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Fair Value of Financial Instruments
 12 Months Ended
Dec. 31, 2022
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments Fair Value of Financial Instruments
The following tables include a list of assets that are measured at fair value by hierarchy level as of December 31, 2022 and 2021.
Assets and liabilities carried at fair value by hierarchy level
December 31, 2022
(In thousands)Level ILevel IILevel IIITotal
Investments
Fixed-maturities available for sale
U.S. government and agency securities$140,011 $5,431 $— $145,442 
State and municipal obligations— 142,386 — 142,386 
Corporate bonds and notes— 2,490,582 — 2,490,582 
RMBS— 928,399 — 928,399 
CMBS— 593,357 — 593,357 
CLO— 498,192 — 498,192 
Other ABS— 161,359 — 161,359 
Foreign government and agency securities— 4,975 — 4,975 
Mortgage insurance-linked notes (1)
— 53,019 — 53,019 
Total fixed-maturities available for sale140,011 4,877,700 — 5,017,711 
Trading securities
State and municipal obligations— 70,511 — 70,511 
Corporate bonds and notes— 32,827 — 32,827 
RMBS— 6,847 — 6,847 
CMBS— 5,480 — 5,480 
Total trading securities— 115,665 — 115,665 
Equity securities138,716 7,749 2,500 148,965 
Mortgage loans held for sale— 3,549 — 3,549 
Other invested assets (2)
— — 4,296 4,296 
Short-term investments
State and municipal obligations— 2,785 — 2,785 
Money market instruments241,440 — — 241,440 
Corporate bonds and notes— 42,385 — 42,385 
Other investments (3)
— 115,480 — 115,480 
Total short-term investments241,440 160,650 — 402,090 
Total investments at fair value (2)
520,167 5,165,313 6,796 5,692,276 
Other
Derivative assets— 11 — 11 
Loaned securities (4)
Corporate bonds and notes— 47,585 — 47,585 
Equity securities64,554 — — 64,554 
Total assets at fair value (2)
$584,721 $5,212,909 $6,796 $5,804,426 
Assets and liabilities carried at fair value by hierarchy level
December 31, 2022
(In thousands)Level ILevel IILevel IIITotal
Liabilities
Derivative liabilities (5)
$— $42 $4,858 $4,900 
Total liabilities at fair value$— $42 $4,858 $4,900 
(1)Includes mortgage insurance-linked notes purchased by Radian Group in connection with the Excess-of-Loss Program. See Note 8 for more information.
(2)Does not include other invested assets of $1.2 million that are primarily invested in limited partnership investments valued using the net asset value as a practical expedient.
(3)Comprises short-term certificates of deposit and commercial paper.
(4)Securities loaned to third-party borrowers under securities lending agreements are classified as other assets in our consolidated balance sheets. See Note 6 for more information.
(5)Consists primarily of embedded derivatives related to our Excess-of-Loss Program, which are classified as other liabilities in our consolidated balance sheets. See Note 8 for more information.
Assets carried at fair value by hierarchy level
December 31, 2021
(In thousands)Level ILevel IILevel IIITotal
Investments
Fixed-maturities available for sale
U.S. government and agency securities$192,452 $29,278 $— $221,730 
State and municipal obligations— 177,257 — 177,257 
Corporate bonds and notes— 2,910,231 — 2,910,231 
RMBS— 705,117 — 705,117 
CMBS— 709,203 — 709,203 
CLO— 530,040 — 530,040 
Other ABS— 211,187 — 211,187 
Foreign government and agency securities— 5,296 — 5,296 
Mortgage insurance-linked notes (1)
— 47,017 — 47,017 
Total fixed-maturities available for sale192,452 5,324,626 — 5,517,078 
Trading securities
State and municipal obligations— 94,637 — 94,637 
Corporate bonds and notes— 119,186 — 119,186 
RMBS— 9,438 — 9,438 
CMBS— 33,285 — 33,285 
Total trading securities— 256,546 — 256,546 
Equity securities176,828 7,417 — 184,245 
Other invested assets (2)
— — 3,000 3,000 
Assets carried at fair value by hierarchy level
December 31, 2021
(In thousands)Level ILevel IILevel IIITotal
Short-term investments
U.S. government and agency securities94,665 — — 94,665 
State and municipal obligations— 12,270 — 12,270 
Money market instruments274,535 — — 274,535 
Corporate bonds and notes— 65,191 — 65,191 
CMBS— 3,023 — 3,023 
Other investments (3)
— 101,824 — 101,824 
Total short-term investments369,200 182,308 — 551,508 
Total investments at fair value (2)
738,480 5,770,897 3,000 6,512,377 
Other
Derivative assets (4)
— — 4,200 4,200 
Loaned securities (5)
Corporate bonds and notes— 65,994 — 65,994 
Equity securities38,002 — — 38,002 
Total assets at fair value (2)
$776,482 $5,836,891 $7,200 $6,620,573 
(1)Includes mortgage insurance-linked notes purchased by Radian Group in connection with the Excess-of-Loss Program. See Note 8 for more information.
(2)Does not include other invested assets of $1.2 million that are primarily invested in limited partnership investments valued using the net asset value as a practical expedient.
(3)Comprises short-term certificates of deposit and commercial paper.
(4)Consists primarily of embedded derivatives related to our Excess-of-Loss Program, which are classified as other assets in our consolidated balance sheets. See Note 8 for more information.
(5)Securities loaned to third-party borrowers under securities lending agreements are classified as other assets in our consolidated balance sheets. See Note 6 for more information.
