logo
Share SHARE
FONT-SIZE Plus   Neg

Radian Completes Quota Share Reinsurance Agreement

Insurance company Radian Group Inc. (RDN), said Tuesday that its mortgage insurance subsidiary, Radian Guaranty Inc., has entered a quota share reinsurance agreement, effective April 1, with an external reinsurance provider in order to proactively manage its mortgage insurance risk-to-capital position.

This represents the completion of the reinsurance agreement described in the fourth quarter 2011 earnings conference call by the company and is a continuation of its ongoing capital management activities designed to increase financial flexibility.

The company also released data for new insurance written and primary mortgage insurance delinquencies for March 2012.

Ibrahim. ceo of the company, "The external reinsurance agreement provides us with additional capital flexibility. We are off to a strong start in 2012 with $6.5 billion of high-quality, new business written in the first quarter, along with another decline in delinquent loans."

According to the quota share reinsurance agreement, Radian is ceding 20 percent of its new insurance written beginning with the fourth quarter of 2011. As of April 1, 2012, this represents $532 million of the company's risk in force. The total amount of risk that may be ceded through this arrangement is limited and is expected to be between $1.25 billion and $1.6 billion.

At a 25 to 1 risk-to-capital ratio, the equivalent capital benefit associated with ceding this amount of risk would be between $50 million and $62.5 million. Radian has the ability, at its option, to commute two-thirds of the reinsurance on December 31, 2014.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Quick Facts

Editors Pick
Alteryx, Inc., a provider of self-service data analytics software, is the latest tech company to go public in March. Alteryx said it has priced its IPO of 9 million shares of its Class A common stock at $14 per share, at the top end of its range of $12 to $14 per share. Dunkin' Donuts is bidding adieu to one of its frozen coffee beverages this summer. However, loyal fans of the decades-old menu staple have not taken kindly to the news. The coffee chain said it will discontinue its popular Coffee Coolatta beverage this summer and instead, introduce the new Frozen Dunkin' Coffee, made with coffee extract, sugar and milk. Canadian pipeline operator Enbridge Inc. said it will cut about 1,000 jobs, or six percent of its workforce, following the completion of its acquisition of Houston-based Spectra Energy Corp. The job cuts will take place across the merged company.
comments powered by Disqus
Follow RTT