$	115.7		$	(27.2	)	$	205.3
Derivative liabilities, net	$	110.6	$	(105.9	)	$	—	$	—	$	—	$	9.0		$	—		$	207.5
VIE debt	228.2		(104.4		)	—		—		—		224.8		(3)	—			107.8
Total Level III Liabilities, net	$	338.8	$	(210.3	)	$	—	$	—	$	—	$	233.8		$	—		$	315.3

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(1) Includes unrealized gains (losses) for the six months ended June 30, 2012, relating to assets and liabilities still held at June 30, 2012, as follows: $1.0 million for investments, $3.8 million for other assets, $(140.2) million for derivative liabilities, and $(4.9) 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. During the period pricing from a third-party pricing source became available for one bond, accounting for a majority of the transfer out of Level III and into Level II.

(3) Primarily represents the settlement of our CDO of ABS.

The following is a rollforward of Level III assets and liabilities measured at fair value for the quarter ended June 30, 2011:

(In millions)	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	$	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

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(1) Includes unrealized gains (losses) for the quarter ended June 30, 2011, relating to assets and liabilities still held at 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.

The following is a rollforward of Level III assets and liabilities measured at fair value for the six months ended June 30, 2011:

(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	$	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

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(1) Includes unrealized gains (losses) for the six months ended June 30, 2011, relating to assets and liabilities still held at 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.

Fair Value, by Balance Sheet Grouping [Table Text Block]

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 as of the dates indicated:

	June 30, 2012				December 31, 2011
(In millions)	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Fixed-maturities held to maturity (1)	$	2.5	$	2.5	$	2.6	$	2.7
Other invested assets (1)	59.1		64.8		61.0		62.8
Liabilities:
Long-term debt (1)	666.8		523.2		818.6		471.3
Non-derivative financial guaranty liabilities (2)	280.4		314.0		342.3		425.7

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(1) These estimated fair values would be classified in Level II of the fair value hierarchy.

(2) These estimated fair values would be classified in Level III of the fair value hierarchy.