Radian Agrees to Commute $827 Million Financial Guaranty Reinsurance Portfolio to FGIC
Reduces total reinsurance portfolio by 13%
PHILADELPHIA--(BUSINESS WIRE)--Nov. 12, 2012--
Radian Group Inc. today announced that on November 09, 2012, its
financial guaranty insurance subsidiary, Radian Asset Assurance Inc.,
entered into an agreement (the “Agreement”) with Financial Guaranty
Insurance Company (“FGIC”) which, if consummated, would commute the
remaining $827 million of outstanding par reinsured by Radian Asset from
FGIC (the “Commutation”). This portfolio represents 13 percent of Radian
Asset’s total reinsurance exposure as of September 30, 2012, and
includes $196 million of Radian Asset’s $225 million in net par
outstanding as of September 30, 2012, related to Jefferson County,
Alabama sewer warrants.
“Entering into this agreement is another example of our efforts to
actively reduce our financial guaranty exposure, which is an important
component of our capital management strategy,” stated Chief Executive
Officer S.A. Ibrahim.
A rehabilitation proceeding for FGIC pursuant to Article 74 of the New
York Insurance Law is currently pending before the Supreme Court of the
State of New York (the “Court”), and the effectuation of the Commutation
is subject to approval by the Court of the Agreement and certain related
matters. Such approval is within the Court’s sole discretion, and no
assurance can be given that the Court will grant such approval or when
it will be granted. If the Court grants such approval, Radian Asset will
be required to make a commutation payment to FGIC in the approximate
amount of $52.4 million once that approval becomes final in accordance
with the Agreement, and the Commutation will become effective upon
FGIC’s receipt of such payment. The amount of this payment was
determined primarily based on existing loss reserves and unearned
premium reserves, and therefore is not expected to have a material
impact on Radian’s consolidated financial statements or Radian Asset’s
statutory capital position.
About Radian
Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia, provides
private mortgage insurance and related risk mitigation products and
services to mortgage lenders nationwide through its principal operating
subsidiary, Radian Guaranty Inc. These services help promote and
preserve homeownership opportunities for homebuyers, while protecting
lenders from default-related losses on residential first mortgages and
facilitating the sale of low-downpayment mortgages in the secondary
market.
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 Securities Exchange Act of
1934 and the United States (“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,” 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 information. The
forward-looking statements, as well as our prospects as a whole, are
subject to risks and uncertainties, including our ability to consummate
the Commutation which depends on, among other things, obtaining the
Court’s approval of the Agreement.
For more information regarding additional risks that we face, you should
refer to the Risk Factors detailed in Item 1A of Part I of our Annual
Report on Form 10-K for the year ended December 31, 2011 and in Item 1A
of Part II of our Quarterly Reports on Form 10-Q filed during 2012, and
in subsequent reports and registration statements filed from time to
time with the Securities and Exchange Commission.
Source: Radian Group Inc.
Radian Group Inc.
Emily Riley, 215-231-1035
emily.riley@radian.com
