Cautionary Note Regarding Forward-Looking ~~Statements—~~Statements
—Safe Harbor Provisions

All statements in this report 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.~~events, including management’s current views regarding the likely impacts of the COVID-19 pandemic. 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~~environment where new risks emerge from time to time and it is not possible for us to predict all risks that may affect ~~us.~~us, particularly those associated with the COVID-19 pandemic, which has had wide-ranging and continually evolving effects. 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:

■the COVID-19 pandemic, which has caused significant economic disruption, high unemployment, periods of volatility and disruption in financial markets, and required adjustments in the housing finance system and real estate markets. The COVID-19 pandemic has adversely impacted our businesses, and we expect that the COVID-19 pandemic could further impact our business and subject us to certain risks, including those discussed in “Item 1A. Risk Factors—The COVID-19 pandemic has adversely impacted us, and its ultimate impact on our business and financial results will depend on future developments, which are highly uncertain and cannot be predicted, including the scope, severity and duration of the pandemic and actions taken by governmental authorities in response to the pandemic” and the other risk factors in our 2020 Form 10-K;

■changes in ~~general~~ economic and political conditions ~~including in particular unemployment rates, interest rates and changes in housing and mortgage credit markets,~~ that impact the size of the insurable market, the credit performance of our insured portfolio, and ~~the~~our business ~~opportunities in our Services segment;~~prospects;

■changes in the way customers, investors, ratings agencies, regulators or legislators perceive our performance, financial strength and future prospects;

■Radian Guaranty’s ability to remain eligible under the PMIERs and other applicable requirements imposed by the FHFA and by the GSEs to insure loans purchased by the GSEs;

our ability to successfully execute and implement our capital plans and to maintain sufficient holding company liquidity to meet our short- and long-term liquidity needs, including temporary reductions in liquidity resulting from federal AMT payments that we are currently required to make and future federal income tax payments that we expect to make once our NOLs are fully utilized, which we anticipate occurring within the next 12 months;

our ability to successfully execute and implement our business plans and strategies, including plans and strategies to reposition our Services segment as well as plans and strategies that require GSE and/or regulatory approvals and licenses;

■our ability to maintain an adequate level of capital in our insurance subsidiaries to satisfy existing and future ~~state~~ regulatory ~~requirements;~~requirements, including the PMIERs and any changes thereto, such as the application of the COVID-19 Amendment, and potential changes to the Model Act currently under consideration;

■changes in the charters or business practices of, or rules or regulations imposed by or applicable to, the GSEs, ~~including~~which may include changes in response to the COVID-19 pandemic, changes in the requirements for Radian Guaranty to remain an approved insurer to the GSEs, changes in the GSEs’ interpretation and application of the PMIERs, ~~to our~~or changes impacting loans purchased by the GSEs;

■the Enterprise Regulatory Capital Framework that was finalized by the FHFA in December 2020 and that, among other things, increases the capital requirements for the GSEs and reduces the credit they receive for risk transfer, which could impact their operations and pricing as well as the size of the insurable mortgage insurance ~~business;~~market, and which may form the basis for future versions of the PMIERs;

■changes in the current housing finance system in the ~~U.S.,~~United States, including the ~~role~~roles of the FHA, the GSEs and private mortgage insurers in this system;

■our ability to successfully execute and implement our capital plans, including our risk distribution strategy through the capital markets and reinsurance markets, and to maintain sufficient holding company liquidity to meet our liquidity needs;

■our ability to successfully execute and implement our business plans and strategies, including plans and strategies that require GSE and/or regulatory approvals and licenses and that are subject to complex compliance requirements;

■uncertainty from the expected discontinuance of LIBOR and transition to one or more alternative benchmarks that could cause interest rate volatility and, among other things, impact our investment portfolio, cost of debt and cost of reinsurance through mortgage insurance-linked notes transactions;

■any disruption in the servicing of mortgages covered by our insurance policies, as well as poor servicer ~~performance;~~performance, which could be impacted by the burdens placed on many servicers due to the COVID-19 pandemic;

■a ~~significant~~ decrease in the Persistency Rates of our mortgage insurance ~~policies;~~on Monthly Premium Policies;

Table of Contents

Glossary

■competition in our mortgage insurance business, including price competition and competition from the FHA VA and the U.S. Department of Veterans Affairs as well as from other forms of credit ~~enhancement;~~enhancement, such as GSE-sponsored alternatives to traditional mortgage insurance;

■the effect of the Dodd-Frank ~~Wall Street Reform and Consumer Protection~~ Act on the financial services industry in general, and on our businesses in ~~particular;~~particular, including the recent changes to the QM loan requirements;

■legislative and regulatory activity (or inactivity), including the adoption of (or failure to adopt) new laws and regulations, or changes in existing laws and regulations, or the way they are interpreted or ~~applied;~~applied, including potential changes in tax law under the Biden Administration;

■legal and regulatory claims, assertions, actions, reviews, audits, inquiries and investigations that could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief that could require significant expenditures, new or increased reserves or have other effects on our business;

■the amount and timing of potential payments or adjustments associated with federal or other tax ~~examinations, including deficiencies assessed by the IRS resulting from its examination of our 2000 through 2007 tax years, which we are currently contesting;~~examinations;

■the possibility that we may fail to estimate accurately, especially in the event of an extended economic downturn or a period of extreme market volatility and economic uncertainty such as we have been experiencing due to the COVID-19 pandemic, the likelihood, magnitude and timing of losses in ~~connection with~~ establishing loss reserves for our mortgage insurance ~~business;~~business or to accurately calculate and/or project our Available Assets and Minimum Required Assets under the PMIERs, which will be impacted by, among other things, the size and mix of our IIF, the level of defaults in our portfolio, the reported status of defaults in our portfolio, including whether they are subject to forbearance, a repayment plan or a loan modification trial period granted in response to a financial hardship related to COVID-19, the level of cash flow generated by our insurance operations and our risk distribution strategies;

■volatility in our financial results ~~of operations~~ caused by changes in the fair value of our assets and liabilities, including ~~a significant portion of~~ our investment portfolio;

~~potential future impairment charges related to our goodwill and other intangible assets, and uncertainties regarding our ability to execute our restructuring plans within expected costs;~~

■changes in GAAP or ~~SAPP~~SAP rules and guidance, or their interpretation;

■effectiveness and security of our information technology systems and solutions, including our ability to successfully develop, launch and implement new and innovative technologies and digital solutions and the potential disruption in, or failure of, our information technology systems due to computer viruses, unauthorized access, cyber-attack, natural disasters or other similar events;

■our ability to attract and retain key employees; and

■legal and other limitations on ~~dividends and other~~ amounts we may receive from our ~~subsidiaries.~~subsidiaries, including dividends or ordinary course distributions under our internal tax- and expense-sharing arrangements.

For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to ~~the~~“Item 1A. Risk ~~Factors detailed~~Factors” in ~~Item 1A of~~this report and “Item 1A. Risk Factors” in our ~~2016~~2020 Form 10-K, and ~~in our~~to subsequent ~~quarterly~~reports and ~~other reports~~registration statements filed from time to time with the SEC. 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 report. 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.

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Glossary

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Index to Condensed Consolidated Financial Statements


			Page
Quarterly Financial Statements
Condensed Consolidated Balance Sheets			10
Condensed Consolidated Statements of Operations			11
Condensed Consolidated Statements of Comprehensive Income (Loss)			12
Condensed Consolidated Statements of Changes in Common Stockholders’ Equity			13
Condensed Consolidated Statements of Cash Flows			14

Notes to Unaudited Condensed Consolidated Financial Statements
Note 1 - Description of Business			15
Note 2 - Significant Accounting Policies			16
Note 3 - Net Income Per Share			17
Note 4 - Segment Reporting			18
Note 5 - Fair Value of Financial Instruments			20
Note 6 - Investments			23
Note 7 - Goodwill and Other Acquired Intangible Assets, Net			27
Note 8 - Reinsurance			28
Note 9 - Other Assets			32
Note 10 - Income Taxes			32
Note 11 - Losses and LAE			33
Note 12 - Borrowings and Financing Activities			34
Note 13 - Commitments and Contingencies			35
Note 14 - Capital Stock			36
Note 15 - Accumulated Other Comprehensive Income (Loss)			37
Note 16 - Statutory Information			38

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Glossary

Radian Group Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)

~~CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)~~


(In thousands, except per-share amounts)	March 31, 2021		December 31, 2020
Assets
Investments (Notes 5 and 6)
Fixed-maturities available for sale—at fair value, net of allowance for credit losses of $638 and $948 (amortized cost of $5,404,119 and $5,393,623)	$	5,553,711	$	5,723,340
Trading securities—at fair value (amortized cost of $243,628 and $260,773)	265,314		290,885
Equity securities—at fair value (cost of $131,311 and $145,501)	141,412		151,240
Short-term investments—at fair value (includes $44,388 and $15,587 of reinvested cash collateral held under securities lending agreements)	705,660		618,004
Other invested assets—at fair value	5,777		4,973
Total investments	6,671,874		6,788,442
Cash	102,776		87,915
Restricted cash	20,987		6,231
Accrued investment income	34,841		34,047
Accounts and notes receivable	134,075		121,294
Reinsurance recoverables (includes $16 and $32 for paid losses)	76,664		73,202
Deferred policy acquisition costs	15,652		18,305
Property and equipment, net	78,309		80,457
Goodwill and other acquired intangible assets, net (Note 7)	22,181		23,043
Other assets (Note 9)	763,502		715,085

Total assets	$	7,920,861	$	7,948,021

Liabilities and Stockholders’ Equity
Liabilities
Unearned premiums	$	406,689	$	448,791
Reserve for losses and LAE (Note 11)	887,355		848,413
Senior notes (Note 12)	1,406,603		1,405,674
FHLB advances (Note 12)	138,833		176,483
Reinsurance funds withheld	282,345		278,555
Net deferred tax liability (Note 10)	210,571		213,897
Other liabilities	353,173		291,855
Total liabilities	3,685,569		3,663,668
Commitments and contingencies (Note 13)
Stockholders’ equity
Common stock: par value $0.001 per share; 485,000 shares authorized at March 31, 2021 and December 31, 2020; 209,846 and 210,130 shares issued at March 31, 2021 and December 31, 2020, respectively; 191,311 and 191,606 shares outstanding at March 31, 2021 and December 31, 2020, respectively	210		210
Treasury stock, at cost: 18,535 and 18,524 shares at March 31, 2021 and December 31, 2020, respectively	(910,347)		(910,115)
Additional paid-in capital	2,242,950		2,245,897
Retained earnings	2,785,744		2,684,636
Accumulated other comprehensive income (loss) (Note 15)	116,735		263,725
Total stockholders’ equity	4,235,292		4,284,353
Total liabilities and stockholders’ equity	$	7,920,861	$	7,948,021

($ in thousands, except per-share amounts) September 30,
2017 December 31,
2016

Assets
Investments (Note 5)
Fixed-maturities available for sale—at fair value (amortized cost $3,218,614 and $2,856,468) $ 3,256,581
$ 2,838,512
Equity securities available for sale—at fair value (cost $161,159 and $1,330) 161,303
1,330
Trading securities—at fair value 636,225
879,862
Short-term investments—at fair value (includes $36,782 and $0 of reinvested cash collateral held under securities lending agreements) 491,956
741,531
Other invested assets 599
1,195
Total investments 4,546,664
4,462,430
Cash 61,917
52,149
Restricted cash 36,888
9,665
Accounts and notes receivable 97,020
77,631
Deferred income taxes, net (Note 9) 356,181
411,798
Goodwill and other intangible assets, net (Note 6) 66,967
276,228
Prepaid reinsurance premium 239,620
229,438
Other assets (Note 8) 439,016
343,835
Total assets $ 5,844,273
$ 5,863,174

Liabilities and Stockholders’ Equity
Unearned premiums $ 717,589
$ 681,222
Reserve for losses and loss adjustment expense (“LAE”) (Note 10) 556,488
760,269
Long-term debt (Note 11) 1,026,806
1,069,537
Reinsurance funds withheld 194,353
158,001
Other liabilities 360,835
321,859
Total liabilities 2,856,071
2,990,888
Commitments and contingencies (Note 12)

Stockholders’ equity
Common stock: par value $.001 per share; 485,000,000 shares authorized at September 30, 2017 and December 31, 2016; 232,894,636 and 232,091,921 shares issued at September 30, 2017 and December 31, 2016, respectively; 215,298,551 and 214,521,079 shares outstanding at September 30, 2017 and December 31, 2016, respectively 233
232
Treasury stock, at cost: 17,596,085 and 17,570,842 shares at September 30, 2017 and December 31, 2016, respectively (893,754 ) (893,332 )
Additional paid-in capital 2,747,393
2,779,891
Retained earnings 1,110,057
997,890
Accumulated other comprehensive income (loss) (“AOCI”) (Note 14) 24,273
(12,395 )
Total stockholders’ equity 2,988,202
2,872,286
Total liabilities and stockholders’ equity $ 5,844,273
$ 5,863,174

See Notes to Unaudited Condensed Consolidated Financial Statements.

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~



Table of Contents Glossary			Radian Group Inc. Notes to Unaudited Condensed Consolidated Financial Statements

1. ~~Condensed Consolidated Financial Statements—~~Description of Business ~~Overview and Significant Accounting Policies~~

~~Business Overview~~

We ~~provide~~are a diversified mortgage and real estate business, providing both credit-related mortgage insurance ~~on first-lien~~coverage and a broad array of other mortgage, ~~loans,~~risk, title, valuation, asset management and ~~products and services to the~~other real estate ~~and mortgage finance industries through our two~~services. We have 2 reportable business segments—Mortgage ~~Insurance~~ and ~~Services.~~Real Estate.

Mortgage ~~Insurance~~

Our Mortgage ~~Insurance~~ segment provides credit-related insurance coverage, principally through private mortgage insurance on residential first-lien mortgage loans, as well as other credit risk management and contract underwriting solutions, to mortgage lending institutions ~~nationwide.~~and mortgage credit investors. We provide our mortgage insurance products and services mainly through our wholly-owned subsidiary, Radian Guaranty. Private mortgage insurance plays an important role in the U.S. housing finance system because it promotes affordable home ownership and helps protect mortgage lenders and ~~third-party~~investors, as well as other beneficiaries, by mitigating default-related losses on residential mortgage loans. Generally, these loans are made to ~~home buyers~~homebuyers who make down payments of less than 20% of the ~~home’s~~ purchase price for their home or, in the case of refinancings, have less than 20% equity in ~~the~~their home. Private mortgage insurance also facilitates the sale of these low down payment loans in the secondary mortgage market, most of which are currently sold to the GSEs.

Our ~~Mortgage Insurance segment currently offers~~total direct primary mortgage ~~insurance coverage on residential first-lien mortgage loans, which comprised 98.2% of our $51.2~~IIF and RIF were $238.9 billion ~~total direct RIF~~and $58.5 billion, respectively, as of ~~September 30, 2017. At September 30, 2017, Pool Insurance represented 1.6%~~March 31, 2021, compared to $246.1 billion and $60.7 billion, respectively, as of ~~our total direct RIF. We provide our~~December 31, 2020. In addition to providing private mortgage insurance, ~~products mainly through~~we participate in credit risk transfer programs developed by the GSEs as part of their initiative to distribute mortgage credit risk and increase the role of private capital in the mortgage market. Our additional RIF under credit risk transfer transactions, resulting from our ~~wholly-owned subsidiary, Radian Guaranty.~~participation in these programs with the GSEs, totaled $428.8 million as of March 31, 2021 compared to $392.0 million as of December 31, 2020.

The GSEs and state insurance regulators impose various capital and financial requirements on our mortgage insurance subsidiaries. These include Risk-to-capital, other risk-based capital measures and surplus requirements, as well as the PMIERs financial requirements. Failure to comply with these capital and financial requirements ~~could~~may limit the amount of insurance that our mortgage insurance subsidiaries write or may ~~write.~~prohibit them from writing insurance altogether. The GSEs and state insurance regulators ~~also~~ possess significant discretion with respect to our mortgage insurance subsidiaries and all aspects of their business. See Note 1516 for additional information on PMIERs and other regulatory ~~information.~~

~~Private mortgage insurers, including Radian Guaranty, are required to comply with~~information, and “—Recent Developments” below for a discussion of the ~~PMIERs to remain eligible insurers of loans purchased~~elevated risks posed by the ~~GSEs. At September 30, 2017, Radian Guaranty~~COVID-19 pandemic, which has led to an increase in mortgage defaults in our insured portfolio and a resulting increase in our Minimum Required Assets.

Real Estate

Our Real Estate segment is ~~an approved mortgage insurer under~~primarily a fee-for-service business that offers a broad array of services to market participants across the ~~PMIERs and is in compliance with the PMIERs financial requirements.~~

~~The PMIERs are comprehensive, covering virtually all aspects of a private mortgage insurer’s business and operations, including internal risk~~real estate value chain. Our real estate services include title, valuation, asset management and ~~quality controls, the relationship between the~~other real estate services offered primarily to mortgage lenders, mortgage and real estate investors, GSEs, real estate brokers and ~~the approved insurer~~agents. These services help lenders, investors, consumers and real estate agents evaluate, manage, monitor, acquire and sell properties. These services include software as a service solutions and platforms, as well as ~~the approved insurer’s financial condition. The~~managed services, such as real estate owned asset management, single family rental services and real estate valuation services. In addition, we provide title insurance and non-insurance title, closing and settlement services to mortgage lenders, GSEs ~~have a broad range of consent rights~~and mortgage investors, as well as directly to approve various actions of the approved insurer. If Radian Guaranty is unable to satisfy the requirements set forth in the PMIERs, the GSEs could restrict it from conducting certain types of business with them or take actions that may include not purchasing loans insured by Radian Guaranty. consumers for residential mortgage loans.

See Note ~~1 of Notes to Consolidated Financial Statements in our 2016 Form 10-K~~4 for additional information about our reportable segments and All Other business activities.

Recent Developments

As a seller of mortgage credit protection, our results are subject to macroeconomic conditions and specific events that impact the ~~PMIERs.~~

~~The PMIERs specifically provide~~housing finance and real estate markets, including events that impact mortgage originations and the credit performance of our RIF. Many of these conditions are beyond our control, including housing prices, unemployment, interest rate changes, the availability of credit and other factors that ~~are applied to determine a mortgage insurer’s Minimum Required Assets~~ may be ~~updated every two years. The GSEs~~derived from national and regional economic conditions. In general, a deterioration in economic conditions increases the likelihood that borrowers will be unable to satisfy their mortgage obligations. A deteriorating economy can adversely affect housing values, which in turn can influence the willingness of borrowers to continue to make mortgage payments regardless of whether they have ~~informed us that they expect updates~~the financial resources to do so. Mortgage defaults can also occur due to a variety of specific events affecting borrowers, including death or illness, divorce or other family problems, unemployment, or other events. In addition, factors impacting regional economic conditions, acts of terrorism, war or other severe conflicts, event-specific economic depressions or other catastrophic events such as natural disasters and pandemics could result in increased defaults due to the ~~PMIERs will become effective~~impact of such events on the ability of borrowers to satisfy their mortgage obligations and on the value of affected homes.

Beginning in March 2020, the ~~fourth quarter of 2018. Based on this timing, we would expect to receive a draft of the recommended changes later this year~~unprecedented and ~~then to engage in an iterative review process~~continually evolving social and economic impacts associated with the ~~GSEs~~COVID-19 pandemic on the U.S. and ~~FHFA before~~global economies generally, and in particular on the updated PMIERs are finalized. The GSEs will provide approved insurers with an implementation period of at least 180 days after the updated requirements are finalized and prior to their effective date. While we have not received a draft of the changes to the PMIERs to date, it is reasonably possible that updates to the PMIERs could, among other things, result in a material increase to Radian Guaranty’s capital requirements under the PMIERs financial requirements.

~~Services~~

~~Our Services segment provides services and solutions to participants in multiple facets of the residential~~U.S. housing, real estate and ~~mortgage~~housing finance ~~markets. Our Services~~markets, had a negative effect on our business ~~is a fee-for-service business that provides outsourced services to buyers~~ and ~~sellers of, and investors in, mortgage- and real estate-related loans and securities as well as other consumer ABS.~~

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

~~2017 Developments~~

~~Capital and Liquidity Actions.~~ ~~During the third quarter of 2017, we completed the following transactions:~~

~~the issuance of $450 million aggregate principal amount of Senior Notes due 2024; and~~

~~tender offers resulting in the purchases of aggregate principal amounts of $141.4 million, $115.9 million and $152.3 million of~~ our ~~Senior Notes due 2019, 2020 and 2021, respectively.~~

The purchases of Senior Notes due 2019, 2020 and 2021 resulted in a pretax charge of $45.8 million during the third quarter of 2017, recorded as a loss on induced conversion and debt extinguishment. See Note 11financial results for ~~additional information.~~

On August 9, 2017, Radian Group’s board of directors renewed its share repurchase program that enables the Company to repurchase its common stock. The current authorization allows the Company to spend up to $50 million to repurchase Radian Group common stock in the open market or in privately negotiated transactions, based on market and business conditions, stock price and other factors. See Note 13 for additional information.

~~During~~ the second quarter of ~~2017, we purchased an aggregate principal amount of $21.6 million~~2020, and to


Table of Contents Glossary			Radian Group Inc. Notes to Unaudited Condensed Consolidated Financial Statements

a lesser extent, since then, and are expected to adversely impact certain aspects of our ~~outstanding Convertible Senior Notes due 2017. These purchases~~business and results of ~~Convertible Senior Notes due 2017 resulted~~operations in future periods. Specifically, and primarily as a ~~loss on induced conversion and debt extinguishment~~result of ~~$1.2 million.~~

~~On January 27, 2017, we settled our obligations with respect to~~an increase in the ~~remaining $68.0 million aggregate principal amount~~number of ~~our Convertible Senior Notes due 2019, resulting in a loss on induced conversion and debt extinguishment of $4.5 million. As~~new defaults since the start of the ~~settlement date, this transaction resulted~~pandemic, our financial results have included: (i) an increase in provision for losses and (ii) an ~~aggregate decrease~~increase in our Minimum Required Assets under the PMIERs. While the number of ~~6.4 million diluted shares for purposes~~new defaults increased significantly during the second quarter of ~~determining diluted net income per share.~~2020, they have subsequently trended down, but remain elevated compared to levels before the pandemic. See Note 11 for additional information on our ~~transactions related to~~reserve for losses.

