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07/06/2016

Radian Enhances Liquidity Position and Accelerates Capital Plan

-- Enhances holding company liquidity by redeeming $325 million surplus note –

-- Board authorizes $125 million share repurchase program and early redemption of $196 million of Senior Notes –

PHILADELPHIA--(BUSINESS WIRE)--Jul. 6, 2016-- Radian Group Inc. announced today that on June 30, 2016, Radian Guaranty Inc., its mortgage insurance subsidiary, redeemed its $325 million surplus note due to Radian Group, which immediately resulted in a $325 million increase to Radian Group’s available liquidity. The redemption of the surplus note was approved by the Pennsylvania Insurance Department. Following the redemption, Radian Group maintained more than $700 million of available liquidity as of June 30, 2016.

“Our redemption of the entire $325 million surplus note at the earliest possible date further enhances our liquidity position and reflects Radian’s strong financial performance and positive future outlook,” said Radian’s Chief Executive Officer S.A. Ibrahim.

The company plans to utilize a portion of its liquidity in order to accelerate its capital plan, with the objective of better positioning Radian Group for a return to investment grade ratings in the future. As a result, Radian’s Board of Directors has authorized the following actions:

  • A share repurchase of up to $125 million of the company’s common stock
  • The early redemption of the remaining $196 million face value of its 9.00% Senior Notes due 2017

In addition, Radian’s capital strategy continues to include opportunistically removing the company’s outstanding Convertible Senior Notes from its capital structure and potentially the redemption, repurchase, or exchange of a portion of its other outstanding senior debt.

Ibrahim added, “The Board of Directors and management team continue to believe that Radian’s business fundamentals, growth prospects and long-term strategy are not reflected in the company’s current stock price. With our common stock trading at a significant discount to book value, we believe a share repurchase program represents an extremely attractive investment opportunity.

“Our strong balance sheet and liquidity position enable us to return value to stockholders through a share repurchase and further strengthen our capital position through debt redemption while simultaneously growing and strengthening our businesses.”

Background on Early Redemption of Surplus Note

On December 30, 2015, Radian Group transferred $325 million of cash and marketable securities to Radian Guaranty in exchange for a surplus note, which was scheduled to mature on December 31, 2025. Based on its compliance with PMIERs and positive trends reflected in its capital projections, Radian Guaranty was able to obtain regulatory approval to redeem the entire note on June 30, 2016, which represented the earliest possible redemption date. Radian remains in compliance with the PMIERs and, as of June 30, 2016, estimates that Radian Guaranty’s Available Assets exceed its Minimum Required Assets by approximately $150 - 200 million.

Share Repurchase Program

Radian’s Board of Directors has authorized a share repurchase program that enables the company to spend up to $125 million to repurchase its common stock. The shares may be purchased in the open market or in privately negotiated transactions.

The authorization provides Radian the flexibility to repurchase shares opportunistically from time to time, based on market and business conditions, stock price and other factors. The authorization expires on June 30, 2017. Radian may utilize a Rule 10b5-1 plan, which would permit the company to purchase shares, at pre-determined price targets, when it may otherwise be precluded from doing so.

Shares of Radian Group are currently trading below the company’s March 31, 2016 book value per share of $12.42. Based on the closing price on July 5, 2016, the $125 million share repurchase program represents approximately 12.7 million shares of Radian's common stock, or 5.9 percent of shares outstanding as of March 31, 2016.

Early Redemption of Senior Notes due 2017

Radian’s Board of Directors has also authorized the company to redeem $196 million principal amount of its 9.000% Senior Notes due 2017, which represents the balance outstanding. The Notes would be redeemed in accordance with the terms of the indenture governing the Notes, which provides for redemption at a price that includes a make-whole premium calculated pursuant to the indenture (assuming a redemption date of June 30, 2016, estimated to be approximately $14 million) plus any interest accrued and unpaid at the redemption date.

ABOUT RADIAN

Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia, provides private mortgage insurance, risk management products and real estate services to financial institutions. Radian offers products and services through two business segments:

  • Mortgage Insurance, through its principal mortgage insurance subsidiary Radian Guaranty Inc. This private mortgage insurance protects lenders from default-related losses, facilitates the sale of low-downpayment mortgages in the secondary market and enables homebuyers to purchase homes more quickly with downpayments less than 20%.
  • Mortgage and Real Estate Services, through its principal services subsidiary Clayton, as well as Green River Capital, Red Bell Real Estate and ValuAmerica. These solutions include information and services that financial institutions, investors and government entities use to evaluate, acquire, securitize, service and monitor loans and asset-backed securities.

Additional information may be found at www.radian.com.

FORWARD LOOKING STATEMENTS

All statements in this press release that address events, developments or results that we expect or anticipate may occur in the future are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Exchange Act and the U.S. Private Securities Litigation Reform Act of 1995. In most cases, forward-looking statements may be identified by words such as "anticipate," "may," "will," "could," "should," "would," "expect," "intend," "plan," "goal," "contemplate," "believe," "estimate," "predict," "project," "potential," "continue," "seek," "strategy," "future," "likely" or the negative or other variations on these words and other similar expressions. These statements, which may include, without limitation, projections regarding our future performance and financial condition, are made on the basis of management's current views and assumptions with respect to future events. Any forward-looking statement is not a guarantee of future performance and actual results could differ materially from those contained in the forward-looking statement. These statements speak only as of the date they were made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We operate in a changing environment. New risks emerge from time to time and it is not possible for us to predict all risks that may affect us. The forward- looking statements, as well as our prospects as a whole, are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. These risks and uncertainties include, without limitation:

  • changes in general economic, market and regulatory conditions;
  • factors that may affect the company’s ability and willingness to repurchase shares under the proposed repurchase program and the possibility that the program may be suspended or terminated;
  • factors that may affect the company’s ability and willingness to early redeem its Senior Notes due 2017 or to take actions with respect to our other remaining debt; and
  • our ability to successfully execute and implement our business plans and strategies.

For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to the Risk Factors detailed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2015, and subsequent reports and registration statements filed from time to time with the U.S. Securities and Exchange Commission. We caution you not to place undue reliance on these forward-looking statements, which are current only as of the date on which we issued this presentation. We do not intend to, and we disclaim any duty or obligation to, update or revise any forward-looking statements to reflect new information or future events or for any other reason.

Source: Radian Group Inc.

Radian Group Inc.
Emily Riley, 215-231-1035
emily.riley@radian.com