There were no transfers to or from Level III for the years ended December 31, 2022 and 2021. Activity related to Level III assets and liabilities (including realized and unrealized gains and losses, purchases, sales, issuances, settlements and transfers) was immaterial for the years ended December 31, 2022 and 2021.
Valuation Methodologies for Assets Measured at Fair Value
We are responsible for the determination of the value of all investments carried at fair value and the supporting methodologies and assumptions. To assist us in this responsibility, we utilize independent third-party valuation service providers to gather, analyze and interpret market information and estimate fair values based upon relevant methodologies and assumptions for various asset classes and individual securities.
We perform monthly quantitative and qualitative analyses on the prices received from third parties to determine whether the prices are reasonable estimates of fair value. Our analysis includes: (i) a review of the methodology used by third-party pricing services; (ii) a comparison of pricing services’ valuations to other independent sources; (iii) a review of month-to-month price fluctuations; and (iv) a comparison of actual purchase and sale transactions with valuations received from third parties. These processes are designed to ensure that our investment values are accurately recorded, that the data inputs and valuation techniques utilized are appropriate and consistently applied and that the assumptions are reasonable and consistent with the objective of determining fair value.
The following are descriptions of our valuation methodologies for financial assets measured at fair value.
U.S. Government and Agency Securities. The fair value of U.S. government and agency securities is estimated using observed market transactions, including broker-dealer quotes and actual trade activity as a basis for valuation. U.S. government and agency securities are categorized in either Level I or Level II of the fair value hierarchy.
State and Municipal Obligations. The fair value of state and municipal obligations is estimated using recent transaction activity, including market observations. Valuation models are used, which incorporate bond structure, yield curve, credit spreads and other factors. These securities are generally categorized in Level II of the fair value hierarchy or in Level III when market-based transaction activity is unavailable.
Money Market Instruments. The fair value of money market instruments is based on daily prices, which are published and available to all potential investors and market participants. As such, these securities are categorized in Level I of the fair value hierarchy.
Corporate Bonds and Notes. The fair value of corporate bonds and notes is estimated using recent transaction activity, including market observations. Spread models are used that incorporate issuer and structure characteristics, such as credit risk and early redemption features, where applicable. These securities are generally categorized in Level II of the fair value hierarchy or in Level III when market-based transaction activity is unavailable.
Asset-backed and Mortgage-backed Securities. The fair value of these instruments, which include RMBS, CMBS, CLO, Other ABS and mortgage insurance-linked notes, is estimated based on prices of comparable securities and spreads and observable prepayment speeds. These securities are generally categorized in Level II of the fair value hierarchy or in Level III when market-based transaction activity is unavailable. The fair value of any Level III securities is generally estimated by discounting estimated future cash flows.
Foreign Government and Agency Securities. The fair value of foreign government and agency securities is estimated using observed market yields used to create a maturity curve and observed credit spreads from market makers and broker-dealers. These securities are categorized in Level II of the fair value hierarchy.
Equity Securities. The fair value of these securities is generally estimated using observable market data in active markets or bid prices from market makers and broker-dealers. Generally, these securities are categorized in Level I or II of the fair value hierarchy, as observable market data are readily available. Certain equity securities may be categorized in Level III of the fair value hierarchy due to a lack of market-based transaction data or the use of model-based valuations.
Mortgage Loans Held for Sale. The fair value of these mortgage loans is generally estimated using measurements derived from observable market data, adjusted for certain loan-level factors such as loan type, loan amount, note rate, LTV, and expected exit value of the loan. As such, these loans are generally categorized in Level II of the fair value hierarchy.
Other Investments. These securities primarily consist of commercial paper and short-term certificates of deposit, which are categorized in Level II of the fair value hierarchy. The fair value of these investments is estimated using market data for comparable instruments of similar maturity and average yield.
Other Invested Assets. These assets consist of interests in private debt or equity investments. The estimated fair value of these other invested assets is primarily based on the private company’s performance, as well as the terms of the instrument and general market benchmarks. As such, these investments are categorized in Level III of the fair value hierarchy.
Derivative Assets and Liabilities. These instruments primarily consist of embedded derivatives related to our Excess-of-Loss Program, which are categorized in Level III of the fair value hierarchy. The fair value of these derivatives reflects the present value impact of the variation in investment income on the assets held by the reinsurance trusts and the contractual reference rate used to calculate the reinsurance premiums we will pay. Beginning in 2022, our derivative assets and liabilities also include the fair value of certain forward commitments and hedging instruments related to our investments in mortgage loans held for sale. These derivative assets and liabilities are categorized in either Level II or III of the fair value hierarchy.
Other Fair Value Disclosure
The carrying value and estimated fair value of other selected liabilities not carried at fair value in our consolidated balance sheets were as follows as of the dates indicated.
Financial liabilities not carried at fair value
December 31, 2022December 31, 2021
(In thousands)Carrying
Amount		Estimated
Fair Value		Carrying
Amount		Estimated
Fair Value
Senior notes$1,413,504 $1,361,844 $1,409,473 $1,534,378 
Other borrowings
FHLB advances$153,686 $153,728 $150,983 $152,117 
Mortgage financing facilities2,136 2,136 — — 
Total other borrowings$155,822 $155,864 $150,983 $152,117 
The fair value of our senior notes is estimated based on quoted market prices. The fair value of our other borrowings is estimated based on contractual cash flows discounted at current borrowing rates for similar borrowing arrangements. These liabilities are categorized in Level II of the fair value hierarchy. See Note 12 for further information about these borrowings. The fair value of our remaining financial instruments included in other assets and other liabilities in our consolidated balance sheets approximates their carrying amounts as of December 31, 2022 and 2021.