The long-term ~~debt.~~

~~Restructuring and Other Exit Costs.~~ ~~Based~~impact of the COVID-19 pandemic on our ~~strategic assessment~~businesses will depend on, among other things: the extent and duration of the ~~Services~~pandemic, the severity of illness and number of people infected with the virus and the acceptance and long-term effectiveness of anti-viral treatments and vaccines, especially as new strains of COVID-19 have been discovered; the wider economic effects of the pandemic and the scope and duration of governmental and other third-party measures restricting day-to-day life and business ~~on September 5, 2017,~~operations; the ~~Company committed~~impact of economic stimulus efforts to support the economy through the pandemic; and governmental and GSE programs implemented to assist borrowers experiencing a ~~plan to restructure~~COVID-19-related hardship, including forbearance programs and suspensions of foreclosures and evictions. Although we are uncertain of the ~~Services~~potential magnitude or duration of the business and ~~incurred pretax restructuring charges~~economic impacts of ~~$12.0 million in~~ the third quarter of 2017, including $5.4 million in cash payments. Additional pretax charges of approximately $7.5 million, including approximately $6.0 million in cash payments, are expected to be recognized within the next 12 months. The total restructuring charges of approximately $19.5 million are expected to consist of: (i) asset impairment charges of approximately $8.1 million; (ii) employee severance and benefit costs of approximately $6.9 million; (iii) facility and lease termination costs of approximately $2.7 million; and (iv) contract terminationCOVID-19 pandemic, these and other ~~restructuring costs of approximately $1.8 million. See Note 6 for additional information,~~factors, including ~~the events that led to the restructuring decision.~~

~~Impairment of Goodwill and Other Intangible Assets.~~ During the second quarter of 2017, we recorded a goodwill impairment charge of $184.4 million, as well as an impairment charge for other intangible assets of $15.8 million, in each case related to our Services segment. These charges were primarily due to changes in expectations regarding the future growth of certain Services product lines resulting from changesthose discussed in our 2020 Form 10-K, could continue to have a material negative effect on the Company’s business, ~~strategy, combined with market trends observed during the second quarter~~liquidity, results of ~~2017 that we expect to persist. As of September 30, 2017 the remaining balances of goodwill~~operations and ~~other intangible assets reported in our condensed consolidated balance sheet were $10.9 million and $56.0 million, respectively. See Note 6 for additional information.~~financial condition.

~~Developments Subsequent to September 30, 2017.~~ ~~For information on transactions that occurred subsequent to September 30, 2017, see Note 16.~~

2. Significant Accounting Policies

Basis of Presentation

Our condensed consolidated financial statements are prepared in accordance with GAAP and include the accounts of Radian Group Inc. and its subsidiaries. All intercompany accounts and transactions, and intercompany profits and losses, have been eliminated. We have condensed or omitted certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP pursuant to the instructions set forth in Article 10 of Regulation S-X of the SEC.

We refer to Radian Group Inc. together with its consolidated subsidiaries as “Radian,” the “Company,” “we,” “us” or “our,” unless the context requires otherwise. We generally refer to Radian Group Inc. alone, without its consolidated subsidiaries, as “Radian Group.” Unless otherwise defined in this report, certain terms and acronyms used throughout this report are defined in the Glossary of Abbreviations and Acronyms included as part of this report.

Our condensed consolidated financial statements are prepared in accordance with GAAP and include the accounts of all wholly-owned subsidiaries. All intercompany accounts and transactions, and intercompany profits and losses, have been eliminated. We have condensed or omitted certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP pursuant to the instructions set forth in Article 10 of Regulation S-X of the SEC.

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

The financial information presented for interim periods is unaudited; however, such information reflects all adjustments that are, in the opinion of management, necessary for the fair statement of the financial position, results of operations, comprehensive income (loss) and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The year-end condensed balance sheet data was derived from our audited financial statements, but does not include all disclosures required by GAAP. ~~These~~

To fully understand the basis of presentation, these interim financial statements and related notes contained herein should be read in conjunction with the audited financial statements and notes thereto included in our ~~2016~~2020 Form 10-K. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or for any other period. See Note 1 for discussion of the elevated risks to our future business, liquidity, results of operations and financial condition due to the COVID-19 pandemic.

Certain prior period amounts have been reclassified to conform to current period ~~presentation.~~presentation, including: (i) certain balance sheet line items now reported in other assets and (ii) certain segment reporting balances due to changes in the composition of our segments during 2020.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of our contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. While the amounts included in our condensed consolidated financial statements include our best estimates and assumptions, actual results may vary materially.

Other Significant Accounting Policies

See Note 2 of Notes to Consolidated Financial Statements in our ~~2016~~2020 Form 10-K for information regarding other significant accounting policies. There have been no significant changes in our significant accounting policies from those discussed in our ~~2016~~2020 Form 10-K, other than described ~~below.~~

~~Securities Lending Agreements.~~ ~~Securities lending agreements,~~below in which we loan certain securities in our investment portfolio to third parties for short periods of time, are treated as collateralized financing arrangements on our condensed consolidated balance sheets. In all of our securities lending agreements, the securities that we transfer to Borrowers (loaned securities) may be transferred or loaned by the Borrowers; however, we maintain effective control over all loaned securities, including: (i) retaining ownership of the securities; (ii) receiving the related investment or other income; and (iii) having the right to request the return of the loaned securities at any time. We report such securities within other assets in our condensed consolidated balance sheets. We receive cash or other securities as collateral for such loaned securities. Any cash collateral may be invested in liquid assets. Cash collateral, which is reinvested for our benefit by the intermediary in accordance with the investment guidelines contained in the securities lending and collateral agreements, is reflected in short-term investments, with an offsetting liability recognized in other liabilities for the obligation to return the cash collateral to the Borrower. Securities collateral we receive from Borrowers is held on deposit for the Borrower’s benefit and we may not transfer or loan such securities collateral unless the Borrower is in default. Therefore, such securities collateral is not reflected in our condensed consolidated financial statements given that the risks and rewards of ownership are not transferred to us from the Borrowers. See Note 5 for additional information.

Fees received and paid in connection with securities lending agreements are recorded in net investment income and interest expense, respectively, on the condensed consolidated statements of operations.

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

~~Restructuring and Other Exit Cos~~ts. Restructuring and other exit costs include items such as asset impairment charges, employee severance and benefit costs, facility and lease termination costs, contract terminations and other costs of restructuring or exiting activities. The timing of the future expense and associated cash payments for restructuring and other exit costs is dependent on the type of exit cost and is expected to be completed within the next 12 months. We review assets for impairment in accordance with the accounting guidance for long-lived assets. Generally, our employee severance and benefit costs are part of the Company’s ongoing benefit arrangement and are recognized when probable and estimable. A liability for facility and lease contract termination costs is recognized at the date we cease the use of rights conveyed by the contract and is measured at its fair value, which is determined based on the remaining contractual lease rentals reduced by estimated sublease rentals. Other contract termination and exit costs include future costs that will be incurred, which are recognized in total when they no longer will benefit the Company. The liabilities for restructuring and other exit costs are recorded in other liabilities.

~~Goodwill and Other Intangible Assets, Net.~~ In performing the quantitative analysis for our goodwill impairment test as of June 30, 2017, we elected to early adopt the update to the accounting standard regarding goodwill and other intangibles, as discussed in “—Recent Accounting Pronouncements—Accounting Standards Adopted During ~~2017~~2021.” below. This update simplifies the subsequent measurement of goodwill by eliminating step two of the goodwill impairment test. Under the new guidance, if indicators for impairment are present, we perform a quantitative analysis to evaluate our long-lived assets for potential impairment, and then determine the amount of the goodwill impairment by comparing a reporting unit’s fair value to its carrying amount. After adjusting the carrying value for any impairment of other intangibles or long-lived assets, an impairment charge is recognized for any excess of the reporting unit’s carrying amount over the reporting unit’s estimated fair value, up to the full amount of the goodwill allocated to the reporting unit.

Other than the change to adopt the update to the accounting standard that eliminates step two of the goodwill impairment test, as described above, our accounting policy with regard to goodwill and other intangible assets has remained unchanged from that described in Notes 2 and 7 of Notes to Consolidated Financial Statements in our 2016 Form 10-K.


Table of Contents Glossary			Radian Group Inc. Notes to Unaudited Condensed Consolidated Financial Statements

Recent Accounting Pronouncements

Accounting Standards Adopted During ~~2017.~~2021

In ~~March 2016,~~December 2019, the FASB issued anASU 2019-12, Income Taxes—Simplifying the Accounting for Income Taxes. This update tosimplifies the ~~accounting standards for share-based payment transactions, including: (i)~~ accounting for income ~~taxes;~~taxes by removing certain exceptions to the general principles of ASC Topic 740 in GAAP and clarifies certain aspects to promote consistency among reporting entities. We adopted this update effective January 1, 2021. The adoption of this update did not have an impact on our financial statements and disclosures.

In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs. This update clarifies that, for each reporting period, to the extent the amortized cost basis of an individual callable debt security exceeds the amount repayable by the issuer at the next call date, the excess (i.e., the premium) should be amortized to the next call date. We adopted ASU 2020-08 on January 1, 2021 on a prospective basis. The adoption of this update did not have a material impact on our financial statements and disclosures.

Accounting Standards Not Yet Adopted

In August 2018, the FASB issued ASU 2018-12, Financial Services—Insurance. The new standard: (i) requires that assumptions used to measure the liability for future policy benefits be reviewed at least annually; (ii) ~~classification~~defines and simplifies the measurement of ~~excess tax benefits on~~market risk benefits; (iii) simplifies the ~~statement~~amortization of ~~cash flows; (iii) forfeitures;~~deferred acquisition costs; and (iv) ~~minimum statutory tax withholding requirements; (v) classification of employee taxes paid on~~enhances the statement of cash flows when an employer withholds shares for tax withholding purposes; (vi) the practical expedient for estimating the expected term; and (vii) intrinsic value. Among other things, the update requires: (i) all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement as they occur; (ii) recognition of excess tax benefits, regardless of whether the benefits reduce taxes payable in the current period; and (iii) excess tax benefits to be classified along with other cash flows as an operating activity, rather than separated from other income tax cash flows as a financing activity.required disclosures about long-duration contracts. This update is effective ~~for public companies~~ for fiscal years beginning after December 15, 2016. Our adoption of this update, effective January 1, 2017, had an immaterial impact on our financial statements at implementation. As a result of implementing this new standard, however, we expect the potential for limited increased volatility in our effective tax rate and net earnings, and possible additional dilution in earnings per share calculations.

In January 2017, the FASB issued an update to the accounting standard regarding goodwill and other intangibles. This update simplifies the subsequent measurement of goodwill by eliminating step two of the goodwill impairment test. Instead, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for any excess of the reporting unit’s carrying amount over the reporting unit’s estimated fair value, after adjusting the carrying value for any impairment of other intangibles or long-lived assets. The provisions of this update are effective for interim and annual goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed after January 1, 2017. We elected to early adopt this update to perform the quantitative analysis for our goodwill impairment test as of June 30, 2017. See “—~~Other Significant Accounting Policies” above and Note 6 for additional information.~~

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

~~Accounting Standards Not Yet Adopted.~~ In May 2014, the FASB issued an update to the accounting standard regarding revenue recognition. In accordance with the new standard, recognition of revenue occurs when a customer obtains control of promised goods or services, in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This update is not expected to change revenue recognition principles related to our investments and insurance products, which combined represent a significant portion of our total revenues. This update is primarily applicable to revenues from our Services segment. In July 2015, the FASB delayed the effective date for this updated standard for public companies to interim and annual periods beginning after December 15, 2017, and subsequently issued various clarifying updates. Early adoption is permitted. This standard permits the use of either the full retrospective or the modified retrospective transition method. We currently anticipate using the modified retrospective method of adoption, with the cumulative effect of initially applying the guidance recognized at the date of adoption. We have reviewed current accounting policies and key contracts that are representative of our various products and services within the Services segment and are in the process of comparing our historical accounting policies and practices to the requirements of the new guidance. We are identifying potential differences resulting from applying the new requirements to our contracts and updating our accounting policy. While we anticipate differences in timing of revenue recognition, we do not expect the impact to be material to our financial statements. We are also in the process of evaluating new disclosure requirements and identifying appropriate changes to our business processes, systems and controls to support recognition and disclosure under the new guidance.

In January 2016, the FASB issued an update that makes certain changes to the standard for the accounting of financial instruments. Among other things, the update requires: (i) equity investments to be measured at fair value with changes in fair value recognized in net income (loss); (ii) the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (iii) separate presentation of financial assets and financial liabilities by measurement category and form of financial asset; and (iv) separate presentation in other comprehensive income of the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The update also eliminates the requirement to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. This update is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is not permitted, with the exception of the “own credit” provision. We are currently evaluating the impact to our financial statements and future disclosures as a result of this update.

In February 2016, the FASB issued an update that replaces the existing accounting and disclosure requirements for leases of property, plant and equipment. The update requires lessees to recognize, as of the lease commencement date, assets and liabilities for all leases with lease terms of more than 12 months, which is a change from the current GAAP requirement to recognize only capital leases on the balance sheet. Pursuant to the new standard, the liability initially recognized for the lease obligation is equal to the present value of the lease payments not yet made, discounted over the lease term at the implicit interest rate of the lease, if available, or otherwise at the lessee’s incremental borrowing rate. The lessee is also required to recognize an asset for its right to use the underlying asset for the lease term, based on the liability subject to certain adjustments, such as for initial direct costs. Leases are required to be classified as either operating or finance, with expense on operating leases recorded as a single lease cost on a straight-line basis. For finance leases, interest expense on the lease liability is required to be recognized separately from the straight-line amortization of the right-of-use asset. Quantitative disclosures are required for certain items, including the cost of leases, the weighted-average remaining lease term, the weighted-average discount rate and a maturity analysis of lease liabilities. Additional qualitative disclosures are also required regarding the nature of the leases, such as basis, terms and conditions of: (i) variable interest payments; (ii) extension and termination options; and (iii) residual value guarantees. This update is effective for public companies for fiscal years beginning after December 15, 2018,2022, including interim periods within those fiscal years. Early adoption is permitted. The new standard must be adopted by applying the new guidance as of the beginning of the earliest comparative period presented, using a modified retrospective transition approach with certain optional practical expedients. We are currently evaluating the impact ~~to our financial statements and future disclosures as a result of this update.~~

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

~~In June 2016, the FASB issued an update to the accounting standard regarding the measurement of credit losses~~ on financial instruments. This update requires that financial assets measured at their amortized cost basis be presented at the net amount expected to be collected. Credit losses relating to available-for-sale debt securities are to be recorded through an allowance for credit losses, rather than a write-down of the asset, with the amount of the allowance limited to the amount by which fair value is less than amortized cost. This update is effective for public companies for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact to our financial statements and future disclosures as a result of this update.

In October 2016, the FASB issued an update to the accounting standard regarding the accounting for income taxes. This update requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This update will be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. This update is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in the first interim period of the adoption year. We have concluded there is currently no impact to our financial statements and future disclosures as a result of this update.

In March ~~2017,~~2020, the FASB issued anASU 2020-04, Reference Rate Reform—Facilitation of the Effects of Reference Reform on Financial Reporting. This update provides optional expedients and exceptions for applying GAAP to ~~the accounting standard regarding receivables.~~contracts, hedging relationships, and other transactions affected by reference rate reform. The new standard requires certain premiums on purchased callable debt securities to be amortized to the earliest call date. The amortization period for callable debt securities purchased at a discount will not be impacted. The provisions ofamendments in this update are ~~effective for fiscal years beginning after~~optional and may be elected from the date of issuance through December ~~15, 2018, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period.~~31, 2022, as reference rate reform activities occur. We are currently evaluating the impact of the guidance and our options related to ~~our financial statements and future disclosures as a result of this update.~~the practical expedients.

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

2.3. Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding, while diluted net income per share is computed by dividing net income attributable to common ~~shareholders~~stockholders by the sum of the weighted-average number of common shares outstanding and the weighted-average number of dilutive potential common shares. Dilutive potential common shares relate to our share-based compensation ~~arrangements and our outstanding convertible senior notes.~~arrangements.

The calculation of basic and diluted net income per share ~~was~~is as ~~follows:~~follows.


	Three Months Ended March 31,
(In thousands, except per-share amounts)	2021		2020
Net income—basic and diluted	$	125,608	$	140,461

Average common shares outstanding—basic	193,439		200,161
Dilutive effect of share-based compensation arrangements (1)	1,764		1,658
Adjusted average common shares outstanding—diluted	195,203		201,819

Net income per share:

Basic	$	0.65	$	0.70
Diluted	$	0.64	$	0.70

(1)The following number of shares of our common stock equivalents issued under our share-based compensation arrangements are not included in the calculation of diluted net income per share because they are anti-dilutive.


	Three Months Ended March 31,
(In thousands)	2021	2020
Shares of common stock equivalents	0	132

Three Months Ended
September 30, Nine Months Ended
September 30,
(In thousands, except per-share amounts) 2017 2016 2017 2016
Net income—basic $ 65,142
$ 82,803
$ 114,272
$ 247,164
Adjustment for dilutive Convertible Senior Notes due 2019, net of tax (1)
—
848
(215 ) 5,151
Net income—diluted $ 65,142
$ 83,651
$ 114,057
$ 252,315

Average common shares outstanding—basic 215,279
214,387
215,194
210,858
Dilutive effect of Convertible Senior Notes due 2017 (2)
16
178
398
71
Dilutive effect of Convertible Senior Notes due 2019 —
8,274
611
16,897
Dilutive effect of share-based compensation arrangements (2)
4,096
3,129
4,027
2,846
Adjusted average common shares outstanding—diluted 219,391

225,968
220,230
230,672

Net income per share:

Basic $ 0.30
$ 0.39
$ 0.53
$ 1.17

Diluted $ 0.30
$ 0.37
$ 0.52
$ 1.09

~~______________________~~


~~(1)~~ Table of Contents Glossary			As applicable, includes coupon interest, amortization of discount and fees, and other changes in income that would result from the assumed conversion. Included in the nine months ended September 30, 2017 is a benefit relatedRadian Group Inc. Notes to ~~our adjustment of estimated accrued expense to actual amounts, resulting from the January 2017 settlement of our obligations on the remaining Convertible Senior Notes due 2019.~~


~~(2)~~	The following number of shares of our common stock equivalents issued under our share-based compensation arrangements and our convertible debt were not included in the calculation of diluted net income per share because they were anti-dilutive:

Three Months Ended
September 30, Nine Months Ended
September 30,
(In thousands) 2017 2016 2017 2016
Shares of common stock equivalents 676
1,045
440
1,045
Shares of Convertible Senior Notes due 2017 —
—
—
1,902

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

Unaudited Condensed Consolidated Financial Statements

3.4. Segment Reporting

We have ~~two~~2 strategic business units that we manage separately—Mortgage ~~Insurance~~ and ~~Services. Adjusted pretax~~Real Estate. Our Mortgage segment derives its revenue from mortgage insurance and other mortgage and risk services, including contract underwriting services provided to lenders. Our Real Estate segment offers a broad array of title, valuation, asset management and other real estate services to market participants across the real estate value chain. In addition, we report as All Other activities that include: (i) income (losses) from assets held by our holding company; (ii) related general corporate operating ~~income (loss) for each segment represents segment results on a standalone basis; therefore, inter-segment eliminations and reclassifications required for consolidated GAAP presentation have~~expenses not ~~been reflected.~~

~~In the fourth quarter of 2016, we completed an organizational change that resulted in a change~~attributable or allocated to our ~~segment financial reporting structure. Previously, contract underwriting activities on behalf of third parties were reported~~reportable segments; (iii) for all periods through its sale in either the Mortgage Insurance segment or the Services segment, based on the customer relationship. Management responsibility for this contract underwriting business was moved entirely to the Services segment. This organizational change resulted in the reclassification to the Services segment of revenueJanuary 2020, income and expenses related to Clayton; (iv) for all ~~contract underwriting performed on behalf of third parties. This change aligns with changes in personnel reporting lines~~periods presented, the income and ~~management oversight, and is consistent with the way the chief operating decision maker began assessing the performance of the reportable segments~~expenses related to our traditional appraisal services, which we wound down beginning in the fourth quarter of ~~2016. The amounts reclassified did not~~2020; and (v) certain other immaterial revenue and expense items.

As described in Note 4 of Notes to Consolidated Financial Statements in our 2020 Form 10-K, we implemented several changes to our segment reporting in 2020, including related to the wind down of our traditional appraisal business announced in the fourth quarter of 2020. All changes to the composition of our segment reporting have a material impact on adjusted pretax operating income. As a result, on a segment basis, Services revenue, cost of services and other operating expenses have increased, with offsetting reductions in Mortgage Insurance other income and other operating expenses. This change has been reflected in our segment operating ~~results. Mortgage Insurance underwriting continues to be reported as an expense in the Mortgage Insurance segment.~~

~~We include underwriting-related expenses~~results for ~~mortgage insurance, based on a pro-rata volume of mortgage applications excluding third-party contract underwriting services, in~~all periods presented. See Note 1 for additional details about our Mortgage Insurance segment’s other operating expenses before corporate allocations. We include underwriting-related expenses for third-party contract underwriting services, based on a pro-rata volume of mortgage applications, in our Services segment’s cost of services and ~~other operating expenses before corporate allocations, as applicable.~~Real Estate businesses.

We allocate corporate operating expenses to both reportable segments based on each segment’s forecasted annual percentage of total revenue, which approximates the estimated percentage of management time spent on each segment. In addition, we allocate all corporate interest expense to our Mortgage ~~Insurance segment: (i) corporate expenses based on an allocated percentage~~segment, due to the capital-intensive nature of ~~time spent on~~our mortgage insurance business.

With the ~~Mortgage Insurance segment; (ii) all interest expense except for interest expense on the original principal balance~~exception of ~~$300 million from the Senior Notes due 2019~~goodwill and other acquired intangible assets that ~~were issued to fund our purchase of Clayton; and (iii) all corporate cash and investments.~~

~~We allocate~~relate to our ~~Services segment: (i) corporate expenses based on an allocated percentage~~Real Estate segment, which are reviewed as part of ~~time spent on the Services segment and (ii) as noted above, allocated interest expense based on the original amount of debt issued to fund~~ our ~~purchase of Clayton. No material corporate cash or investments are allocated to the Services~~annual goodwill impairment assessment, we do not manage assets by segment. ~~Inter-segment activities are recorded at market rates for segment reporting and eliminated in consolidation.~~

Adjusted Pretax Operating Income (Loss)

Our senior management, including our Chief Executive Officer (Radian’s chief operating decision maker), uses adjusted pretax operating income (loss) as our primary measure to evaluate the fundamental financial performance of each of Radian’s business segments and to allocate resources to the segments. Adjusted pretax operating income (loss) is defined as pretax income (loss) excluding the effects of: (i) net gains (losses) on investments and other financial instruments; (ii) loss on ~~induced conversion~~extinguishment of debt; (iii) amortization and ~~debt extinguishment; (iii) acquisition-related expenses; (iv) amortization or~~ impairment of goodwill and other acquired intangible assets; and ~~(v) net~~(iv) impairment ~~losses recognized~~of other long-lived assets and other non-operating items, such as gains (losses) from the sale of lines of business and acquisition-related income and expenses. See Note 4 of Notes to Consolidated Financial Statements in ~~earnings.~~our 2020 Form 10-K for detailed information regarding items excluded from adjusted pretax operating income (loss), including the reasons for their treatment.

Although adjusted pretax operating income (loss) excludes certain items that have occurred in the past and are expected to occur in the future, the excluded items represent those that are: (i) not viewed as part of the operating performance of our primary activities or (ii) not expected to result in an economic impact equal to the amount reflected in pretax income (loss). ~~These adjustments, along with the reasons for their treatment, are described below.~~


~~(1)~~ Table of Contents Glossary			~~Net gains (losses) on investments and other financial instruments.~~ ~~The recognition of realized investment gains or losses can vary significantly across periods as the activity is highly discretionary based on the timing of individual securities sales due~~Radian Group Inc. Notes to such factors as market opportunities, our tax and capital profile and overall market cycles. Unrealized investment gains and losses arise primarily from changes in the market value of our investments that are classified as trading securities. These valuation adjustments may not necessarily result in realized economic gains or losses. Unaudited Condensed Consolidated Financial Statements

Trends in the profitability of our fundamental operating activities can be more clearly identified without the fluctuations of these realized and unrealized gains or losses. We do not view them to be indicative of our fundamental operating activities. Therefore, these items are excluded from our calculation of adjusted pretax operating income (loss).

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

~~(2)~~

~~Loss on induced conversion and debt extinguishment.~~ Gains or losses on early extinguishment of debt and losses incurred to purchase our convertible debt prior to maturity are discretionary activities that are undertaken in order to take advantage of market opportunities to strengthen our financial and capital positions; therefore, we do not view these activities as part of our operating performance. Such transactions do not reflect expected future operations and do not provide meaningful insight regarding our current or past operating trends. Therefore, these items are excluded from our calculation of adjusted pretax operating income (loss).

~~(3)~~

~~Acquisition-related expenses.~~ Acquisition-related expenses represent the costs incurred to effect an acquisition of a business (i.e., a business combination). Because we pursue acquisitions on a strategic and selective basis and not in the ordinary course of our business, we do not view acquisition-related expenses as a consequence of a primary business activity. Therefore, we do not consider these expenses to be part of our operating performance and they are excluded from our calculation of adjusted pretax operating income (loss).

~~(4)~~

~~Amortization or impairment of goodwill and other intangible assets.~~ Amortization of intangible assets represents the periodic expense required to amortize the cost of intangible assets over their estimated useful lives. Intangible assets with an indefinite useful life are also periodically reviewed for potential impairment, and impairment adjustments are made whenever appropriate. These charges are not viewed as part of the operating performance of our primary activities and therefore are excluded from our calculation of adjusted pretax operating income (loss).

~~(5)~~

~~Net impairment losses recognized in earnings~~. The recognition of net impairment losses on investments and the impairment of other long-lived assets does not result in a cash payment and can vary significantly in both amount and frequency, depending on market credit cycles and other factors. We do not view these impairment losses to be indicative of our fundamental operating activities. Therefore, whenever these losses occur, we exclude them from our calculation of adjusted pretax operating income (loss).

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

~~Summarized operating results for our segments as of and for the periods indicated, are as follows:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(In thousands) 2017
2016 (1)
2017
2016 (1)
Mortgage Insurance
Net premiums written—insurance (2)
$ 247,810
$ 240,999
$ 713,782
$ 499,662
(Increase) decrease in unearned premiums (11,108 ) (2,850 ) (26,184 ) 188,522
Net premiums earned—insurance 236,702
238,149
687,598
688,184
Net investment income 32,540
28,430
93,643
84,470
Other income 760
716
2,118
2,836
Total (3)
270,002
267,295

783,359

775,490

Provision for losses 35,980
56,151
100,926
149,500
Policy acquisition costs 5,554
6,119
18,406
17,901
Other operating expenses before corporate allocations 36,941
35,940
114,169
102,851
Total (4)
78,475
98,210
233,501
270,252
Adjusted pretax operating income before corporate allocations 191,527
169,085
549,858
505,238
Allocation of corporate operating expenses 11,737
11,911
41,817
35,526
Allocation of interest expense 11,282
15,360
34,539
50,596
Adjusted pretax operating income $ 168,508
$ 141,814
$ 473,502
$ 419,116

~~______________________~~

~~(1)~~

Reflects changes made during the fourth quarter of 2016 to align our segment reporting structure concurrent with changes in personnel reporting lines and management oversight related to contract underwriting performed on behalf of third parties. Revenue and expenses for this business are now reflected in the Services segment. As a result, Services revenue, cost of services and other operating expenses have increased, with offsetting reductions in Mortgage Insurance other income and other operating expenses.


~~(2)~~	~~Net of ceded premiums written under the QSR Transactions and the Single Premium QSR Transaction. See Note 7 for additional information.~~


~~(3)~~	Excludes net gains on investments and other financial instruments of $2.5 million and $5.0 million, respectively, for the three and nine months ended September 30, 2017, and net gains on investments and other financial instruments of $7.7 million and $69.5 million, respectively, for the three and nine months ended September 30, 2016, not included in adjusted pretax operating income.

~~(4)Includes inter-segment expenses as follows:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(In thousands) 2017 2016 2017 2016
Inter-segment expenses $ 1,491
$ 2,156
$ 5,726
$ 5,702

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(In thousands) 2017
2016 (1)
2017
2016 (1)
Services
Services revenue (2)
$ 41,062
$ 48,033
$ 121,126
$ 124,691

Cost of services 27,544
29,655
82,196
81,239
Other operating expenses before corporate allocations 12,781
13,575
38,188
40,973
Restructuring and other exit costs (3)
5,463
—
5,463
—
Total 45,788
43,230
125,847
122,212
Adjusted pretax operating income (loss) before corporate allocations (4,726 ) 4,803

(4,721 )
2,479
Allocation of corporate operating expenses 3,730
2,265
10,852
6,795
Allocation of interest expense 4,433
4,423
13,293
13,267
Adjusted pretax operating income (loss) $ (12,889 ) $ (1,885 )
$ (28,866 )
$ (17,583 )

~~______________________~~

~~(1)~~


~~(2)~~	~~Includes inter-segment revenues as follows:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(In thousands) 2017 2016 2017 2016
Inter-segment revenues $ 1,491
$ 2,156
$ 5,726
$ 5,702


~~(3)~~	~~Primarily includes employee severance and related benefit costs. Does not include impairment of long-lived assets, which is not considered a component of adjusted pretax operating income.~~

~~Selected balance sheet information for our segments, as of the periods indicated, is as follows:~~

At September 30, 2017
(In thousands) Mortgage Insurance
Services (1)
Total
Total assets $ 5,630,687
$ 213,586
$ 5,844,273

At December 31, 2016
(In thousands) Mortgage Insurance Services Total
Total assets $ 5,506,338
$ 356,836
$ 5,863,174

~~______________________~~


~~(1)~~	The decrease in total assets for the Services segment at September 30, 2017, as compared to December 31, 2016, is primarily due to the impairment of goodwill and other intangible assets. See Note 6 for further details.

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

The reconciliation of adjusted pretax operating income (loss) for our reportable segments to consolidated pretax income ~~(loss)~~ is as ~~follows:~~follows.


	Three Months Ended March 31,
(In thousands)	2021		2020
Adjusted pretax operating income (loss):
Mortgage	$	174,287	$	205,667
Real Estate	(10,453)		(3,153)
Total adjusted pretax operating income (loss) for reportable segments (1)	163,834		202,514
All Other adjusted pretax operating income (loss)	3,482		2,085
Net gains (losses) on investments and other financial instruments	(5,181)		(22,027)

Amortization and impairment of other acquired intangible assets	(862)		(979)
Impairment of other long-lived assets and other non-operating items	(84)		(300)
Consolidated pretax income	$	161,189	$	181,293

(1)Includes allocated corporate operating expenses and depreciation expense as follows.


	Three Months Ended March 31,
(In thousands)	2021		2020
Mortgage:
Allocated corporate operating expenses	$	27,884	$	29,214
Depreciation expense	1,810		3,270

Real Estate:
Allocated corporate operating expenses	$	3,996	$	3,367
Depreciation expense	454		610

Three Months Ended
September 30,
Nine Months Ended
September 30,
(In thousands) 2017
2016
2017
2016
Adjusted pretax operating income (loss):
Mortgage Insurance (1)
$ 168,508
$ 141,814
$ 473,502
$ 419,116
Services (1)
(12,889 ) (1,885 ) (28,866 ) (17,583 )
Total adjusted pretax operating income 155,619

139,929

444,636
401,533

Net gains (losses) on investments and other financial instruments 2,480
7,711
4,960
69,524
Loss on induced conversion and debt extinguishment (45,766 ) (17,397 ) (51,469 ) (75,075 )
Acquisition-related expenses (2)
(54 ) (10 ) (126 ) (161 )
Impairment of goodwill —
—
(184,374 ) —
Amortization and impairment of other intangible assets (2,890 ) (3,292 ) (25,042 ) (9,931 )
Impairment of other long-lived assets (3)
(6,575 ) —
(6,575 ) —
Consolidated pretax income $ 102,814

$ 126,941

$ 182,010
$ 385,890

~~______________________~~


~~(1)~~ Table of Contents Glossary			~~Includes inter-segment expenses and revenues as listed in the notes~~Radian Group Inc. Notes to ~~the preceding tables.~~Unaudited Condensed Consolidated Financial Statements


~~(2)~~	~~Acquisition-related expenses represent expenses incurred~~ Revenue The reconciliation of revenue for our reportable segments to ~~effect the acquisition of a business, net of adjustments to accruals previously recorded for acquisition expenses.~~


~~(3)~~	~~Included within restructuring and other exit costs. See Note 1.~~

~~On a~~ consolidated ~~basis, “adjusted pretax operating income”~~revenues is ~~a measure~~as follows.


	Three Months Ended March 31,
(In thousands)	2021		2020
Revenues:
Mortgage (1)	$	303,797	$	315,084
Real Estate (2)	25,795		26,525
Total revenues for reportable segments	329,592		341,609
All Other revenues (1)	4,461		9,691
Net gains (losses) on investments and other financial instruments	(5,181)		(22,027)

Elimination of inter-segment revenues	(59)		(192)
Total revenues	$	328,813	$	329,081

(1)Includes immaterial inter-segment revenues for the three months ended March 31, 2020.

(2)Includes immaterial inter-segment revenues for the three months ended March 31, 2021 and 2020.

The table below, which represents total services revenue on our condensed consolidated statements of operations for the periods indicated, represents the disaggregation of services revenues from external customers, by type.


	Three Months Ended March 31,
(In thousands)	2021		2020
Real Estate services:
Title services	$	8,057	$	6,565
Asset management services	5,534		8,690
Valuation services	4,886		7,233
Other real estate services	14		653
Mortgage services	4,351		3,133
All Other services (1)	53		5,653
Total services revenue	$	22,895	$	31,927

(1)Includes services revenue from Clayton prior to its sale in January 2020 and amounts related to our traditional appraisal business, which we wound down beginning in the fourth quarter of 2020.

Revenue recognized related to services made available to customers and billed is reflected in accounts and notes receivable. Accounts and notes receivable includes $15.1 million and $18.8 million as of March 31, 2021 and December 31, 2020, respectively, related to services revenue contracts. Revenue recognized related to services performed and not ~~determined~~yet billed is recorded in ~~accordance with GAAP. Total adjusted pretax operating income is not a measure~~unbilled receivables and reflected in other assets. See Note 2 of ~~total profitability,~~Notes to Consolidated Financial Statements in our 2020 Form 10-K for information regarding our accounting policies and therefore should not be considered in isolation or viewed as a substitute for GAAP pretax income. Our definition of adjusted pretax operating income may not be comparable to similarly-named measures reported by other companies.the services we offer.

4.5. Fair Value of Financial Instruments

~~Available~~For discussion of our valuation methodologies for ~~sale securities, trading securities~~assets and ~~certain other assets are recorded~~liabilities measured at fair ~~value. All changes in the fair~~ value ~~of trading securities~~ and certain other assets are included in our condensed consolidated statements of operations. All changes in the fair value of available for sale securities are recorded in AOCI. There were no significant changes to our fair value methodologies during the nine months ended September 30, 2017.

In accordance with GAAP, we established a three-level valuation hierarchy for disclosure of fair value measurements based on the transparency of inputs to the valuation of an asset or liability as of the measurement date. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements). The level in the fair value hierarchy, ~~within which the fair value measurement falls is determined based on the lowest level input that is significant to the measurement in its entirety. The three levels~~see Note 5 of ~~the fair value hierarchy are defined below:~~


~~Level I~~	~~— Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;~~


~~Level II~~	~~— Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities; and~~


~~Level III~~	— Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Level III inputs are used to measure fair value only to the extent that observable inputs are not available.

~~Radian Group Inc.~~

Notes to ~~Unaudited Condensed~~ Consolidated Financial Statements ~~— (Continued)~~

The level of market activity used to determine the fair value hierarchy is based on the availability of observable inputs market participants would use to price an asset or a liability, including market value price observations. We provide a qualitative description of the valuation techniques and inputs used for recurring and non-recurring fair value measurements in our audited financial statements and notes thereto included in our 2016 Form 10-K. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in our 20162020 Form 10-K.

The following istables include a list of assets that are measured at fair value by hierarchy level as of ~~September 30, 2017:~~March 31, 2021 and December 31, 2020.

(In thousands) Level I Level II Total
Assets at Fair Value
Investment Portfolio:
U.S. government and agency securities $ 137,606
$ 12,217
$ 149,823
State and municipal obligations —
385,486
385,486
Money market instruments 155,957
—
155,957
Corporate bonds and notes —
2,291,267
2,291,267
RMBS —
207,150
207,150
CMBS —
495,229
495,229
Other ABS —
620,441
620,441
Foreign government and agency securities —
36,684
36,684
Equity securities 187,642
860
188,502
Other investments (1)
—
39,620
39,620
Total Investments at Fair Value (2)
481,205
4,088,954
4,570,159
Total Assets at Fair Value $ 481,205
$ 4,088,954
$ 4,570,159

~~______________________~~


~~(1)~~ Table of Contents Glossary			~~Comprising short-term certificates of deposit and commercial paper.~~Radian Group Inc. Notes to Unaudited Condensed Consolidated Financial Statements


(In thousands)	Level I		Level II		Level III		Total
Assets at fair value as of March 31, 2021
Investments:
Fixed-maturities available for sale:
U.S. government and agency securities	$	94,491	$	30,290	$	0	$	124,781
State and municipal obligations	0		161,038		0		161,038
Corporate bonds and notes	0		2,979,117		0		2,979,117
RMBS	0		774,110		0		774,110
CMBS	0		708,347		0		708,347
CLO	0		562,588		0		562,588
Other ABS	0		238,337		0		238,337
Foreign government and agency securities	0		5,393		0		5,393

Total fixed-maturities available for sale	94,491		5,459,220		0		5,553,711

Trading securities:

State and municipal obligations	0		98,544		0		98,544
Corporate bonds and notes	0		120,527		0		120,527
RMBS	0		12,015		0		12,015
CMBS	0		34,228		0		34,228



Total trading securities	0		265,314		0		265,314

Equity securities	134,439		6,973		0		141,412

Short-term investments:
U.S. government and agency securities	19,499		0		0		19,499
State and municipal obligations	0		15,640		0		15,640
Money market instruments	367,606		0		0		367,606
Corporate bonds and notes	0		35,910		0		35,910

CMBS	0		4,705		0		4,705

Other ABS	0		786		0		786

Other investments (1)	0		261,514		0		261,514
Total short-term investments	387,105		318,555		0		705,660

Other invested assets (2)	0		0		3,000		3,000

Total investments at fair value (2)	616,035		6,050,062		3,000		6,669,097

Other:
Embedded derivatives (3)	0		0		6,116		6,116
Loaned securities: (4)
U.S. government and agency securities	39,788		0		0		39,788
Corporate bonds and notes	0		56,535		0		56,535

Equity securities	37,981		0		0		37,981
Total assets at fair value (2)	$	693,804	$	6,106,597	$	9,116	$	6,809,517

(1)Comprising short-term certificates of deposit and commercial paper.

(2)Does not include other invested assets of $2.8 million that are primarily invested in limited partnership investments valued using the net asset value as a practical expedient.

(3)Embedded derivatives related to our Excess-of-Loss Program are classified as other assets in our consolidated balance sheets. See Note 8 for more information about our reinsurance programs.

(4)Securities loaned to third-party borrowers under securities lending agreements are classified as other assets in our condensed consolidated balance sheets. See Note 6 for more information.


~~(2)~~ Table of Contents Glossary			Does not include certain other invested assets ($0.6 million), primarily invested in limited partnerships, accounted for as cost-method investments and not measured at fair value. Also does not include cash collateral held under securities lending agreements reinvested in short-term investments, and includes securities loanedRadian Group Inc. Notes to ~~third-party borrowers under securities lending agreements.~~Unaudited Condensed Consolidated Financial Statements


(In thousands)	Level I		Level II		Level III		Total
Assets at fair value as of December 31, 2020
Investments:
Fixed-maturities available for sale:
U.S. government and agency securities	$	140,034	$	29,189	$	0	$	169,223
State and municipal obligations	0		165,271		0		165,271
Corporate bonds and notes	0		3,047,189		0		3,047,189
RMBS	0		833,939		0		833,939
CMBS	0		681,265		0		681,265
CLO	0		568,558		0		568,558
Other ABS	0		252,457		0		252,457
Foreign government and agency securities	0		5,438		0		5,438

Total fixed-maturities available for sale	140,034		5,583,306		0		5,723,340

Trading securities:

State and municipal obligations	0		120,449		0		120,449
Corporate bonds and notes	0		123,142		0		123,142
RMBS	0		13,000		0		13,000
CMBS	0		34,294		0		34,294




Total trading securities	0		290,885		0		290,885

Equity securities	142,761		8,479		0		151,240

Short-term investments:

State and municipal obligations	0		21,819		0		21,819
Money market instruments	268,900		0		0		268,900
Corporate bonds and notes	0		30,495		0		30,495



Other ABS	0		219		0		219

Other investments (1)	0		296,571		0		296,571
Total short-term investments	268,900		349,104		0		618,004

Other invested assets (2)	0		0		3,000		3,000

Total investments at fair value (2)	551,695		6,231,774		3,000		6,786,469

Other:
Embedded derivatives (3)	0		0		5,513		5,513
Loaned securities: (4)
U.S. government and agency securities	4,876		0		0		4,876
Corporate bonds and notes	0		31,324		0		31,324

Equity securities	21,299		0		0		21,299
Total assets at fair value (2)	$	577,870	$	6,263,098	$	8,513	$	6,849,481

(1)Comprising short-term certificates of deposit and commercial paper.

(2)Does not include other invested assets of $2.0 million that are primarily invested in limited partnership investments valued using the net asset value as a practical expedient.

(3)Embedded derivatives related to our Excess-of-Loss Program are classified as other assets in our consolidated balance sheets. See Note 8 for more information about our reinsurance programs.

(4)Securities loaned to third-party borrowers under securities lending agreements are classified as other assets in our condensed consolidated balance sheets. See Note 6 for more information.

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

~~The following is a list of assets that are measured at fair value by hierarchy level as of December 31, 2016:~~

(In thousands) Level I Level II Level III Total
Assets at Fair Value
Investment Portfolio:
U.S. government and agency securities $ 237,479
$ —
$ —
$ 237,479
State and municipal obligations —
358,536
—
358,536
Money market instruments 431,472
—
—
431,472
Corporate bonds and notes —
2,024,205
—
2,024,205
RMBS —
388,842
—
388,842
CMBS —
507,273
—
507,273
Other ABS —
450,128
—
450,128
Foreign government and agency securities —
32,807
—
32,807
Equity securities —
830
500
1,330
Other investments (1)
—
28,663
500
29,163
Total Investments at Fair Value (2)
668,951
3,791,284
1,000
4,461,235
Total Assets at Fair Value $ 668,951
$ 3,791,284
$ 1,000
$ 4,461,235

~~______________________~~


~~(1)~~ Table of Contents Glossary			~~Comprising short-term certificates of deposit and commercial paper, included within Level II, and convertible notes of non-public company issuers, included within Level III.~~Radian Group Inc. Notes to Unaudited Condensed Consolidated Financial Statements


~~(2)~~	~~Does not include certain other invested assets ($1.2 million), primarily invested in limited partnerships, accounted for as cost-method investments and not measured at fair value.~~

~~At December 31, 2016, total~~There were 0 transfers to or from Level III ~~assets of $1.0 million accounted~~ for ~~less than 0.1% of total assets measured at fair value. Included in equity securities was a Level III investment of $0.5 million in a privately-placed equity security, purchased during~~ the three months ended June 30, 2015. Included in other debt securities was a Level III investment of $0.5 million in debt securities from a non-public company issuer, purchased during the three months ended June 30, 2016. There were no related gainsMarch 31, 2021 or ~~losses recorded during~~ the year ended December 31, 2016 on these investments. However, during the nine months ended September 30, 2017, we recorded other-than-temporary credit-related impairment losses in earnings of $1.0 million on these securities. As a result, there were no2020. Activity related to Level III assets ~~remaining in our portfolio at September 30, 2017. See Note 5 for additional information.~~

~~There were no Level III~~and liabilities ~~at September 30, 2017 or December 31, 2016. There were no transfers between Level I~~(including realized and ~~Level II~~unrealized gains and losses, purchases, sales, issuances, settlements and transfers) was immaterial for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016. There were also no transfers involving Level III assets or liabilities for~~ the ~~three and nine months~~year ended ~~September 30, 2017 and 2016.~~December 31, 2020.

Other Fair Value Disclosure

The carrying value and estimated fair value of other selected ~~assets and~~ liabilities not carried at fair value onin our condensed consolidated balance sheets were as follows as of the dates ~~indicated:~~indicated.


	March 31, 2021				December 31, 2020
(In thousands)	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Senior notes	$	1,406,603	$	1,528,311	$	1,405,674	$	1,563,503
FHLB advances	138,833		141,299		176,483		179,578

The fair value of our senior notes is estimated based on quoted market prices. The fair value of our FHLB advances is estimated based on expected cash flows for similar borrowings. These liabilities are categorized in Level II of the fair value hierarchy. See Note 12 for further information about these borrowings.

September 30, 2017 December 31, 2016
(In thousands)
Carrying
Amount

Estimated
Fair Value

Carrying
Amount

Estimated
Fair Value
Assets:
Other invested assets $ 599
$ 3,404
$ 1,195
$ 3,789
Liabilities:
Long-term debt 1,026,806
1,095,409
1,069,537
1,214,471

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

5.6. Investments

Available for Sale Securities

Our available for sale securities within our investment portfolio consisted of the following as of the dates ~~indicated:~~indicated.


	March 31, 2021
(In thousands)	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Fixed-maturities available for sale:
U.S. government and agency securities	$	172,927	$	0	$	323	$	(8,681)	$	164,569
State and municipal obligations	151,222		0		11,326		(1,510)		161,038
Corporate bonds and notes	2,938,328		(638)		145,509		(47,600)		3,035,599
RMBS	752,109		0		25,667		(3,666)		774,110
CMBS	685,914		0		27,763		(5,330)		708,347
CLO	561,013		0		2,183		(608)		562,588
Other ABS	236,464		0		2,334		(461)		238,337
Foreign government and agency securities	5,102		0		291		0		5,393

Total securities available for sale, including loaned securities	5,503,079		$	(638)	$	215,396	$	(67,856)	5,649,981
Less: loaned securities (1)	98,960								96,270
Total fixed-maturities available for sale	$	5,404,119							$	5,553,711

(1)Included in other assets in our consolidated balance sheet as further described below. See below for a discussion of our securities lending agreements.

September 30, 2017
(In thousands)
Amortized
Cost
Fair Value
Gross
Unrealized
Gains

Gross
Unrealized
Losses
Fixed-maturities available for sale:
U.S. government and agency securities $ 61,287
$ 60,860
$ 187
$ 614
State and municipal obligations 125,485
129,507
4,461
439
Corporate bonds and notes 1,806,796
1,836,316
34,927
5,407
RMBS 176,789
175,408
796
2,177
CMBS 433,916
436,892
4,167
1,191
Other ABS 616,687
618,832
2,627
482
Foreign government and agency securities 31,437
32,392
961
6
Total fixed-maturities available for sale (1)
3,252,397
3,290,207
48,126
10,316
Equity securities available for sale (1) (2)
188,065
188,502
937
500
Total debt and equity securities $ 3,440,462
$ 3,478,709
$ 49,063
$ 10,816

~~______________________~~


~~(1)~~ Table of Contents Glossary			~~Includes loaned securities under securities lending agreements that are classified as other assets in our condensed consolidated balance sheets, as further described below.~~Radian Group Inc. Notes to Unaudited Condensed Consolidated Financial Statements

~~(2)~~(In thousands)

~~Primarily consists of investments in fixed income and equity exchange-traded funds and publicly-traded business development company equities.~~

December 31, 2016
(In thousands)
Amortized
Cost
Fair Value
Gross
Unrealized
Gains

Gross
Unrealized
Losses
Fixed-maturities available for sale:
U.S. government and agency securities $ 78,931
$ 75,474
$ 2
$ 3,459
State and municipal obligations 66,124
67,171
1,868
821
Corporate bonds and notes 1,463,720
1,455,628
14,320
22,412
RMBS 358,262
350,628
197
7,831
CMBS 429,057
428,289
2,255
3,023
Other ABS 433,603
434,728
2,037
912
Foreign government and agency securities 24,771
24,594
148
325
Other investments 2,000
2,000
—
—
Total fixed-maturities available for sale 2,856,468
2,838,512
20,827
38,783
Equity securities available for sale (1)
1,330
1,330
—
—
Total debt and equity securities $ 2,857,798
$ 2,839,842
$ 20,827
$ 38,783

~~______________________~~

Three Months Ended
March 31, 2021

~~(1)~~Beginning balance

~~Primarily consists of investments in Federal Home Loan Bank stock as required in connection with the memberships of Radian Guaranty and Radian Reinsurance in the FHLB.~~

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

	$	948

Net increases (decreases) in allowance on previously impaired securities			(310)

Ending balance			$	638

Gross Unrealized Losses and Related Fair Value of Available for Sale Securities

~~The~~For securities deemed “available for sale” that are in an unrealized loss position and for which an allowance for credit loss has not been established, the following tables show the gross unrealized losses and fair value, ~~of our securities deemed “available for sale”~~ aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of the dates indicated. Included in the amounts as of ~~September 30, 2017,~~March 31, 2021 and December 31, 2020 are loaned securities under securities lending agreements that are classified as other assets in our condensed consolidated balance sheets, as further described below.

September 30, 2017
($ in thousands) Description of Securities
Less Than 12 Months 12 Months or Greater Total
# of
securities
Fair Value
Unrealized
Losses

# of
securities
Fair Value
Unrealized
Losses

# of
securities
Fair Value
Unrealized
Losses
U.S. government and agency securities 8
$ 37,926
$ 604
2
$ 1,580
$ 10
10
$ 39,506
$ 614
State and municipal obligations 17
60,210
439
—
—
—
17
60,210
439
Corporate bonds and notes 108
439,016
5,104
5
11,013
303
113
450,029
5,407
RMBS 29
114,243
1,862
5
14,262
315
34
128,505
2,177
CMBS 30
122,980
1,009
3
1,811
182
33
124,791
1,191
Other ABS 64
174,128
478
1
1,484
4
65
175,612
482
Foreign government and agency securities 2
1,196
6
—
—
—
2
1,196
6
Equity securities 11
79,856
500
—
—
—
11
79,856
500
Total 269
$ 1,029,555
$ 10,002
16
$ 30,150
$ 814
285
$ 1,059,705
$ 10,816

December 31, 2016
($ in thousands) Description of Securities
Less Than 12 Months 12 Months or Greater Total
# of
securities
Fair Value
Unrealized
Losses

# of
securities
Fair Value
Unrealized
Losses

# of
securities
Fair Value
Unrealized
Losses
U.S. government and agency securities 7
$ 73,160
$ 3,459
—
$ —
$ —
7
$ 73,160
$ 3,459
State and municipal obligations 7
30,901
821
—
—
—
7
30,901
821
Corporate bonds and notes 185
788,876
22,135
2
4,582
277
187
793,458
22,412
RMBS 56
311,031
7,822
1
1,398
9
57
312,429
7,831
CMBS 37
218,170
2,909
2
6,585
114
39
224,755
3,023
Other ABS 58
131,268
470
16
45,886
442
74
177,154
912
Foreign government and agency securities 12
13,034
325
—
—
—
12
13,034
325
Total 362
$ 1,566,440
$ 37,941
21
$ 58,451
$ 842
383
$ 1,624,891
$ 38,783

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~


Table of Contents Glossary
Radian Group Inc. Notes to Unaudited Condensed Consolidated Financial Statements


	March 31, 2021
($ in thousands)	Less Than 12 Months					12 Months or Greater					Total
Description of Securities	# of securities	Fair Value		Unrealized Losses		# of securities	Fair Value		Unrealized Losses		# of securities	Fair Value		Unrealized Losses
U.S. government and agency securities	7	$	87,663	$	(8,681)	0	$	0	$	0	7	$	87,663	$	(8,681)
State and municipal obligations	29	37,553		(1,510)		0	0		0		29	37,553		(1,510)
Corporate bonds and notes	225	819,835		(47,419)		1	2,725		(181)		226	822,560		(47,600)
RMBS	32	239,012		(3,654)		2	869		(12)		34	239,881		(3,666)
CMBS	51	111,105		(4,146)		17	42,527		(1,184)		68	153,632		(5,330)
CLO	33	101,725		(172)		24	92,497		(436)		57	194,222		(608)
Other ABS	34	101,363		(283)		3	7,812		(178)		37	109,175		(461)

Total	411	$	1,498,256	$	(65,865)	47	$	146,430	$	(1,991)	458	$	1,644,686	$	(67,856)


	December 31, 2020
($ in thousands)	Less Than 12 Months					12 Months or Greater					Total
Description of Securities	# of securities	Fair Value		Unrealized Losses		# of securities	Fair Value		Unrealized Losses		# of securities	Fair Value		Unrealized Losses
U.S. government and agency securities	4	$	90,591	$	(3,611)	0	$	0	$	0	4	$	90,591	$	(3,611)
State and municipal obligations	4	9,626		(100)		0	0		0		4	9,626		(100)
Corporate bonds and notes	60	174,848		(3,758)		0	0		0		60	174,848		(3,758)
RMBS	5	42,003		(305)		2	915		(9)		7	42,918		(314)
CMBS	43	118,345		(3,035)		6	8,312		(266)		49	126,657		(3,301)
CLO	52	173,459		(970)		25	137,506		(1,671)		77	310,965		(2,641)
Other ABS	26	70,759		(322)		3	12,119		(110)		29	82,878		(432)

Total	194	$	679,631	$	(12,101)	36	$	158,852	$	(2,056)	230	$	838,483	$	(14,157)

~~Impairments~~See “Net Gains (Losses) on Investments” below for additional details on our net gains (losses) on investments, including the changes in the allowance for credit losses on fixed maturities available for sale and other impairments due to ~~credit deterioration that result in a conclusion that the present value of cash flows expected~~our intent to be collected will not be sufficient to recover the amortized cost basis of the security are considered other-than-temporary. Other declines in fair value (for example, due to interest rate changes, sector credit rating changes or company-specific rating changes) that result in a conclusion that the present value of cash flows expected to be collected will not be sufficient to recover the amortized cost basis of the security also may serve as a basis to conclude that an other-than-temporary impairment has occurred. To the extent we determine that a security is deemed to have had an other-than-temporary impairment, an impairment loss is recognized.

During the nine months ended September 30, 2017, we recorded other-than-temporary impairment losses in earnings of $1.0 million, including $0.5 million related to a convertible note of a non-public company issuer included in debt securities and $0.5 million related to a privately-placed equity security. We concluded that we would not recover the amortized cost basis of these securities due to credit deterioration. There were no credit-related impairment losses recognized in earnings or in AOCI during the year ended December 31, 2016.

~~Although we held~~sell securities in an unrealized loss ~~position as~~position. See Note 2 of September 30, 2017, we did not consider those securities to be other-than-temporarily impaired as of such date. For all investment categories, the unrealized losses of 12 months or greater duration as of September 30, 2017 were generally caused by interest rate or credit spread movements since the purchase date, and as such, we expect the present value of cash flows to be collected from these securities to be sufficient to recover the amortized cost basis of these securities. As of September 30, 2017, we did not have the intent to sell any debt securities in an unrealized loss position, and we determined that it is more likely than not that we will not be required to sell the securities before recovery of their cost basis, which may be at maturity; therefore, we did not consider these investments to be other-than-temporarily impaired at September 30, 2017.

~~Trading Securities~~

~~The trading securities within our investment portfolio, which are recorded at fair value, consisted of the following as of the dates indicated:~~

(In thousands) September 30,
2017 December 31,
2016
Trading securities:
U.S. government and agency securities $ —
$ 33,042
State and municipal obligations 214,599
259,573
Corporate bonds and notes 327,306
453,617
RMBS 31,742
38,214
CMBS 58,337
78,984
Other ABS —
8,219
Foreign government and agency securities 4,292
8,213
Total $ 636,276
(1) $ 879,862

~~______________________~~


~~(1)~~	~~Includes loaned securities under securities lending agreements that are classified as other assets in our condensed consolidated balance sheets, as further described below.~~

For trading securities held at September 30, 2017 and December 31, 2016, we had net unrealized gains associated with those securities of $10.0 million and $16.8 million during the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively.

~~For the nine months ended September 30, 2017, we did not transfer any securities from the available for sale or trading categories.~~

~~Radian Group Inc.~~

Notes to ~~Unaudited Condensed~~ Consolidated Financial Statements ~~— (Continued)~~

in our 2020 Form 10-K for information regarding our accounting policy for impairments.

Securities Lending Agreements

~~During the third quarter of 2017, we commenced participation~~We participate in a securities lending program whereby we loan certain securities in our investment portfolio to ~~Borrowers~~third-party borrowers for short periods of time. These securities lending agreements are collateralized financing arrangements whereby we transfer securities to third parties through an intermediary in exchange for cash or other securities. In all of our securities lending agreements, the securities we transfer to Borrowers (loaned securities) may be transferred or loaned by the Borrowers; however, we maintain effective control over all loaned securities, including: (i) retaining ownership of the securities; (ii) receiving the related investment or other income; and (iii) having the right to request the return of the loaned securities at any time. Although we report such securities at fair value within other assets onin our condensed consolidated balance sheets, rather than within investments, the detailed information ~~provided~~we provide in this Note 6 includes these securities. See ~~Notes 1 and 8~~Note 5 for additional ~~information.~~

~~Under~~detail on the loaned securities, and see Note 6 of Notes to Consolidated Financial Statements in our 2020 Form 10-K for additional information about our accounting policies with respect to our securities lending agreements the Borrower is required to provide to us collateral, consisting of cash or securities, in amounts generally equal to or exceeding (i) 102% of the value of the loaned securities (105% in the case of foreign securities) or (ii) another agreed-upon percentage not less than 100% of the market value of the loaned securities. Any cash collateral we receive may be invested in liquid assets.

~~Under our securities lending agreements, the Borrower generally may return the loaned securities to us at any time, which would require us to return~~and the collateral within the standard settlement period for the loaned securities on the principal exchange or market in which the securities are traded. We manage this liquidity risk associated with cash collateral by regularly monitoring our available sources of cash and collateral to ensure we can meet short-term liquidity demands in both normal and stressed scenarios. We may use our general liquidity resources to meet any potential cash demands when loaned securities are returned to us. The credit risk under these programs is reduced by the amounts of collateral received. On a daily basis, the value of the underlying securities that we have loaned to the Borrowers is compared to the value of cash and securities collateral we received from the Borrowers, and additional cash or securities are requested or returned, as applicable. In addition, we are indemnified against counterparty credit risk by the intermediary.requirements thereunder.

~~Key components~~All of our securities lending agreements ~~at September 30, 2017 consisted~~are classified as overnight and revolving. Securities collateral on deposit with us from third-party borrowers totaling $93.8 million and $43.3 million as of ~~the following:~~March 31, 2021 and December 31, 2020, respectively,

(In thousands) September 30,
2017
Loaned securities: (1)

Corporate bonds and notes $ 33,557
Foreign government and agency securities 120
Equity securities 27,199
Total loaned securities, at fair value $ 60,876

Total loaned securities, at amortized cost $ 60,740
Securities collateral on deposit from Borrowers (2)
25,589
Reinvested cash collateral, at estimated fair value (3)
36,782

~~______________________~~


~~(1)~~ Table of Contents Glossary			Our securities loaned under securities lending agreements are included at fair value within other assets on our condensed consolidated balance sheets. All of our securities lending agreements are classified as overnight and continuous. None of the amounts are subjectRadian Group Inc. Notes to ~~offsetting.~~Unaudited Condensed Consolidated Financial Statements


~~(2)~~	~~Securities collateral on deposit with us from Borrowers may not be transferred or re-pledged unless the Borrower~~ may not be transferred or re-pledged unless the third-party borrower is in default, and is therefore not reflected in our condensed consolidated financial statements.


~~(3)~~	All cash collateral received has been reinvested in accordance with the securities lending and collateral agreements and is included in short-term investments. Amounts payable on the return of cash collateral under securities lending agreements are included within other liabilities on our condensed consolidated balance sheets.

~~There were no securities lending transactions outstanding at December 31, 2016.~~

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

Net Gains (Losses) on Investments ~~and Other Financial Instruments~~

Net ~~realized and unrealized~~ gains (losses) on investments ~~and other financial instruments~~ consisted ~~of:~~of the following.


	Three Months Ended March 31,
(In thousands)	2021		2020
Net realized gains (losses):
Fixed-maturities available for sale (1)	$	(790)	$	11,247
Trading securities	503		49
Equity securities	0		310
Other investments	105		33
Net realized gains (losses) on investments	(182)		11,639
Impairment losses due to intent to sell	0		(622)
Net decrease (increase) in expected credit losses	310		0
Net unrealized gains (losses) on investments	(2,519)		(26,845)
Total net gains (losses) on investments	$	(2,391)	$	(15,828)

(1)Components of net realized gains (losses) on fixed-maturities available for sale include the following.


	Three Months Ended March 31,
(In thousands)	2021		2020
Gross investment gains from sales and redemptions	$	4,117	$	11,899
Gross investment losses from sales and redemptions	(4,907)		(652)

The net changes in unrealized gains (losses) recognized in earnings on investments that were still held at each period-end were as follows.


	Three Months Ended March 31,
(In thousands)	2021		2020
Net unrealized gains (losses) on investments still held:
Trading securities	$	(8,089)	$	(2,034)
Equity securities	5,118		(24,020)
Other investments	886		804
Net unrealized gains (losses) on investments still held	$	(2,085)	$	(25,250)

Three Months Ended
September 30, Nine Months Ended September 30,
(In thousands) 2017 2016 2017 2016
Net realized gains (losses):
Fixed-maturities available for sale $ 137
$ 5,685
$ (3,552 ) $ 3,703
Equity securities available for sale 33
—
418
(170 )
Trading securities (223 ) 1,524
(6,266 ) (295 )
Short-term investments 14
38
(18 ) (1 )
Other invested assets —
631
—
631
Other gains (losses) 7
15
25
33
Net realized gains (losses) on investments (32 ) 7,893
(9,393 ) 3,901
Other-than-temporary impairment losses —
—
(1,000 ) —
Unrealized gains (losses) on trading securities 2,353
(47 ) 14,517
62,862
Total net gains (losses) on investments 2,321
7,846
4,124
66,763
Net gains (losses) on other financial instruments 159
(135 ) 836
2,761
Net gains (losses) on investments and other financial instruments $ 2,480
$ 7,711
$ 4,960
$ 69,524


Table of Contents Glossary			Radian Group Inc. Notes to Unaudited Condensed Consolidated Financial Statements

Contractual Maturities

The contractual maturities of ~~fixed-maturity investments~~fixed-maturities available for sale were as ~~follows:~~follows.


	March 31, 2021
	Available for Sale
(In thousands)	Amortized Cost		Fair Value
Due in one year or less	$	132,399	$	133,403
Due after one year through five years (1)	1,154,711		1,203,984
Due after five years through 10 years (1)	1,232,690		1,278,861
Due after 10 years (1)	747,779		750,351
Asset-backed and mortgage-backed securities (2)	2,235,500		2,283,382
Total	5,503,079		5,649,981
Less: loaned securities	98,960		96,270
Total fixed-maturities available for sale	$	5,404,119	$	5,553,711

September 30, 2017
Available for Sale
(In thousands)
Amortized
Cost

Fair
Value
Due in one year or less (1)
$ 41,767
$ 41,780
Due after one year through five years (1)
687,822
694,932
Due after five years through 10 years (1)
965,360
974,600
Due after 10 years (1)
330,056
347,763
RMBS (2)
176,789
175,408
CMBS (2)
433,916
436,892
Other ABS (2)
616,687
618,832
Total (3)
$ 3,252,397
$ 3,290,207
(1)Actual maturities may differ as a result of calls before scheduled maturity.

~~______________________~~(2)Includes RMBS, CMBS, CLO and Other ABS, which are not due at a single maturity date.


~~(1)~~	~~Actual maturities may differ as a result of calls before scheduled maturity.~~


~~(2)~~	~~RMBS, CMBS and Other ABS are shown separately, as they are not due at a single maturity date.~~


~~(3)~~	~~Includes securities loaned under securities lending agreements.~~

Other

AtFor the three months ended March 31, 2021, we did not transfer any securities to or from the available for sale or trading categories.

Our fixed-maturities available for sale include securities totaling $17.1 million and $16.9 million at March 31, 2021 and December 31, ~~2016, Radian Guaranty had $63.9 million in a~~2020, respectively, on deposit and serving as collateral ~~account invested in and classified~~with various state regulatory authorities. Our fixed-maturities available for sale also include securities serving as ~~part of~~collateral for our trading securities and pledged to cover Loss Mitigation Activity on the loans subject to the Freddie Mac Agreement. During the third quarter of 2017, the scheduled final settlement date under the Freddie Mac Agreement occurred. As of September 30, 2017, the remaining balance of $5.5 million in the collateral account was invested in and classified as short-term investments and pledged to cover Loss Mitigation Activity and pending claims activity already in process but not yet finalized.FHLB advances. See Note 1012 for additional ~~information.~~information about our FHLB advances.

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

6.7. Goodwill and Other Acquired Intangible Assets, Net

All of our goodwill and other acquired intangible assets relate to our ~~Services~~Real Estate segment. ~~The following table shows the changes in the carrying amount of goodwill for the year-to-date periods ended September 30, 2017 and December 31, 2016:~~

(In thousands) Goodwill Accumulated Impairment Losses Net
Balance at December 31, 2015 $ 197,265
$ (2,095 ) $ 195,170
Goodwill acquired —
—
—
Impairment losses —
—
—
Balance at December 31, 2016 197,265
(2,095 ) 195,170
Goodwill acquired 126
—
126
Impairment losses —
(184,374 ) (184,374 )
Balance at September 30, 2017 $ 197,391
$ (186,469 ) $ 10,922

~~Accounting Policy Considerations~~

Goodwill is an asset representing the estimated future economic benefits arising from the assets we have acquired that are not individually identified and separately recognized, and includes the value of the discounted expected future cash flows from these businesses, the workforce, expected synergies with our other affiliates and other unidentifiable intangible assets. Goodwill is deemedThere was no change to ~~have an indefinite useful life and is subject to review for impairment annually, or more frequently, whenever events and circumstances indicate potential impairment. For purposes of performing~~ our goodwill ~~impairment test, we have concluded that the Services segment constitutes one reporting unit to which all~~balance of ~~our recorded goodwill is related.~~

Events and circumstances that could result in an interim assessment of goodwill impairment and/or a potential impairment loss include, but are not limited to: (i) significant under-performance of the Services segment relative to historical or projected future operating results; (ii) significant changes in the strategy for the Services segment; (iii) significant negative industry or economic trends; and (iv) a decline in market capitalization below the book value attributable to the Services segment. The value of goodwill is supported by cash flow projections, which are primarily driven by projected transaction volume and margins. Management regularly updates certain assumptions related to our projections, including the likelihood of achieving the assumed potential revenues from new initiatives and business strategies, and if these or other items have a significant negative impact on the reporting unit’s projections, we may perform additional analysis to determine whether an impairment charge is needed. Lower earnings over sustained periods also can lead to impairment of goodwill, which could result in a charge to earnings. Given that our goodwill impairment analysis continues to rely significantly on achieving our projected future cash flows, failure to meet those projections may result in additional impairment in a future period.

~~We generally perform our annual goodwill impairment test~~$9.8 million during the fourth quarter of each year, using balances as of the prior quarter. However, if there are events and circumstances that indicate that it is more likely than not that the fair value of a reporting unit is less than the carrying amount, we will perform a quantitative analysis on an interim basis. As part of our quantitative goodwill impairment assessment, we estimate the fair value of the reporting unit using primarily an income approach and, based on a lower weighting, a market approach. The key driver in our fair value analysis is forecasted future cash flows.

~~In the second quarter of 2017, we early adopted the update to the accounting standard regarding goodwill and other intangibles, as discussed in Note 1 “—Significant Accounting Policies—Recent Accounting Pronouncements~~—~~Accounting Standards Adopted During 2017~~.” In accordance with the updated standard, the fair value of a reporting unit is compared with its carrying amount, with any excess of the reporting unit’s carrying amount over its estimated fair value recognized as an impairment charge, up to the full amount of the goodwill allocated to the reporting unit, after adjusting the carrying value for any impairment of other intangibles or long-lived assets.

~~For additional information on our accounting policies for goodwill and other intangible assets, see Note 1 herein and Note 1 of Notes to Consolidated Financial Statements in our 2016 Form 10-K.~~

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

~~Impairment Analysis~~

We performed an interim goodwill impairment test as of June 30, 2017, due to events and circumstances identified during our June 30, 2017 qualitative analysis that indicated that it was more likely than not that the fair value was less than the carrying amount. We performed our qualitative assessment of goodwill at June 30, 2017, focusing on the impact of certain key factors affecting our Services segment, including: (i) decisions related to changes in the business strategy for our Services segment determined in the second quarter of 2017, following our Chief Executive Officer’s evaluation of both existing products and new product development opportunities and (ii) second quarter 2017 results for our Services segment which were negatively impacted by market trends. Our expectation that these market trends will persist negatively impacted our projected future cash flows compared to the projections used in our prior valuation.

Our Chief Executive Officer joined Radian in March 2017 and initiated a review to evaluate the strategic direction of the Services segment. Based on this strategic review, in the second quarter of 2017, we made several decisions with respect to business strategy for the segment in order to reposition the Services business to drive future growth and profitability. We determined to: (i) discontinue certain initiatives, as discussed below and (ii) shift the strategy of the Services segment to focus on core products and services that, in the current market environment, are expected to have higher growth potential, to produce more predictable, recurring revenue streams over time and to better align with our market expertise and the needs of our customers. Our recent strategic decisions include an intent to scale back or, in certain cases, discontinue certain planned or existing initiatives, such as discontinuing a new product line which, based on a market study received in the second quarter of 2017, would require significant additional investment to achieve the growth rates that had been expected. The impact of the strategic decisions determined during the second quarter resulted in a meaningful reduction in the fair value of the Services segment since the previous annual impairment test.

During the second quarter of 2017, the Services segment performed below forecasted levels. In combination with the recent underperformance of the Services segment, the anticipated business and growth opportunities for certain business lines in our Services segment have been impacted by: (i) market demand, which was lower than anticipated; (ii) increased competition, including with respect to product alternatives and pricing; and (iii) delays in the realization of efficiencies and margin improvements associated with certain technology initiatives. The demand for certain products and services has decreased due to several factors. Given the decreased volume of refinancings in the mortgage market that began in the first half of 2017, our customers have excess internal capacity which they are choosing to utilize and as a result they are less reliant on outsourcing to us. Additionally, due to market and competitive pressures, we renewed the contract terms with one of our largest customers during the second quarter of 2017, with lower pricing and volumes than expected in order to retain the engagement. We also experienced lower than expected customer acceptance for certain of our current and proposed products and services. The impact of these factors, partially offset by related future expense reductions, constituted a majority of the decline in the fair value of the Services segment since the previous annual impairment test.

Our quantitative valuation analysis, performed in connection with our annual goodwill impairment analysis in 2016, relied heavily on achieving the growth rates in our projected future cash flows. The impact of the market trends observed during the second quarter of 2017, which we currently expect to continue, together with our strategic decisions discussed above, resulted in changes to our expected product mix and the expected growth rates associated with various initiatives, which in turn generated material reductions to our forecasted net cash flows. Given the significant negative impact that the market trends and our strategic decisions would have on the timing and amount of our projected future cash flows in comparison to our original projections, we performed a quantitative analysis of the associated goodwill and other intangible assets as of June 30, 2017.

~~As a result of the quantitative goodwill analysis, we recorded an impairment charge of $184.4 million for~~ the three months ended June 30, 2017, to reduce the carrying amount of the Services segment to its estimated fair value. As discussed further below, prior to finalizing this amount, we also evaluated the recoverability of the segment’s other intangible assets and recorded impairment charges of $15.8 million related to the Services segment’s other intangible assets. See “Other Intangible Assets,” below. Substantially all of our impairment charges for goodwill and other intangible assets will continue to be deductible for tax purposes, over the original amortization period of approximately 15 years.

~~Other Intangible Assets~~

As of June 30, 2017, we also evaluated the recoverability of our other intangible assets. Factors affecting the estimated fair value of our goodwill, as described above, also affected the estimated recoverability of our other intangible assets. Based on our analysis in the second quarter of 2017, impairment was indicated for the Services segment’s client relationships and technology, related to certain product lines that were affected by the factors above. There was no impairment indicated for the remaining intangible assets, as the remaining carrying amounts were estimated to be recoverable despite the decline in projected earnings.

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

Client relationships represent the value of the specifically acquired customer relationships and are valued using the excess earnings approach using estimated client revenues, attrition rates, implied royalty rates and discount rates. The excess earnings approach estimates the present value of expected earnings in excess of a traditional return on business assets. For the three months ended June 30, 2017, we recorded an impairment charge of $14.9 million related to the segment’s client relationships, primarily due to the changes in estimated client revenues based on the factors discussed above in “—Impairment Analysis.” The remaining carrying value of client relationships is supported by projected earnings.

For the three months ended June 30, 2017, we also recorded an impairment charge of $0.9 million related to technology, representing the estimated unrecoverable value of a portion of the acquired proprietary software used to provide services in a product line impacted by the factors described above in “—Impairment Analysis.” The remaining carrying value of technology is supported by technology that we expect to continue to use in its current form, in either the same or an alternative capacity.March 31, 2021.

The following is a summary of the gross and net carrying amounts and accumulated amortization (including impairment) of our other acquired intangible assets as of the periods ~~indicated:~~indicated.


	March 31, 2021						December 31, 2020
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Client relationships	$	43,550	$	(32,324)	$	11,226	$	43,550	$	(31,559)	$	11,991
Technology	8,285		(7,446)		839		8,285		(7,370)		915
Licenses	463		(149)		314		463		(128)		335
Total	$	52,298	$	(39,919)	$	12,379	$	52,298	$	(39,057)	$	13,241

For additional information on our accounting policies for goodwill and other acquired intangible assets, see Notes 2 and 7 of Notes to Consolidated Financial Statements in our 2020 Form 10-K.

September 30, 2017
(In thousands) Original Amount Acquired Accumulated Amortization and Impairment Net Carrying Amount
Client relationships (1)
$ 83,363
$ (40,625 ) $ 42,738
Technology (2)
15,250
(8,382 ) 6,868
Trade name and trademarks 8,340
(2,787 ) 5,553
Client backlog 6,680
(5,813 ) 867
Non-competition agreements 185
(166 ) 19
Total $ 113,818
$ (57,773 ) $ 56,045

~~______________________~~


~~(1)~~ Table of Contents Glossary			~~Includes an impairment charge of $14.9 million.~~


~~(2)~~	~~Includes an impairment charge of $0.9 million.~~

December 31, 2016
(In thousands) Original Amount Acquired Accumulated Amortization Net Carrying Amount
Client relationships $ 83,316
$ (19,696 ) $ 63,620
Technology 15,250
(5,497 ) 9,753
Trade name and trademarks 8,340
(2,125 ) 6,215
Client backlog 6,680
(5,235 ) 1,445
Non-competition agreements 185
(160 ) 25
Total $ 113,771
$ (32,713 ) $ 81,058

~~The estimated aggregate amortization expense for the remainder of 2017 and thereafter is as follows (in thousands):~~

2017 $ 2,754
2018 10,316
2019 8,790
2020 7,412
2021 5,834
2022 5,081
Thereafter 15,858
Total $ 56,045

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

Radian Group Inc.
Notes to Unaudited Condensed Consolidated Financial Statements

8. Reinsurance

~~Generally, for tax purposes, substantially all~~In our mortgage insurance and title insurance businesses, we use reinsurance as part of our ~~goodwill~~risk distribution strategy, including to manage our capital position and ~~other intangible assets are deductible and will be amortized over a period of 15 years from acquisition.~~

~~7. Reinsurance~~

risk profile. The ~~effect of~~ reinsurance ~~on net premiums written and earned is as follows:~~

Three Months Ended
September 30,
Nine Months Ended
September 30,
(In thousands) 2017
2016
2017
2016
Net premiums written—insurance:
Direct $ 265,927
$ 261,456
$ 766,219
$ 748,110
Ceded (1)
(18,117 ) (20,457 ) (52,437 ) (248,448 )
Net premiums written—insurance $ 247,810
$ 240,999
$ 713,782
$ 499,662
Net premiums earned—insurance:
Direct $ 250,541
$ 258,074
$ 729,832
$ 747,342
Assumed 7
9
21
27
Ceded (1)
(13,846 ) (19,934 ) (42,255 ) (59,185 )
Net premiums earned—insurance $ 236,702
$ 238,149
$ 687,598
$ 688,184

~~______________________~~


~~(1)~~	~~Net of profit commission.~~

In 2012, Radian Guaranty entered into the QSR Transactions with a third-party reinsurance provider. Radian Guaranty has ceded the maximum amount permitted under the QSR Transactions; therefore, Radian Guaranty is no longer ceding NIW under these transactions. RIFarrangements for our mortgage insurance business include premiums ceded under the QSR ~~Transactions was $1.3 billion~~Program, the Single Premium QSR Program and ~~$1.7 billion as~~the Excess-of-Loss Program. The amount of ~~September 30, 2017 and 2016, respectively.~~

~~In the first quarter of 2016, in order to proactively manage the risk and return profile of Radian Guaranty’s insured portfolio and manage its position~~credit that we receive under the PMIERs financial requirements for our third-party reinsurance transactions is subject to ongoing review and approval by the GSEs.

The effect of all of our reinsurance programs on our net income is as follows.


	Three Months Ended March 31,
(In thousands)	2021		2020
Net premiums written:
Direct	$	260,619	$	279,482
Assumed (1)	2,298		3,451
Ceded (2)	(8,835)		(19,543)
Net premiums written	$	254,082	$	263,390
Net premiums earned:
Direct	$	302,721	$	301,254
Assumed (1)	2,298		3,456
Ceded (2)	(33,147)		(27,295)
Net premiums earned	$	271,872	$	277,415

Ceding commissions earned (3)	$	10,407	$	9,966
Ceded losses	3,746		1,962

(1)Primarily includes premiums from our participation in ~~a cost-effective manner,~~ certain credit risk transfer programs.

(2)Net of profit commission, which is impacted by the level of ceded losses recoverable, if any, on reinsurance transactions. See Note 11 for additional information on our reserve for losses and reinsurance recoverables.

(3)Deferred ceding commissions of $47.8 million and $71.6 million are included in other liabilities on our condensed consolidated balance sheets at March 31, 2021 and 2020, respectively.

Single Premium QSR Program

Radian Guaranty entered into each of the 2016 Single Premium QSR Agreement, 2018 Single Premium QSR Agreement and 2020 Single Premium QSR Agreement with panels of third-party reinsurers to cede a contractual quota share percent of our Single Premium NIW as of the effective date of each agreement (as set forth in the table below), subject to certain conditions. Radian Guaranty receives a ceding commission for ceded premiums written pursuant to these transactions. Radian Guaranty also receives a profit commission annually, provided that the loss ratio on the loans covered under the agreement generally remains below the applicable prescribed thresholds. Losses on the ceded risk up to this level reduce Radian Guaranty’s profit commission on a dollar-for-dollar basis.

Each of the agreements is subject to a scheduled termination date as set forth in the table below; however, Radian Guaranty has the option, based on certain conditions and subject to a termination fee, to terminate any of the agreements at the end of any calendar quarter on or after the applicable optional termination date. If Radian Guaranty exercises this option in the future, it would result in Radian Guaranty reassuming the related RIF in exchange for a net payment to the reinsurer calculated in accordance with the terms of the applicable agreement. Radian Guaranty also may terminate any of the agreements prior to the applicable scheduled termination date under certain circumstances, including if one or both of the GSEs no longer grant full PMIERs capital relief for the reinsurance.

The 2020 Single Premium QSR Agreement is the only QSR agreement under which Radian Guaranty is currently ceding NIW. Under the 2020 Single Premium QSR Agreement, NIW for Single Premium Policies issued between January 1, 2020 and December 31, 2021 is being ceded, subject to certain conditions and a limitation on ceded premiums written of $250 million. The parties may mutually agree to increase the amount of ceded risk above this level.


Table of Contents Glossary			Radian Group Inc. Notes to Unaudited Condensed Consolidated Financial Statements

The following table sets forth additional details regarding the Single Premium QSR ~~Transaction~~Program.

(In millions)

2020 Singles QSR

2018 Singles QSR

2016 Singles QSR

NIW Policy Dates

Jan 1, 2020-Dec 31, 2021

Jan 1, 2018-Dec 31, 2019

Jan 1, 2012-Dec 31, 2017

Effective Date

January 1, 2020

January 1, 2018

January 1, 2016

Scheduled Termination Date

December 31, 2031

December 31, 2029

December 31, 2027

Optional Termination Date

January 1, 2024

January 1, 2022

January 1, 2020

Quota Share %

65%

20% - 65% (1)

Ceding Commission %

25%

Profit Commission %

Up to 56%

Up to 55%

(In millions)

As of March 31, 2021

RIF Ceded

1,767

1,698

2,683

(In millions)

As of December 31, 2020

RIF Ceded

1,597

1,979

3,071

(1)Effective December 31, 2017, we amended the 2016 Single Premium QSR Agreement to increase the amount of ceded risk on performing loans under the agreement from 35% to 65% for the 2015 through 2017 vintages. Loans included in the 2012 through 2014 vintages, and any other loans subject to the agreement that were delinquent at the time of the amendment, were unaffected by the change and therefore the amount of ceded risk for those loans continues to range from 20% to 35%.

Excess-of-Loss Program

As of March 31, 2021, Radian Guaranty had entered into 4 fully collateralized reinsurance arrangements with the Eagle Re Issuers. For the respective coverage periods, Radian Guaranty retains the first-loss layer of aggregate losses, as well as any losses in excess of the outstanding reinsurance coverage amounts. The Eagle Re Issuers provide second layer coverage up to the outstanding coverage amounts. For each of these 4 reinsurance arrangements, the Eagle Re Issuers financed their coverage by issuing mortgage insurance-linked notes to eligible capital markets investors in unregistered private offerings. The aggregate excess-of-loss reinsurance coverage for these arrangements decreases over a ~~panel~~10-year period as the principal balances of ~~third-party reinsurers.~~the underlying covered mortgages decrease and as any claims are paid by the applicable Eagle Re Issuer or the mortgage insurance is canceled. Radian Guaranty has rights to terminate the reinsurance agreements upon the occurrence of certain events.

Under each of the reinsurance agreements, the outstanding reinsurance coverage amount will begin amortizing after an initial period in which a target level of credit enhancement is obtained and will stop amortizing if certain thresholds, or triggers, are reached, including a trigger based on an elevated level of delinquencies as defined in the related insurance-linked notes transaction agreements. With the exception of insurance-linked notes issued by Eagle Re 2020-2 Ltd., the insurance-linked notes issued by the Eagle Re Issuers in connection with our Excess-of-Loss Program are currently subject to a delinquency trigger event, which was reported to the insurance-linked note investors on June 25, 2020. For the insurance-linked notes that are subject to a delinquency trigger event, both the amortization of the outstanding reinsurance coverage amount pursuant to our reinsurance arrangements with the Eagle Re Issuers and the amortization of the principal amount of the related insurance-linked notes issued by the Eagle Re Issuers have been suspended and will continue to be suspended during the pendency of the trigger event.


Table of Contents Glossary			Radian Group Inc. Notes to Unaudited Condensed Consolidated Financial Statements

The following table sets forth additional details regarding the Excess-of-Loss Program as of March 31, 2021.


(In millions)	Eagle Re 2020-2 Ltd.		Eagle Re 2020-1 Ltd.		Eagle Re 2019-1 Ltd.		Eagle Re 2018-1 Ltd.
Issued	October 2020		February 2020		April 2019		November 2018
NIW Policy Dates	Oct 1, 2019- Jul 31, 2020		Jan 1, 2019- Sep 30, 2019		Jan 1, 2018- Dec 31, 2018		Jan 1, 2017- Dec 31, 2017
Initial RIF	$	13,011	$	9,866	$	10,705	$	9,109
Initial Coverage	390		488		562		434		(1)
Initial First Layer Retention	423		202		268		205

(In millions)	As of March 31, 2021
RIF	$	10,458	$	5,156	$	3,950	$	3,370
Remaining Coverage	355		488		385		276		(1)
First Layer Retention	423		202		265		201

(In millions)	As of December 31, 2020
RIF	$	11,748	$	6,121	$	4,657	$	3,986
Remaining Coverage	390		488		385		276		(1)
First Layer Retention	423		202		265		201

(1)Excludes a separate excess-of-loss reinsurance agreement entered into by Radian Guaranty with both initial and remaining coverage of $21.4 million.

The Eagle Re Issuers are not subsidiaries or affiliates of Radian Guaranty. Based on the accounting guidance that addresses VIEs, we have not consolidated any of the assets and liabilities of the Eagle Re Issuers in our financial statements, because Radian does not have: (i) the power to direct the activities that most significantly affect the Eagle Re Issuers’ economic performances or (ii) the obligation to absorb losses or the right to receive benefits from the Eagle Re Issuers that potentially could be significant to the Eagle Re Issuers. See Note 2 of Notes to Consolidated Financial Statements in our 2020 Form 10-K for more information on our accounting treatment of VIEs.

The reinsurance premium due to the Eagle Re Issuers is calculated by multiplying the outstanding reinsurance coverage amount at the beginning of a period by a coupon rate, which is the sum of one-month LIBOR (or an acceptable alternative to LIBOR) plus a contractual risk margin, and then subtracting actual investment income collected on the assets in the reinsurance trust during the preceding month. As a result, the premiums we pay will vary based on: (i) the spread between LIBOR and the rates on the investments held by the reinsurance trust and (ii) the outstanding amount of reinsurance coverage. As the reinsurance premium will vary based on changes in these rates, we concluded that the reinsurance agreements contain embedded derivatives, which we have accounted for separately as freestanding derivatives and recorded in other assets or other liabilities on our condensed consolidated balance sheets. Changes in the fair value of these embedded derivatives are recorded in net gains (losses) on investments and other financial instruments in our condensed consolidated statements of operations. See Note 5 herein and Note 5 of Notes to Consolidated Financial Statements in our 2020 Form 10-K for more information on our fair value measurements of financial instruments, including our embedded derivatives.

In the event an Eagle Re Issuer is unable to meet its future obligations to us, if any, our insurance subsidiaries would be liable to make claims payments to our policyholders. In the event that all of the assets in the reinsurance trust (consisting of U.S. government money market funds, cash or U.S. Treasury securities) have become worthless and the Eagle Re Issuer is unable to make its payments to us, our maximum potential loss would be the amount of mortgage insurance claim payments for losses on the insured policies, net of the aggregate reinsurance payments already received, up to the full aggregate excess-of-loss reinsurance coverage amount. In the same scenario, the related embedded derivative would no longer have value.


Table of Contents Glossary			Radian Group Inc. Notes to Unaudited Condensed Consolidated Financial Statements

The Eagle Re Issuers represent our only VIEs as of March 31, 2021 and December 31, 2020. The following table presents the total assets and liabilities of the Eagle Re Issuers as of the dates indicated.


	Total VIE Assets and Liabilities (1)
(In thousands)	March 31, 2021		December 31, 2020
Eagle Re 2020-2 Ltd.	$	354,792	$	390,324
Eagle Re 2020-1 Ltd.	488,385		488,385
Eagle Re 2019-1 Ltd.	384,602		384,602
Eagle Re 2018-1 Ltd.	275,718		275,718
Total	$	1,503,497	$	1,539,029

(1)Assets held by the Eagle Re Issuers are required to be invested in U.S. government money market funds, cash or U.S. Treasury securities. Liabilities of the Eagle Re Issuers consist of their mortgage insurance-linked notes, described above.

In April 2021, Radian Guaranty entered into a fully collateralized reinsurance agreement with Eagle Re 2021-1 Ltd. This reinsurance agreement provides for up to $497.7 million of aggregate excess-of-loss reinsurance coverage for the mortgage insurance losses on new defaults on an existing portfolio of eligible policies with RIF ~~ceded under~~of $11.1 billion that were issued between August 1, 2020 and December 31, 2020. Eagle Re 2021-1 Ltd. financed its coverage by issuing mortgage insurance-linked notes to eligible capital markets investors and Radian Group in the amounts of $452.3 million and $45.4 million, respectively, in an unregistered private offering.

Other Collateral

Although we use reinsurance as one of our risk management tools, reinsurance does not relieve us of our obligations to our policyholders. In the event the reinsurers are unable to meet their obligations to us, our insurance subsidiaries would be liable for any defaulted amounts. However, consistent with the PMIERs reinsurer counterparty collateral requirements, Radian Guaranty’s reinsurers have established trusts to help secure our potential cash recoveries. In addition to the total VIE assets of the Eagle Re Issuers discussed above, the amount held in reinsurance trusts was $217.4 million as of March 31, 2021, compared to $228.6 million as of December 31, 2020. In addition, for the Single Premium QSR ~~Transaction was $4.3 billion~~Program, Radian Guaranty holds amounts related to ceded premiums written to collateralize the reinsurers’ obligations, which is reported in reinsurance funds withheld on our condensed consolidated balance sheets. Any loss recoveries and ~~$3.6 billion as of September 30, 2017 and 2016, respectively.~~ profit commissions paid to Radian Guaranty related to the Single Premium QSR Program are expected to be realized from this account.

See Note 8 of Notes to Consolidated Financial Statements in our ~~2016~~2020 Form 10-K for more information about our reinsurance transactions.

~~As of December~~

31 2017, our ability to cede Single Premium NIW under the Single Premium QSR Transaction expires. In anticipation of this expiration, we entered into the 2018 Single Premium QSR Transaction in October 2017. See Note 16 for additional information.

~~The following tables show the amounts related to the QSR Transactions and the Single Premium QSR Transaction for the periods indicated:~~

QSR Transactions
Three Months Ended
September 30, Nine Months Ended
September 30,
(In thousands) 2017 2016 2017 2016
Ceded premiums written (1)
$ 4,621
$ 6,730
$ 15,137
$ 22,048
Ceded premiums earned (1)
6,826
10,597
22,064
33,094
Ceding commissions written 1,323
1,922
4,328
6,291
Ceding commissions earned (2)
2,925
3,974
10,198
12,199
Ceded losses, net 257
495
517
1,259

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

Single Premium QSR Transaction
Three Months Ended
September 30, Nine Months Ended
September 30,
(In thousands) 2017 2016 2017 2016
Ceded premiums written (1)
$ 13,248
$ 13,004
$ 36,064
$ 222,085
(3)
Ceded premiums earned (1)
6,771
8,608
18,941
21,748

Ceding commissions written 5,156
5,482
14,002
61,258

Ceding commissions earned (2)
3,536
4,382
9,721
11,173

Ceded losses 406
719
1,443
1,635

~~______________________~~


~~(1)~~ Table of Contents Glossary			~~Net of profit commission.~~


~~(2)~~	~~Includes amounts reported in policy acquisition costs and other operating expenses.~~


~~(3)~~	~~Includes ceded premiums for policies written in prior periods. See Note 8 of~~ Radian Group Inc. Notes to Unaudited Condensed Consolidated Financial Statements ~~in our 2016 Form 10-K.~~

8.9. Other Assets

The following table shows the components of other assets as of the dates ~~indicated:~~indicated.


(In thousands)	March 31, 2021		December 31, 2020
Prepaid reinsurance premiums (1)	$	243,326	$	267,638
Prepaid federal income taxes (Note 10)	210,889		210,889
Loaned securities (Note 5)	134,304		57,499
Company-owned life insurance (2)	109,681		115,586
Right-of-use assets (Note 13)	31,265		32,985
Other	34,037		30,488
Total other assets	$	763,502	$	715,085

(1)Relates to our Single Premium QSR Program.

(2)We are the beneficiary of insurance policies on the lives of certain of our current and past officers and employees. The balances reported in other assets reflect the amounts that could be realized upon surrender of the insurance policies as of each respective date.

(In thousands) September 30,
2017 December 31,
2016
Deposit with the IRS (Note 9) $ 88,557
$ 88,557
Property and equipment (1) (2)
88,119
70,665
Corporate-owned life insurance 85,699
83,248
Loaned securities 60,876
—
Accrued investment income 31,390
29,255
Deferred policy acquisition costs 15,816
14,127
Reinsurance recoverables 7,605
7,368
Other 60,954
50,615
Total other assets $ 439,016
$ 343,835

~~______________________~~

~~(1)~~

Property and equipment at cost, less accumulated depreciation of $101.7 million and $118.5 million at September 30, 2017 and December 31, 2016, respectively. Depreciation expense was $4.6 million and $2.9 million for the three-month periods ended September 30, 2017 and 2016, respectively, and $12.8 million and $7.6 million for the nine-month periods ended September 30, 2017 and 2016, respectively.


~~(2)~~	~~Includes $45.0 million and~~ ~~$49.7 million~~ at ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, respectively, related to our technology upgrade project and $15.7 million at September 30, 2017 of leasehold improvements related to our new corporate headquarters.~~

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

9.10. Income Taxes

As ~~required under the accounting standard regarding accounting for~~of March 31, 2021 and December 31, 2020, our current income ~~taxes,~~tax liability was $17.3 million and $17.5 million, respectively, and is included as a component of other liabilities in our condensed consolidated balance sheets.

Certain entities within our consolidated group have generated deferred tax assets ~~(“DTAs”)~~relating primarily to state and ~~deferred tax liabilities (“DTLs”) are recognized under the balance sheet method,~~local NOL carryforwards, which, recognizes the future tax effect of temporary differences between the amounts recorded in our financial statements and the tax bases of these amounts. DTAs and DTLs are measured using the enacted tax rates expected to apply to taxable income in the periods in which the DTA or DTL is expected to be realized or settled.

Our provision for income taxes for interim financial periods is based on an estimate of our annual effective tax rate for the full year. When estimating our full year 2017 and 2016 annual effective tax rates, we accounted for discrete items at the federal applicable tax rate, including: (i) the tax effects of gains and losses on our investments; (ii) excess tax benefits or deficiencies realized in 2017 from employee share-based payments; (iii) return-to-provision adjustments; (iv) prior year items relating to the accounting for uncertainty in income taxes; (v) the impairments of goodwill and other intangible assets in 2017; and (vi) certain other adjustments.

As of September 30, 2017, for federal income tax purposes and before any consideration of the impact of our potential IRS Settlement, we have generated certain tax attributes. We had approximately $297.4 million of NOL carryforwards. To the extent not utilized, the NOL carryforwardsif unutilized, will expire during various future tax years 2031 and 2032. We also have research and development tax credit carryforwards of $6.4 million that, if not utilized, will expire during tax years 2031 through 2036. Additionally, we had approximately $36.2 million of AMT credit carryforwards, which have no expiration date.

periods. We are required to establish a valuation allowance against our ~~DTAs~~deferred tax assets when it is more likely than not that all or some portion of our ~~DTAs~~deferred tax assets will not be realized. At each balance sheet date, we assess our need for a valuation ~~allowance. Our~~allowance and this assessment is based on all available evidence, both positive and negative. This requires management to exercise judgment and make assumptions regarding whether our ~~DTAs~~deferred tax assets will be realized in future periods. ~~In making this assessment as of September 30, 2017, we~~We have determined that certain ~~of our non-insurance subsidiaries~~entities within Radian Group may continue to generate taxable losses on a separate company basis in the near term and may not be able to fully utilize certain of their state and local NOLs on their state and local tax returns. ~~As of September 30, 2017, our valuation allowance is $64.1 million~~Therefore, with respect to ~~the DTAs~~deferred tax assets relating to these ~~separate company~~state and local NOLs and other state timing ~~adjustments.~~adjustments, we retained a valuation allowance of $82.4 million at March 31, 2021.

WeAs a mortgage guaranty insurer, we are ~~contesting adjustments resulting from~~eligible for a tax deduction, subject to certain limitations, under Internal Revenue Code Section 832(e) for amounts required by state law or regulation to be set aside in statutory contingency reserves. The deduction is allowed only to the ~~examination~~extent that, in conjunction with quarterly federal tax payment due dates, we purchase non-interest bearing U.S. Mortgage Guaranty Tax and Loss Bonds issued by the ~~IRS~~U.S. Department of the Treasury in an amount equal to the tax benefit derived from deducting any portion of our ~~2000 through 2007 consolidated~~statutory contingency reserves. As of March 31, 2021 and December 31, 2020, we held $210.9 million of these bonds, which are included as prepaid federal income ~~tax returns.~~taxes within other assets in our condensed consolidated balance sheets. The ~~IRS opposes~~corresponding deduction of our statutory contingency reserves resulted in the recognition of ~~certain~~a net deferred tax ~~losses and deductions that were generated through our investment in a portfolio~~liability. See Note 16 of non-economic REMIC residual interests and has proposed denying the associated tax benefits of these items. We appealed these proposed adjustments to Appeals and made “qualified deposits” with the U.S. Treasury of $85 million in June 2008 relating to the 2000 through 2004 tax years and $4 million in May 2010 relating to the 2005 through 2007 tax years, in order to avoid the accrual of incremental above-market-rate interest with respect to the proposed adjustments.

~~Radian Group Inc.~~

Notes to ~~Unaudited Condensed~~ Consolidated Financial Statements ~~— (Continued)~~in our 2020 Form 10-K for additional information about our U.S. Mortgage Guaranty Tax and Loss Bonds.

For additional information on our income taxes, including our accounting policies, see Notes 2 and 10 of Notes to Consolidated Financial Statements in our 2020 Form 10-K.



Table of Contents Glossary			Radian Group Inc. Notes to Unaudited Condensed Consolidated Financial Statements

On December 3, 2014, we petitioned the U.S. Tax Court to litigate the Deficiency Amount. On September 1, 2015, we received a notice that the case had been scheduled for trial. However, the parties have jointly filed, and the U.S. Tax Court has approved, motions for continuance in this matter to postpone the trial date. Also, in February 2016, the U.S. Tax Court approved a joint motion to consolidate for trial, briefing and opinion our case with a similar case involving MGIC Investment Corporation.During 2016, we held several meetings with the IRS in an attempt to reach a compromised settlement on the issues presented in our dispute. In October 2017, the parties informed the U.S. Tax Court that they believe they have reached agreement in principle on all issues presented in the dispute and that the parties are currently reviewing the computations reflecting the agreed upon settlement terms. The resolution must be reported to the JCT for review and cannot be finalized until the IRS considers the views, if any, expressed by the JCT about the matter. If we are unable to complete a compromised settlement, then the ongoing litigation could take several years to resolve and may result in substantial legal expenses. We can provide no assurance regarding the outcome of any such litigation or whether a compromised settlement with the IRS will ultimately be reached. We currently believe that an adequate provision for income taxes has been made for the potential liabilities that may result from this matter. However, if the ultimate resolution of this matter produces a result that differs materially from our current expectations, there could be a material impact on our effective tax rate, results of operations and cash flows.

~~10.~~11. Losses and ~~Loss Adjustment Expense~~LAE

~~All of the balance and activity of our consolidated~~Our reserve for losses and LAE, ~~relate to the Mortgage Insurance segment. The following table shows our reserve for losses and LAE by category~~ at the end of each period ~~indicated:~~indicated, consisted of the following.


(In thousands)	March 31, 2021		December 31, 2020
Mortgage insurance loss reserves (1)	$	882,838	$	844,107
Title insurance loss reserves	4,517		4,306
Total reserve for losses and LAE	$	887,355	$	848,413

(In thousands) September 30,
2017 December 31,
2016
Reserves for losses by category:
Prime $ 296,885
$ 379,845
Alt-A 112,033
148,006
A minus and below 78,048
101,653
IBNR and other (1)
13,085
71,107
LAE 14,687
18,630
Reinsurance recoverable (2)
7,445
6,816
Total primary reserves 522,183
726,057
Pool 18,630
31,853
IBNR and other 14,576
673
LAE 550
932
Reinsurance recoverable (2)
25
35
Total pool reserves 33,781
33,493
Total First-lien reserves 555,964
759,550
Other (3)
524
719
Total reserve for losses $ 556,488
$ 760,269
(1)Primarily comprises first lien primary case reserves of $841.6 million and $799.5 million at March 31, 2021 and December 31, 2020, respectively.

~~______________________~~

~~(1)~~

~~At December 31, 2016, primarily related to expected payments under~~For the periods indicated, the Freddie Mac Agreement. During the third quarter of 2017, the scheduled final settlement date under the Freddie Mac Agreement occurred and therefore, except for loans with loss mitigation and claims activity already in process, most of the loans subject to the Freddie Mac Agreement were removed from RIF and IIF because the insurance no longer remains in force. See ~~“—Freddie Mac Agreement,”~~ ~~below for additional information.~~


~~(2)~~	~~Represents ceded losses on captive reinsurance transactions, the QSR Transactions and the Single Premium QSR Transaction.~~


~~(3)~~	~~Does not include our Second-lien premium deficiency reserve that is included in other liabilities.~~

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

~~The~~ following table presents information relating to our mortgage insurance reserve for losses, including our IBNR reserve and LAE, but excluding our ~~Second-lien~~second-lien mortgage loan premium deficiency ~~reserve,~~reserve.


	Three Months Ended March 31,
(In thousands)	2021		2020
Balance at beginning of period	$	844,107	$	401,273
Less: Reinsurance recoverables (1)	71,769		14,594
Balance at beginning of period, net of reinsurance recoverables	772,338		386,679
Add: Losses and LAE incurred in respect of default notices reported and unreported in:
Current year (2)	50,312		41,242
Prior years	(4,513)		(5,876)
Total incurred	45,799		35,366
Deduct: Paid claims and LAE related to:
Current year (2)	16		0
Prior years	10,457		23,391
Total paid	10,473		23,391
Balance at end of period, net of reinsurance recoverables	807,664		398,654
Add: Reinsurance recoverables (1)	75,174		16,024
Balance at end of period	$	882,838	$	414,678

(1)Related to ceded losses recoverable, if any, on reinsurance transactions. See Note 8 for additional information.

(2)Related to underlying defaulted loans with a most recent default notice dated in the ~~periods indicated:~~year indicated. For example, if a loan had defaulted in a prior year, but then subsequently cured and later re-defaulted in the current year, that default would be considered a current year default.

Nine Months Ended
September 30,
(In thousands) 2017 2016
Balance at beginning of period $ 760,269
$ 976,399
Less: Reinsurance recoverables (1)
6,851
8,286
Balance at beginning of period, net of reinsurance recoverables 753,418
968,113
Add: Losses and LAE incurred in respect of default notices reported and unreported in:
Current year (2)
145,798
152,320
Prior years (45,331 ) (3,906 )
Total incurred 100,467
148,414
Deduct: Paid claims and LAE related to:
Current year (2)
3,639
2,725
Prior years 301,228
298,352
Total paid 304,867
(3) 301,077
Balance at end of period, net of reinsurance recoverables 549,018
815,450
Add: Reinsurance recoverables (1)
7,470
6,484
Balance at end of period $ 556,488
$ 821,934

~~______________________~~


~~(1)~~	~~Related to ceded losses recoverable, if any, on captive reinsurance transactions, the QSR Transactions and the Single Premium QSR Transaction. See Note 7 for additional information.~~


~~(2)~~	Related to underlying defaulted loans with a most recent default notice dated in the year indicated. For example, if a loan had defaulted in a prior year, but then subsequently cured and later re-defaulted in the current year, that default would be considered a current year default.


~~(3)~~	~~Includes the payment of $54.8 million made in connection with the scheduled final settlement of the Freddie Mac Agreement in the third quarter of 2017.~~

Reserve Activity

~~2017 Activity~~Incurred Losses

~~Our loss~~Case reserves at September 30, 2017 declined as compared to December 31, 2016, primarily as a result of the amount of paid claims and Cures continuing to outpace losses incurred related to new default notices reported in the current year. Reserves established for new default notices were the primary driver of our total incurred ~~loss~~losses for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2021 and 2020, and they were primarily impacted by the number of new primary default notices received in the period and our related gross Default to Claim Rate assumption applied to those new defaults.

For the three months ended March 31, 2021, we experienced an increase in the number of new primary default notices, compared to the three months ended March 31, 2020, substantially all related to defaults ~~which~~subject to forbearance programs implemented in response to the COVID-19 pandemic. Our gross Default to Claim Rate assumption applied to new defaults was ~~10.5%~~8.0% as of ~~September 30, 2017. The~~March 31, 2021. While our Default to Claim Rate assumptions for prior year defaults were not materially changed as of March 31, 2021, our provision for losses during the first ~~nine~~three months of ~~2017~~2021 was positively impacted by favorable reserve development on prior year defaults, ~~which~~primarily due to higher Cures than previously estimated. See Note 1 for additional information on the elevated risks and uncertainties resulting from the COVID-19 pandemic to our business.

Our gross Default to Claim Rate assumption applied to new defaults was 7.5% as of March 31, 2020. Our provision for losses during the first three months of 2020 was positively impacted by favorable reserve development on prior year defaults. This favorable development was primarily driven by a reduction during the ~~period~~periods in certain Default to Claim Rate assumptions for these prior year defaults ~~compared to the assumptions used at December 31, 2016. The reductions in Default to Claim Rate assumptions resulted from~~based on observed trends, primarily higher Cures than ~~were~~ previously estimated. The positive development in prior year defaults was partially offset by incremental IBNR reserves of $14.2 million to reflect the estimated payment for future losses, primarily on performing loans in our Legacy Portfolio that are likely to be affected by an expected pool commutation.


Table of Contents Glossary			Radian Group Inc. Notes to Unaudited Condensed Consolidated Financial Statements

Claims Paid

Total claims paid ~~increased~~decreased for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2021 compared to the same period in ~~2016, primarily as a result of~~2020. Claims paid in 2021 include payments ~~that, as expected, were~~ made ~~in connection with the final settlement of the Freddie Mac Agreement in the third quarter of 2017.~~to settle certain previously disclosed legal proceedings. See “—~~Freddie Mac Agreement~~”~~below~~Note 13 for additional ~~information.~~

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

During the third quarter of 2017, Hurricanes Harvey and Irma caused extensive property damage to areas of Texas, Florida and Georgia, as well as other general disruptions including power outages and flooding. At September 30, 2017, our total primary mortgage insurance exposure to mortgages in counties affected byinformation about these storms and subsequently designated as FEMA Designated Areas is approximately $4.4 billion of RIF on approximately $16.8 billion of IIF. This exposure represents approximately 8.8% of our primary mortgage insurance RIF as of September 30, 2017. Although the mortgage insurance we write protects the lenders from a portion of losses resulting from loan defaults, it does not provide protection against property loss or physical damage. Our Master Policies contain an exclusion against physical damage, including damage caused by floods or other natural disasters. Depending on the policy form and circumstances, we may, among other things, deduct the cost to repair or remedy physical damage above a de minimis amount from a claim payment and/or, under certain circumstances, deny a claim where (i) the property underlying a mortgage in default is subject to unrestored physical damage or (ii) the physical damage is deemed to be the principal cause of default. As of September 30, 2017, our provision for losses has not been materially impacted by increased defaults in FEMA Designated Areas related to Hurricanes Harvey and Irma. However, the future reserve impact may be affected by various factors, including the pace of economic recovery in the FEMA Designated Areas.

~~2016 Activity~~

Our loss reserves at September 30, 2016 declined as compared to December 31, 2015, primarily because the amount of paid claims outpaced losses incurred related to new default notices reported in the current year. Reserves established for new default notices were the primary driver of our total incurred loss for the nine months ended September 30, 2016, and they were impacted primarily by the number of new primary default notices received in the period and our related gross Default to Claim Rate assumption applied to those new defaults, which was approximately 12.0% as of September 30, 2016.legal proceedings. The ~~impact to incurred losses from reserve development on default notices reported in prior years was not significant during the first nine months of 2016.~~

~~Reserve Assumptions~~

~~Default to Claim Rate~~

Our aggregate weighted average Default to Claim Rate assumption for our primary loans (net of Claim Denials and Rescissions) used in estimating our primary reserve for losses was 40% (38% excluding pending claims) at September 30, 2017, and 42% (40% excluding pending claims) at December 31, 2016. This decrease was primarily due to a shift in the mix of defaults during the nine months ended September 30, 2017, with a slightly lower proportion of pending claims in our total inventory, as well as the decrease in claims paid is primarily attributable to COVID-19-related hardship forbearance plans and suspensions of foreclosure and evictions.

For additional information about our ~~gross Default to Claim Rate assumptions. During the nine months ended September 30, 2017, our gross Default to Claim Rate assumption~~Reserve for new primary defaults was reduced from 12% as of December 31, 2016, to 10.5%. As of September 30, 2017, our gross Default to Claim Rates on our primary portfolio ranged from 10.5% for new defaults, up to 62% for defaults not in foreclosure stage,Losses and ~~81% for Foreclosure Stage Defaults.~~

~~Loss Mitigation~~

Our estimate of expected Rescissions and Claim Denials (net of expected Reinstatements) embedded in our Default to Claim Rate is generally based on our recent experience. Consideration is also given for differences in characteristics between those previously rescinded policies and denied claims and the loans remaining in our defaulted inventory, as well as the estimated impact of the BofA Settlement Agreement, which is discussed below.

Although our estimates of future Loss Mitigation Activities have been declining, they continue to be elevated compared to levels experienced before 2009. Since 2009, the elevated levels of our rate of Rescissions, Claim Denials and Claim Curtailments have significantly reduced our paid losses and have resulted in a reduction in our loss reserve. As our Legacy Portfolio has become a smaller percentage of our overall insured portfolio, we have experienced a reduced amount of Loss Mitigation Activity with respect to the claims we receive, and we expect this trend to continue. As a result, our anticipated future Loss Mitigation Activity is not expected to mitigate our paid losses to the same extent as in the years immediately following the financial crisis. Our estimate of net future Loss Mitigation Activities reduced our loss reserve as of September 30, 2017 and December 31, 2016 by approximately $23 million and $39 million, respectively. The amount of estimated Loss Mitigation Activities incorporated into our reserve analysis at any point in time is affected by a number of factors,LAE, including our ~~estimated rate of Rescissions, Claim Denials~~accounting policies, see Notes 2 and Claim Curtailments on future claims, as well as the volume and attributes of our defaulted insured loans, our estimated Default to Claim Rate and our estimated Claim Severity, among other assumptions. Our assumptions also reflect the estimated future impact of the BofA Settlement Agreement, as discussed below.

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

Our reported Rescission, Claim Denial and Claim Curtailment activity in any given period is subject to challenge by our lender and servicer customers. We expect that a portion of previous Rescissions will be reinstated and previous Claim Denials will be resubmitted with the required documentation and ultimately paid; therefore, we have incorporated this expectation into our IBNR reserve estimate. Our IBNR reserve estimate of $24.8 million and $14.3 million at September 30, 2017 and December 31, 2016, respectively, includes reserves for this activity, and, with respect to our IBNR estimate at September 30, 2017, also includes $14.2 million to reflect the estimated payment for future losses from an expected pool commutation, as discussed above.

~~We also accrue for the premiums that we expect to refund to our lender customers in connection with our estimated Rescissions.~~

~~Agreements~~

~~BofA Settlement Agreement~~

On September 16, 2014, Radian Guaranty entered into the BofA Settlement Agreement in order to resolve various actual and potential claims or disputes related to the parties’ respective rights and duties as to mortgage insurance coverage on certain Subject Loans. Implementation of the BofA Settlement Agreement commenced on February 1, 2015 and was completed by December 31, 2015. Except for certain limited circumstances, Radian Guaranty agreed that with respect to future Legacy Loans (as defined in and subject to the agreement, Legacy Loans where a claim decision has been or will be communicated by Radian Guaranty after February 13, 2013), it will not assert any origination error or servicing defect as a basis for a decision not to pay a claim, nor will it effect a Claim Curtailment of such claims. See Note 11 of Notes to Consolidated Financial Statements in our ~~2016~~2020 Form ~~10-K for additional information about the BofA Settlement Agreement.~~10-K.

~~Freddie Mac Agreement~~

~~At December 31, 2016, Radian Guaranty had $63.9 million in a collateral account invested in~~12. Borrowings and classified as part of our trading securities and pledged to cover Loss Mitigation Activity on the loans subject to the Freddie Mac Agreement. During the third quarter of 2017, the scheduled final settlement date under the Freddie Mac Agreement occurred and, as expected, we paid $54.8 million to Freddie Mac, which reduced the remaining balance in the collateral account to $5.5 million at September 30, 2017. These amounts were invested in and classified as short-term investments and pledged to cover Loss Mitigation Activity and pending claims activity already in process but not yet finalized. As of September 30, 2017, we have $2.8 million remaining in reserve for losses that we expect to pay to Freddie Mac from the remaining funds in the collateral account.

~~11. Long-Term Debt~~Financing Activities

The carrying value of our ~~long-term~~ debt at ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~2020 was as ~~follows:~~follows.


(In thousands)	March 31, 2021		December 31, 2020
Senior notes:
Senior Notes due 2024	$	445,787	$	445,512
Senior Notes due 2025	517,065		516,634
Senior Notes due 2027	443,751		443,528
Total senior notes	$	1,406,603	$	1,405,674
FHLB advances:
FHLB advances due 2021	$	26,850	$	67,500
FHLB advances due 2022	61,050		61,050
FHLB advances due 2023	27,995		27,995
FHLB advances due 2024	9,954		9,954
FHLB advances due 2025	9,984		9,984
FHLB advances due 2027	3,000		0
Total FHLB advances	$	138,833	$	176,483

(In thousands) September 30,
2017 December 31,
2016
5.500% Senior Notes due 2019 $ 157,470
$ 296,907
5.250% Senior Notes due 2020 231,618
345,308
7.000% Senior Notes due 2021 194,974
344,362
4.500% Senior Notes due 2024 442,223
—
3.000% Convertible Senior Notes due 2017 521
20,947
2.250% Convertible Senior Notes due 2019 —
62,013
Total long-term debt $ 1,026,806
$ 1,069,537
FHLB Advances

~~Extinguishment~~As of ~~Debt~~

~~Repurchases of Senior Notes due 2019, 2020 and 2021~~

~~During the third quarter of 2017, pursuant to cash tender offers to purchase a portion of our outstanding Senior Notes due 2019, 2020 and~~March 31, 2021, we ~~purchased aggregate principal amounts of $141.4 million, $115.9 million and $152.3~~had $138.8 million of ~~our Senior Notes due 2019, 2020 and 2021, respectively. We funded the purchases~~fixed-rate advances outstanding with ~~$450.0 million in cash (plus accrued and unpaid~~a weighted average interest ~~due~~rate of 1.23%. Interest on the ~~purchased notes). These purchases resulted in a loss on induced conversion and debt extinguishment of $45.8 million. Following these purchases,~~FHLB advances is payable quarterly, or at maturity if the ~~remaining principal amounts~~term of the ~~outstanding Senior Notes~~advance is less than 90 days. Principal is due ~~2019, 2020 and 2021 were $158.6 million, $234.1 million and $197.7 million, respectively,~~ at ~~September 30, 2017.~~

~~Repurchases of Convertible Senior Notes due 2017~~

During the second quarter of 2017, we purchased an aggregate principal amount of $21.6 million of our outstanding Convertible Senior Notes due 2017. We funded the purchases with $31.6 million in cash (plus accrued and unpaid interest due on the purchased notes). These purchases of Convertible Senior Notes due 2017 resulted in a loss on induced conversion and debt extinguishment of $1.2 million. As of September 30, 2017, $0.5 million of the principal amount of the Convertible Senior Notes due 2017 remained outstanding and mature in November 2017.

In connection with our purchases of Convertible Senior Notes due 2017, we terminated a corresponding portion of the capped call transactions we entered into in 2010 related to the initial issuance of the Convertible Senior Notes due 2017. We received proceeds of $4.1 million for this termination.

~~Conversion of Convertible Senior Notes due 2019~~

In November 2016, we announced our intent to exercise our redemption option for the remaining $68.0 million aggregate principal amount of our Convertible Senior Notes due 2019. As a result of the average closing price of our common stock exceeding the conversion price of $10.60 prior to the redemption date, all of the holders of these notes elected to exercise their conversion rights. Radian elected to settle all of the notes surrendered for conversion with cash. We settled ourmaturity. For obligations with ~~respect~~maturities greater than or equal to ~~these conversions on January 27, 2017, with a cash payment of $110.1 million. At~~90 days, we may prepay the ~~time of settlement, this transaction resulted in a pretax charge of $4.5 million.~~

~~Senior Notes due 2024~~

In September 2017, we issued $450 million aggregate principal amount of Senior Notes due 2024 and received net proceeds of $443.3 million. These notes mature on October 1, 2024 and bear interest at a rate of 4.500% per annum, payable semi-annually on April 1 and October 1 of each year, with interest payments commencing on April 1, 2018.

~~We have the option to redeem these notes, in whole or in part,~~debt at any time, ~~or from time~~subject to ~~time prior to July 1, 2024 (the “Par Call Date”) at~~ a ~~redemption price equal to the greater of: (i) 100%~~prepayment fee calculation.

The principal balance of the ~~aggregate principal amount~~FHLB advances are required to be collateralized by eligible assets with a market value that must be maintained generally within a minimum range of 103% to 111% of the ~~notes to be redeemed~~amount borrowed, depending on the type of assets pledged. Our fixed-maturities available for sale include securities totaling $153.8 million and (ii) the make-whole amount, which is the sum of the present values of the remaining scheduled payments of principal and interest in respect of the notes to be redeemed, calculated from the redemption date to the Par Call Date, discounted to the redemption date at the applicable treasury rate plus 50 basis points, plus, in each case, accrued and unpaid interest thereon to, but excluding, the redemption date. At any time on or after the Par Call Date, we may, at our option, redeem the notes in whole or in part at a redemption price equal to 100% of the aggregate principal amount of the notes to be redeemed, plus accrued and unpaid interest thereon to, but excluding, the redemption date.

The indenture governing the Senior Notes due 2024 contains covenants customary for securities of this nature, including covenants related to the payments of the notes, reports, compliance certificates and modification of the covenants. Additionally, the indenture includes covenants restricting us from encumbering the capital stock of a designated subsidiary (as defined in the indenture for the notes) or disposing of any capital stock of any designated subsidiary unless either all of the stock is disposed of or we retain more than 80% of the stock.

~~Convertible Senior Notes due 2017 and 2019~~

Upon the original issuance of the Convertible Senior Notes due 2017 and 2019, in accordance with accounting standards related to convertible debt instruments that may be settled in cash upon conversion, the Company recorded a pretax equity component, net of the capped call transaction (with respect to the Convertible Senior Notes due 2017) and related issuance costs (with respect to the Convertible Senior Notes due 2017 and 2019). The pretax equity component is not subject to remeasurement, and therefore remains unchanged unless a reduction of outstanding principal occurs. The pretax equity component associated with our Convertible Senior Notes due 2017 decreased from $5.0$188.0 million at March 31, 2021 and December 31, ~~2016~~2020, respectively, which serve as collateral for our FHLB advances to $0.1 million at September 30, 2017, as a result of our purchases of the associated notes during 2017. In addition, as a result of settling our obligations on the remaining Convertible Senior Notes due 2019 during the first three months of 2017, the associated pretax equity component of $13.1 million at December 31, 2016 was eliminated.

Beginning on August 15, 2017 until the close of business on November 13, 2017 (the second scheduled trading day immediately preceding the maturity date), holders of our Convertible Senior Notes due 2017 may submit their notes for conversion regardless of the stock price or other conversion thresholds. During the same period, however, we have the option to call the Convertible Senior Notes due 2017. Therefore, at September 30, 2017, the pretax equity component associated with our Convertible Senior Notes due 2017 is not subject to reclassification as mezzanine (temporary) equity, and is classified as permanent equity.satisfy this requirement. See Note 12 of Notes to Consolidated Financial Statements in our ~~2016~~2020 Form 10-K for additional ~~information.~~information about our FHLB advances.

Revolving Credit Facility

Radian Group ~~Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~

~~Issuance and transaction costs incurred at the time~~has in place a $267.5 million unsecured revolving credit facility with a syndicate of bank lenders, which has a maturity date of January 18, 2022. At March 31, 2021, Radian Group was in compliance with all of the ~~original issuance~~credit facility covenants, and there were 0 amounts outstanding. For more information regarding our revolving credit facility, including certain of ~~the convertible notes were allocated to the liability~~its terms and equity components in proportion to the allocation of proceeds and are accounted for as debt issuance costs and equity issuance costs, respectively. The convertible notes are reflected on our condensed consolidated balance sheets as follows:

Convertible Senior Notes due 2017 Convertible Senior Notes due 2019
(In thousands) September 30,
2017 December 31,
2016 September 30,
2017 December 31,
2016
Liability component:
Principal $ 526
$ 22,233
$ —
$ 68,024
Debt discount, net (1)
(5 ) (1,221 ) —
(5,461 )
Debt issuance costs (1)
—
(65 ) —
(550 )
Net carrying amount $ 521
$ 20,947
$ —
$ 62,013

~~______________________~~


~~(1)~~	~~Included within long-term debt and is being amortized over the life of the convertible notes.~~

~~The following tables set forth total interest expense recognized related to the convertible notes for the periods indicated:~~

Convertible Senior Notes due 2017

Three Months Ended
September 30, Nine Months Ended
September 30,
(In thousands) 2017 2016 2017 2016
Contractual interest expense (benefit) (1)
$ 4

$ 166

$ 312

$ 705
Amortization of debt issuance costs —

17

32

71
Amortization of debt discount 10

322

615

1,344
Total interest expense (benefit) (1)
$ 14

$ 505

$ 959

$ 2,120

~~______________________~~


~~(1)~~	~~Interest expense (benefit) represents expense incurred, net of adjustments to accruals previously recorded.~~

Convertible Senior Notes due 2019
Three Months Ended
September 30, Nine Months Ended
September 30,
(In thousands) 2017 2016 2017 2016
Contractual interest expense (benefit) (1)
$ —
$ 493
$ (510 ) $ 3,043
Amortization of debt issuance costs —
74
16
447
Amortization of debt discount —
737
163
4,434
Total interest expense (benefit) (1)
$ —
$ 1,304
$ (331 ) $ 7,924

~~______________________~~


~~(1)~~	~~Interest expense (benefit) represents expense incurred, net of adjustments to accruals previously recorded.~~

~~12. Commitments and Contingencies~~

~~Legal Proceedings~~

~~See~~covenants, see Note 1312 of Notes to Consolidated Financial Statements in our ~~2016~~2020 Form ~~10-K for information regarding our accounting policies for contingencies.~~

10-K.

~~Radian Group Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements — (Continued)~~



Table of Contents Glossary			Radian Group Inc. Notes to Unaudited Condensed Consolidated Financial Statements

13. Commitments and Contingencies

Legal Proceedings

We are routinely involved in a number of legal actions and proceedings, including litigation and other disputes arising in the ordinary course of our business. ~~The legal~~Legal and regulatory matters such as discussed below and in our ~~2016~~2020 Form 10-K could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief that could require significant expenditures or have other effects on our business. Management believes, based on current knowledge and after consultation with counsel, that the outcome of ~~such~~any currently pending or threatened actions will not have a material adverse effect on our consolidated financial condition. ~~However, the~~The outcome of litigation and other legal and regulatory matters and proceedings is inherently uncertain, and it is possible that ~~one~~1 or more of the matters currently pending or threatened could have an ~~unanticipated~~ adverse effect on our liquidity, financial condition or results of operations for any particular period.

~~As described in Note 9, on September 4, 2014, we received formal Notices of Deficiency from the IRS related to certain tax losses and deductions resulting from our investment in~~ On August 31, 2018, Nationstar Mortgage LLC d/b/a portfolio of non-economic REMIC residual interests. We believe that an adequate provision for income taxes has been made for the potential liabilities that may result from this matter. However, if the ultimate resolution of this matter produces a result that differs materially from our current expectations, there could be a material impact on our effective tax rate, results of operations and cash flows.

~~On December 22, 2016, Ocwen Loan Servicing, LLC and Homeward Residential, Inc. (collectively, “Ocwen”~~Mr. Cooper (“Nationstar”) filed a complaint against Radian Guaranty (the “Complaint”). Ocwen has also initiated legal proceedings against several other mortgage insurers. The action filed against Radian Guaranty, titled Ocwen, et al. v. Radian Guaranty, is pending in the U.S. District Court for the Eastern District of Pennsylvania (the “Court”). The Complaint alleged breach of contract and bad faith claims and sought monetary damages and declaratory relief in regard to certain claims handling practices on future insurance claims. On December 17, 2016, Ocwen separately filed a parallel arbitration petition against Radian Guaranty related to certain insurance coverage and premium refund decisions made by Radian Guaranty. Effective June 26, 2020, Radian Guaranty and Nationstar entered into a Confidential Settlement Agreement and Release (the ~~“Petition”~~“Nationstar Settlement”) ~~before~~to fully resolve, among other things, all claims and counterclaims in this litigation. Implementation of the ~~American Arbitration Association (“AAA”)~~Nationstar Settlement, which was subject to the condition precedent that ~~asserted substantially~~ the ~~same allegations as contained in~~GSEs consent to the ~~Complaint (the Complaint~~Nationstar Settlement, became effective on March 1, 2021, and the ~~Petition are collectively referred~~litigation was subsequently dismissed with prejudice. Pursuant to the Nationstar Settlement, among other things: (i) Radian made a cash settlement payment to Nationstar on March 5, 2021 and (ii) each party agreed to release the other with respect to all known or unknown claims with respect to the certificates subject to this litigation as well as with respect to all other certificates issued under certain policies on loans serviced by Nationstar for which Radian decided claims prior to January 1, 2019. See Note 13 of Notes to Consolidated Financial Statements in our 2020 Form 10-K for additional background on this matter. The implementation of the ~~“Filings”). The Filings listed 9,420~~Nationstar Settlement did not have a material impact on our mortgage insurance certificates (“Certificates”) issued under multiple insurance policies, including Pool Insurance policies, as being the subject of these proceedings. On March 3, 2017, Radian Guaranty filed with the Court: (i) a motion to dismiss Ocwen’s Complaint or, in the alternative,reserves for a more definite statement and (ii) a motion to enjoin Ocwen’s parallel arbitration. On June 5, 2017, Ocwen filed an Amended Complaint and an Amended Petition (collectively, the “Amended Filings”) with the Court and the AAA, respectively, which together list 8,870 Certificates as being the subject of these proceedings. On June 30, 2017, Radian Guaranty filed with the Court renewed motions to dismiss Ocwen’s Amended Complaint and to enjoin Ocwen’s parallel arbitration. In July 2017, the Court denied Radian Guaranty’s motions to dismiss Ocwen’s Amended Complaint and to enjoin Ocwen’s parallel arbitration. In August 2017, Radian Guaranty filed an Answer With Affirmative Defenses and Counterclaim against Ocwen with the Court and in September Radian Guaranty filed an Amended Counterclaim. Also, in September 2017, Radian Guaranty filed an Answer With Affirmative Defenses and Counterclaim against Ocwen with the AAA. In October 2017, Ocwen filed a Motion to Dismiss Radian’s Amended Counterclaim (“Motion”) and Radian filed a Brief in Opposition to the Motion. On October 24, 2017, the Court issued an Order granting in part and denying in part Ocwen’s Motion, and directed Ocwen to answer Radian Guaranty’s Amended Counterclaim. Radian Guaranty believes that Ocwen’s allegations and claims in the legal proceedings described above are without merit and legally deficient, and plans to defend these claims vigorously. We are not able to estimate a reasonably possible loss, if any, or range of loss in this ~~matter because of the preliminary stage of the proceedings.~~proceeding.

We also are periodically subject to reviews and audits, as well as inquiries, information-gathering requests and ~~investigations.~~investigations, by regulatory entities. In connection with these matters, from time to time we receive requests and subpoenas seeking information and documents related to aspects of our business. In March 2017, Green River Capital, a subsidiary of Clayton, received a letter from the staff of the SEC stating that it is conducting an investigation captioned, “In the Matter of Certain Single Family Rental Securitizations,” and that it is requesting information from market participants. The letter asks Green River Capital to provide information regarding broker price opinions that Green River Capital provided on properties included in SFR securitization transactions. Green River Capital is cooperating with the SEC.

Our Master Policies establish the timeline within which any suit or action arising from any right of an insured under the policy generally must be commenced. In general, any suit or action arising from any right of an insured under the policy must be commenced within two years after such right first arose for primary insurance and within three years for certain other policies, including certain Pool Mortgage Insurance policies. Although we believe that our Loss Mitigation Activities are justified under our policies, from time to time we face challenges from certain lender and servicer customers regarding our Loss Mitigation Activities, which have resulted in some reversals of our decisions regarding Rescissions, Claim Denials or Claim Curtailments. We are currently in discussions with these customers regarding our Loss Mitigation Activities and claim payment practices, which if not resolved,Activities. These challenges could result in additional arbitration or judicial proceedings and we may need to reassume the risk on, and increase loss reserves for, the associated policies or pay additional claims.

The legal and regulatory matters discussed above could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief that could require significant expenditures or have other effects on our business in excess of amounts we have established as reserves for such matters.

Lease Liability

Our lease liability represents the present value of future lease payments over the lease term. Our operating lease liability was $51.4 million and $53.4 million as of March 31, 2021 and December 31, 2020, respectively, and is classified in other liabilities in our condensed consolidated balance sheets. Our operating lease right-of-use asset is classified in other assets in our condensed consolidated balance sheets as shown in Note 9.

See Note ~~10 for additional information.~~

~~Radian Group Inc.~~

13 of Notes to ~~Unaudited Condensed~~ Consolidated Financial Statements ~~— (Continued)~~in our 2020 Form 10-K for further information regarding our commitments and contingencies and our accounting policies for contingencies.



Table of Contents Glossary			Radian Group Inc. Notes to Unaudited Condensed Consolidated Financial Statements

Further, there are loans in our total defaulted portfolio (in particular, our older defaulted portfolio) for which actions or proceedings (such as foreclosure) may not have been commenced within the outermost deadline in our Prior Master Policy. We are evaluating these loans regarding this potential violation and our corresponding rights under the Prior Master Policy. While we can provide no assurance regarding the ultimate resolution of these issues, it is possible that arbitration or legal proceedings could result.

~~Other~~

Securities regulations became effective in 2005 that impose enhanced disclosure requirements on issuers of ABS (including mortgage-backed securities). To allow our customers to comply with these regulations at that time, we typically were required, depending on the amount of credit enhancement we were providing, to provide: (i) audited financial statements for the insurance subsidiary participating in the transaction or (ii) a full and unconditional holding company-level guarantee for our insurance subsidiaries’ obligations in such transactions. Radian Group has guaranteed two structured transactions for Radian Guaranty involving $101.5 million of remaining credit exposure as of September 30, 2017.

~~13.~~14. Capital Stock

Share Repurchase ~~Program~~Activity

On ~~June 29, 2016,~~August 14, 2019, Radian Group’s board of directors ~~authorized~~approved a share repurchase program to spend up to $125 million to repurchase Radian Group common stock. In order to implement the program, we adopted a trading plan under Rule 10b5-1 of the Exchange Act during the third quarter of 2016. During the second quarter of 2017, 380 shares were purchased at an average price of $15.59 per share, which represented the only purchases made under the plan. This share repurchase program expired on June 30, 2017.

~~On August 9, 2017, Radian Group’s board of directors renewed its share repurchase program~~ that ~~enables the Company to repurchase its common stock. The current authorization allows~~authorizes the Company to spend up to ~~$50~~$200 million, excluding commissions, to repurchase Radian Group common stock in the open market or in privately negotiated transactions, based on market and business conditions, stock price and other factors. Radian ~~has established~~operated this program pursuant to a trading plan under Rule 10b5-1 of the Exchange Act, which permits the Company to ~~implement~~purchase shares, at pre-determined price targets, when it may otherwise be precluded from doing so. On February 13, 2020, Radian Group’s board of directors authorized a $275 million increase in this program, bringing the ~~program.~~total authorization to repurchase shares up to $475 million, excluding commissions, and extended the expiration of this program from July 31, 2020 to August 31, 2021. During the three months ended March 31, 2021, the Company entered into a new 10b5-1 plan and resumed purchases under this program which had been temporarily suspended in March 2020 in response to the COVID-19 pandemic. During the three months ended March 31, 2021, the Company purchased 413,141 shares at an average price of $20.91, including commissions. As of ~~September 30, 2017, no shares had been purchased and therefore the full~~March 31, 2021, purchase authority of up to ~~$50~~$190.2 million remained available under this ~~program, which expires on July 31, 2018.~~program.

Other Purchases

We may purchase shares on the open market to settle stock options exercised by employees and ~~to fund 401(k) matches and~~ purchases under ~~our~~the Amended and Restated Radian Group Inc. Employee Stock Purchase Plan. In addition, upon the vesting of certain restricted stock awards under our equity compensation plans, we may withhold from such vested awards shares of our common stock to satisfy the tax liability of the award recipients.

Dividends and Dividend Equivalents

During the first quarter of 2021 and each quarter of 2020, we declared quarterly cash dividends on our common stock equal to $0.125 per share. On May 4, 2021, Radian Group’s board of directors authorized an increase to the Company’s quarterly dividend from $0.125 to $0.14 per share, beginning with the dividend declared in the second quarter of 2021.

Share-Based and Other Compensation Programs

~~Radian Group Inc.~~

In the three months ended March 31, 2021, we did not grant any material amounts of performance-based or time-based awards in the form of non-qualified stock options, restricted stock, restricted stock units, phantom stock, or stock appreciation rights. See Note 17 of Notes to ~~Unaudited Condensed~~ Consolidated Financial Statements ~~— (Continued)~~in our 2020 Form 10-K for additional information regarding the Company’s share-based and other compensation programs.



Table of Contents Glossary			Radian Group Inc. Notes to Unaudited Condensed Consolidated Financial Statements


~~(5)~~			~~The timing~~ Table of ~~these potential payments is uncertain given the nature~~Contents Glossary Part I. Item 2. Management’s Discussion and Analysis of ~~the obligations.~~Financial Condition and Results of Operations

The following table summarizes our All Other results of operations for the three months ended March 31, 2021 and 2020.


					Change
	Three Months Ended March 31,				Favorable (Unfavorable)
(In millions)	2021		2020		2021 vs. 2020
Adjusted pretax operating income (loss) (1)	$	3.5	$	2.1	$	1.4
Services revenue	0.1		5.7		(5.6)
Net investment income	4.2		4.6		(0.4)
Cost of services	—		5.5		5.5
Other operating expenses	1.0		2.1		1.1

(1)Our senior management uses adjusted pretax operating income (loss) as our primary measure to evaluate the fundamental financial performance of each of the Company’s business segments. See Note 4 of Notes to Unaudited Condensed Consolidated Financial Statements.

Liquidity and Capital Resources

~~Radian Group—Short-Term~~ Consolidated Cash Flows

The following table summarizes our consolidated cash flows from operating, investing and financing activities.


	Three Months Ended March 31,
(In thousands)	2021		2020
Net cash provided by (used in):
Operating activities	$	153,029	$	155,800
Investing activities	(81,938)		31,993
Financing activities	(41,474)		(222,142)

Increase (decrease) in cash and restricted cash	$	29,617	$	(34,349)

Operating Activities. Our most significant source of operating cash flows is from premiums received from our mortgage insurance policies, while our most significant uses of operating cash flows are for claims paid on our mortgage insurance policies and our operating expenses. Net cash provided by operating activities totaled $153.0 million for the three months ended March 31, 2021, a slight decrease compared to $155.8 million for the same period in 2020. This decrease was principally due to lower net premiums written, partially offset by a reduction in claims paid for the three months ended March 31, 2021.

Investing Activities. Net cash used in investing activities was $81.9 million for the three months ended March 31, 2021, compared to $32.0 million provided by investing activities for the same period in 2020. This change was primarily the result of an increase in purchases, net of proceeds from sales, of both fixed-maturity investments available for sale and equity securities, partially offset by a decrease in purchases of short-term investments.

Financing Activities. Net cash used in financing activities decreased for the three months ended March 31, 2021, compared to net cash used in financing activities during the same period in 2020. For the three months ended March 31, 2021, our primary financing activities included a decrease in repurchases of common shares partially offset by an increase in net repayments of secured borrowings. See Notes 12 and 14 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information regarding our secured borrowings and share repurchases, respectively.

See “Item 1. Financial Statements (Unaudited)—Condensed Consolidated Statements of Cash Flows (Unaudited)” for additional information.

Liquidity ~~Needs~~Analysis—Holding Company

Radian Group serves as the holding company for our ~~insurance and other~~operating subsidiaries and does not have any operations of its own. At ~~September 30, 2017,~~March 31, 2021, Radian Group had available, either directly or through an unregulated ~~subsidiary,~~subsidiaries, unrestricted cash and liquid investments of ~~approximately $300 million. This amount: (i) includes $89 million deposited with the IRS (which may be recalled by us~~$1.0 billion. Available liquidity at ~~any time) in connection with our dispute with the IRS related to the Deficiency Amount from the IRS’s examination of our 2000 through 2007 consolidated federal income tax returns and (ii)~~March 31, 2021 excludes certain additional cash and liquid investments that have been advanced to Radian Group from ~~our~~its subsidiaries to pay for corporate expenses and interest payments. Total liquidity, which includes our undrawn $267.5 million unsecured revolving credit facility, as described below, was $1.3 billion as of March 31, 2021.

Available holding company liquidity was reduced during the third quarter of 2017 due to an estimated tax payment made by Radian Group. While this payment reduced available holding company liquidity, a significant portion of it created an AMT credit carryforward that can be utilized in future periods to offset regular tax payments Radian Group may make after its NOL carryforwards are fully utilized. Additionally, approximately $20 million of the third quarter estimated tax payment was reimbursed to Radian Group through its tax-sharing agreement with its subsidiaries.


Table of Contents Glossary Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

During the ~~third quarter~~three months ended March 31, 2021, Radian Group’s available liquidity decreased by $78.4 million, primarily due to payments for dividends and share repurchases, as described below, as well as the impact of ~~2017, we improved our debt maturity profile by completing the following transactions:~~

~~the issuance of $450 million aggregate principal amount of Senior Notes due 2024; and~~

~~tender offers resulting in the purchases of aggregate principal amounts of $141.4 million, $115.9 million and $152.3 million of our Senior Notes due 2019, 2020 and 2021, respectively;~~

~~Part I. Item 2. Management's DiscussionandAnalysis of Financial Condition and Results of Operations (Cont'd)~~

~~The Senior Notes due 2024 bear interest at a rate of 4.500% per annum, payable semi-annually~~unrealized losses on April 1 and October 1 of each year, with interest payments commencing on April 1, 2018. We received net proceeds of $443.3 million upon the issuance of the Senior Notes due 2024. We used the net proceeds to fund the purchases of a portion of our Senior Notes due 2019, 2020 and 2021, which required $450.0 million in cash (plus accrued and unpaid interest due on the purchased notes). The combination of these transactions is estimated to reduce our future annual cash interest payments by $4.3 million and to increase the weighted average maturity of our Senior Notes by nearly two years. Following these purchases, the remaining principal amounts of the outstanding Senior Notes due 2019, 2020 and 2021 were $158.6 million, $234.1 million and $197.7 million, respectively, at September 30, 2017. See Note 11 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information about these debt transactions.

~~The chart below shows our debt maturity profile at September 30, 2017 compared to December 31, 2016.~~

During the second quarter of 2017, we purchased an aggregate principal amount of $21.6 million of our outstanding Convertible Senior Notes due 2017. We funded the purchases with $31.6 million in cash (plus accrued and unpaid interest due on the purchased notes). As of September 30, 2017, $0.5 million of the principal amount of the Convertible Senior Notes due 2017 remained outstanding and mature in November 2017.

During the first quarter of 2017, we settled our obligations with respect to the remaining $68.0 million aggregate principal amount of our Convertible Senior Notes due 2019 for $110.1 million in cash. As of the settlement date, this transaction resulted in an aggregate decrease of 6.4 million diluted shares for purposes of determining diluted net income per share. See Note 11 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information about our debt transactions.

On August 9, 2017, Radian’s Board of Directors renewed its share repurchase program and authorized the Company to spend up to $50 million to repurchase Radian Group common stock in the open market or in privately negotiated transactions, based on market and business conditions, stock price and other factors. As of September 30, 2017, the full purchase authority of up to $50 million remained available under this program, which expires on July 31, 2018. See Note 13 of Notes to Unaudited Condensed Consolidated Financial Statements.

~~Part I. Item 2. Management's DiscussionandAnalysis of Financial Condition and Results of Operations (Cont'd)~~

investments.

In addition to ~~the potential use~~available cash and marketable securities, Radian Group’s principal sources of upcash to ~~$50 million~~fund future liquidity needs include: (i) payments made to ~~repurchase~~ Radian Group ~~common stock pursuant~~by its subsidiaries under expense- and tax-sharing arrangements; (ii) net investment income earned on its cash and marketable securities; (iii) to the ~~existing share repurchase program,~~extent available, dividends or other distributions from its subsidiaries; and (iv) amounts, if any, that Radian Guaranty is able to repay under the Surplus Notes. Radian Group also has in place a $267.5 million unsecured revolving credit facility with a syndicate of bank lenders, which has a maturity date of January 18, 2022. Subject to certain limitations, borrowings under the credit facility may be used for working capital and general corporate purposes, including, without limitation, capital contributions to our insurance and reinsurance subsidiaries as well as growth initiatives. At March 31, 2021, the full $267.5 million remains undrawn and available under the facility. See Note 12 of Notes to Consolidated Financial Statements in our 2020 Form 10-K for additional information on the unsecured revolving credit facility.

We expect Radian Group’s principal liquidity demands for the next 12 months ~~are expected~~ to ~~include:~~be: (i) the payment of corporate expenses, including taxes; (ii) interest payments on our outstanding ~~long-term debt;~~debt obligations; (iii) ~~as discussed further below, payments~~subject to ~~the U.S. Treasury resulting from~~approval by our board of directors and our ongoing ~~dispute with the IRS relating to the examination~~assessment of our ~~2000 through 2007 consolidated federal income tax returns if a compromised settlement with the IRS is reached; and (iv)~~financial condition, the payment of quarterly dividends on our common ~~stock.~~stock, which we recently increased from $0.125 to $0.14 per share; and (iv) the potential continued repurchases of shares of our common stock pursuant to the current share repurchase authorization, as described below, for which $190.2 million in authorization remains outstanding.

In addition to our ongoing short-term liquidity needs discussed above, our most significant need for liquidity beyond the next 12 months is the repayment of $1.4 billion aggregate principal amount of our senior debt due in future years. See “—Capitalization—Holding Company” below for details of our debt maturity profile. Radian Group’s liquidity demands for the next 12 months or in future periods could also include: (i) early repurchases or ~~early~~ redemptions of portions of our ~~long-term~~ debt ~~and~~obligations; (ii) potential additional investments to support our ~~strategy for growing our businesses.~~

~~Corporate Expenses~~business strategy; and ~~Interest Expense. Radian Group has expense-sharing arrangements in place with~~(iii) potential additional capital contributions to its ~~principal operating~~ subsidiaries, including due to the continuing impact that ~~require those subsidiaries to pay their allocated share~~the COVID-19 pandemic could have on the liquidity, results of ~~certain holding company-level expenses, including interest payments on our outstanding long-term debt. Payments~~operations and financial condition of such corporate expenses for the next 12 months, excluding interest payments on our long-term debt, are expected to be approximately $65.5 million, most of which is expected to be reimbursed by our subsidiaries under our existing expense-sharing arrangements. For the same period, payments of interest on our long-term debt are expected to be approximately $45.3 million, most of which is expected to be reimbursed by our subsidiaries under our existing expense-sharing arrangements. See “~~—Services,” below. The expense-sharing arrangements between~~ Radian Group and its subsidiaries. In our ~~insurance subsidiaries, as amended, have been approved by the Pennsylvania Insurance Department, but such approval~~2020 Form 10-K, see “Item 1A. Risk Factors,” including “—Radian Group’s sources of liquidity may be ~~modified or revoked at any time.~~

~~Capital Support for Subsidiaries. Private mortgage insurers, including~~ insufficient to fund its obligations”and“—Radian Guaranty ~~are required~~may fail to comply with the PMIERs to remain eligible insurers of loans purchased by the GSEs. The PMIERs specifically provide that the factors that are applied to determine a mortgage insurer’s Minimum Required Assets may be updated every two years. The GSEs have informed us that they expect updates to the PMIERs will become effective in the fourth quarter of 2018. Based on this timing, we would expect to receive a draft of the recommended changes later this year and then to engage in an iterative review processmaintain its eligibility status with the GSEs, and ~~FHFA before~~ the ~~updated PMIERs are finalized. The GSEs will provide approved insurers~~additional capital required to support Radian Guaranty’s eligibility could reduce our available liquidity” for additional discussion about the elevated risks and uncertainties associated with ~~an implementation period of at least 180 days after~~ the ~~updated requirements are finalized~~COVID-19 pandemic and ~~prior to their effective date. While we have not received a draft of~~ the ~~changes to the PMIERs to date, it is reasonably possible that updates to the PMIERs could, among other things, result in a material increase~~potential impact to Radian Guaranty’s ~~capital requirements under the PMIERs financial requirements.~~Minimum Required Assets. See ~~Note~~also Notes 1 and 16 of Notes to Unaudited Condensed Consolidated Financial Statements ~~in our 2016 Form 10-K~~and “Overview—COVID-19 Impacts” for ~~additional information about the PMIERs.~~further information.

If Radian Guaranty currently is an approved mortgage insurer under the PMIERs, and is in compliance with the PMIERs financial requirements. At September 30, 2017, Radian Guaranty’s Available Assets under the PMIERs totaled approximately $3.5 billion, resulting in an excessGroup’s current sources of liquidity are insufficient to fund its obligations, or “cushion” of approximately $237 million, or 7%, over its Minimum Required Assets of approximately $3.3 billion. During the third quarter of 2017, the PMIERs cushion was reduced by the $54.8 million payment to Freddie Mac from the collateral account in connection with the scheduled final settlement of the Freddie Mac Agreement, as described below. In addition, strong NIW and the growth in IIF increased Minimum Required Assets. Based on our current projections and the current requirements under the PMIERs,if we expect to generally maintain Radian Guaranty’s Available Assets at a level no less than approximately 5% above its Minimum Required Assets. We expect the amount of this cushion to fluctuate on a quarterly basis, but over time we expect it to increase based, in part, on our expectations regarding the future financial performance of Radian Guaranty, including our projected NIW and expected decrease in defaults. Although the holding company liquidity of $300 million and the $225 million unsecured revolving credit facility described below could be utilized to enhance the cushion if needed, based on our projections, Radian Guaranty is not expected to require any additional capital contributions to remain in compliance with the current requirements under the PMIERs financial requirements.

Under the PMIERs, Radian Guaranty’s Available Assets and Minimum Required Assets are determined on an aggregate basis, taking into account the assets and insured risk of Radian Guaranty and any exclusive affiliated reinsurers. Effective in the third quarter of 2017, Radian Reinsurance is no longer considered an exclusive affiliated reinsurer of Radian Guaranty under the PMIERs, due to its participation in the credit risk transfer programs with Fannie Mae and Freddie Mac. As a result, the Available Assets and Minimum Required Assets of Radian Reinsurance are no longer included in the determination of Radian Guaranty’s Available Assets and Minimum Required Assets. Although this change reduced Radian Guaranty’s Available Assets as well as its Minimum Required Assets under the PMIERs, it did not affect Radian Guaranty’s compliance with the PMIERs financial requirements.

~~The impact of increased defaults resulting from Hurricanes Harvey and Irma is expected~~otherwise decide to increase our ~~Minimum Required Assets~~liquidity position, Radian Group may seek additional capital, including by incurring additional debt, issuing additional equity, or selling assets, which we may not be able to do on favorable terms, if at all.

Share Repurchases. During the three months ended March 31, 2021, the Company repurchased 413 thousand shares of Radian Group common stock under ~~the PMIERs financial requirements~~programs authorized by ~~an immaterial amount and result in volatility~~Radian Group’s board of ~~our PMIERs cushion. See “~~—~~Overview—Operating Environment and Business Strategy” for additional information.~~

~~Part I. Item 2. Management's DiscussionandAnalysis~~directors, at a total cost of ~~Financial Condition and Results of Operations (Cont'd)~~

~~Radian Guaranty’s Risk-to-capital as of September 30, 2017 was 14.4 to 1.~~$8.6 million, including commissions. See Note 1514 of Notes to Unaudited Condensed Consolidated Financial Statements for ~~more information. Our combined Risk-to-capital, which represents~~additional details on our share repurchase programs.

Dividends and Dividend Equivalents. Throughout 2020, and for the ~~consolidated Risk-to-capital measure for all~~first quarter of 2021, our Mortgage Insurance subsidiaries, was 13.4 to 1 as of September 30, 2017. Radian Guaranty is not expected to need additional capital to satisfy state insurance regulatory requirements in their current form.

The NAIC is in the process of reviewing the minimum capital and surplus requirements for mortgage insurers and considering changes to the Model Act. In May 2016, a working group of state regulators released an exposure draft of a risk-based capital framework to establish capital requirements for mortgage insurers. While the timing and outcome of this process is not known, in the event the NAIC adopts changes to the Model Act, we expect that the capital requirements in states that adopt the new Model Act may increase as a result of the changes. However, we continue to believe the changes to the Model Act will not result in financial requirements that require greater capital than the level currently required under the PMIERs financial requirements.

In the event the cash flow from operations of the Services segment is not adequate to fund all of its needs, Radian Group may provide additional funds to the Services segment in the form of a capital contribution or an intercompany note. See also “~~—Services,” below.~~

~~Additional capital support may also be required for potential investments in new business initiatives to support our strategy for growing our businesses.~~

~~Dividends. Our~~ quarterly common stock dividend ~~is currently $0.0025~~was $0.125 per ~~share and, based~~share. Effective May 4, 2021, Radian Group’s board of directors authorized an increase to the Company’s quarterly dividend to $0.14 per share. Based on our current outstanding shares of common stock and restricted stock units, we would require ~~$2.2~~approximately $108 million in the aggregate to pay ~~our quarterly~~ dividends and dividend equivalents for the next 12 months. Radian Group is not subject to any limitations on its ability to pay dividends except those generally applicable to corporations that are incorporated in Delaware. ~~Delaware corporation law provides that~~The declaration and payment of future quarterly dividends are only payable out of a corporation’s capital surplus or (subject to certain limitations) recent net profits. As of September 30, 2017, our capital surplus was $3.0 billion, representing our dividend limitation under Delaware law.

~~IRS Matter. In addition~~remains subject to the ~~items discussed above,~~board of directors’ determination.

Corporate Expenses and Interest Expense. Radian Group has expense-sharing arrangements in ~~the event a final judgment or compromised settlement agreement is reached in~~place with its principal operating subsidiaries that require those subsidiaries to pay their allocated share of certain holding-company-level expenses, including interest payments on Radian Group’s ~~ongoing dispute with~~outstanding debt obligations. Corporate expenses and interest expense on Radian Group’s debt obligations allocated under these arrangements during the ~~IRS related to the Deficiency Amount from the examination~~three months ended March 31, 2021 of $31.9 million and $20.7 million, respectively, were substantially all reimbursed by its subsidiaries. We expect substantially all of our ~~2000 through 2007 consolidated~~holding company expenses to continue to be reimbursed by our subsidiaries under our expense-sharing arrangements. The expense-sharing arrangements between Radian Group and its mortgage insurance subsidiaries, as amended, have been approved by the Pennsylvania Insurance Department, but such approval may be modified or revoked at any time.

Taxes. Pursuant to our tax-sharing agreements, our operating subsidiaries pay Radian Group an amount equal to any federal income tax ~~returns,~~the subsidiary would have paid on a standalone basis if they were not part of our consolidated tax return. As a result, from time to time, under the provisions of our tax-sharing agreements, Radian Group may ~~be required~~pay to make a payment (including by utilizing the amount currently on deposit with the IRS as discussed above) to the U.S. Treasury. During 2016, we held several meetings with the IRS in an attempt to reach a compromised settlement on the issues presented in our dispute. In October 2017, the parties informed the U.S. Tax Court that they believe they have reached agreement in principle on all issues presented in the dispute and that the parties are reviewing computations resultingor receive from those agreed upon terms. The resolution must be reported to the JCT for review and cannot be finalized until the IRS considers the views, if any, expressed by the JCT about the matter. If we are unable to complete a compromised settlement, then the ongoing litigation could take several years to resolve and may result in substantial legal expenses. Although we can provide no assurance regarding the outcome of any such litigation or whether a compromised settlement with the IRS will ultimately be reached, based on current proposed settlement terms, the amount we currently expect to pay does not exceed the $89 million we have on deposit with the IRS related to this matter. However, there remains uncertainty with regard to whether a compromised settlement will ultimately be reached as well as the amount and timing of any potential payments. See Note 9 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information regarding the IRS matter.

~~Sources of Liquidity.~~ In addition to available cash and marketable securities, Radian Group’s principal sources of cash to fund future short-term liquidity needs include: (i) payments made to Radian Group under expense-sharing arrangements with our subsidiaries, as discussed above and (ii) payments made to Radian Group under tax-sharing arrangements with our subsidiaries, as discussed below. See also “~~—Services,” below.~~

In addition, on October 16, 2017, Radian Group entered into a three-year, $225 million unsecured revolving credit facility with a syndicate of bank lenders. Borrowings under the credit facility may be used for working capital and general corporate purposes, including, without limitation, capital contributions to Radian Group’s insurance and reinsurance subsidiaries as well as growth initiatives. See Note 16 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information.

~~Under the provisions of~~ its ~~tax-sharing agreement with its subsidiaries, Radian Group may receive cash as a result of certain of our~~ operating subsidiaries ~~generating tax liabilities and related payments~~amounts that ~~are in excess of~~differ from Radian Group’s consolidated federal tax payment ~~obligation to~~obligation. During the ~~U.S. Treasury.~~

~~Part I. Item 2. Management's DiscussionandAnalysis of Financial Condition and Results of Operations (Cont'd)~~



Table of Contents Glossary Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~If Radian Group’s current sources of liquidity are insufficient for~~three months ended March 31, 2021, Radian Group did not receive any tax-sharing agreement payments from its operating subsidiaries.

Capitalization—Holding Company

The following table presents our holding company capital structure.


(In thousands)	March 31, 2021			December 31, 2020
Debt:
Senior Notes due 2024	$	450,000		$	450,000
Senior Notes due 2025	525,000			525,000
Senior Notes due 2027	450,000			450,000
Deferred debt costs on senior notes	(18,397)			(19,326)
Revolving credit facility	—			—
Total	1,406,603			1,405,674
Stockholders’ equity	4,235,292			4,284,353
Total capitalization	$	5,641,895		$	5,690,027
Debt-to-capital ratio	24.9		%	24.7		%

Stockholders’ equity decreased by $49.1 million from December 31, 2020 to ~~fund its obligations during~~March 31, 2021. The net decrease in stockholders’ equity for the ~~next 12~~three months ~~or if we otherwise decide to increase~~ended March 31, 2021 resulted primarily from unrealized losses on investments of $147.0 million, and dividends of $24.5 million, partially offset by our ~~liquidity position, Radian Group may seek additional capital by incurring additional debt, issuing additional equity, or selling assets, which we may not be able to do on favorable terms, if at all.~~net income of $125.6 million.

We regularly evaluate opportunities, based on market conditions, to finance our operations by accessing the capital markets or entering into other types of financing arrangements with institutional and other lenders and financing sources, and consider various measures to improve our capital and liquidity positions, as well as to strengthen our balance sheet, ~~and~~ improve Radian Group’s debt maturity ~~profile.~~profile and maintain adequate liquidity for our operations. In the past we have repurchased and exchanged, prior to maturity, some of our outstanding debt, and in the future, we may from time to time seek to redeem, repurchase or exchange for other securities, or otherwise restructure or refinance some or all of our outstanding debt prior to maturity in the open market through other public or private transactions, including pursuant to one or more tender offers or through any combination of the foregoing, as circumstances may allow. The timing or amount of any potential transactions will depend on a number of factors, including market opportunities and our views regarding our capital and liquidity positions and potential future ~~needs.~~needs, including as a result of the effects of the COVID-19 pandemic. There can be no assurance that any such transactions will be completed on favorable terms, or at all.

~~Radian Group—Long-Term Liquidity Needs~~Mortgage

~~In addition to our short-term liquidity needs discussed above, our most significant needs for liquidity beyond the next 12 months are expected to include:~~

~~the repayment of our outstanding long-term debt, consisting of:~~


◦	~~$159 million principal amount of outstanding debt due in June 2019;~~


◦	~~$234 million principal amount of outstanding debt due in June 2020;~~


◦	~~$198 million principal amount of outstanding debt due in March 2021;~~


◦	~~$450 million principal amount of outstanding debt due in October 2024; and~~

~~potential additional capital contributions to our subsidiaries.~~

We expect to meet the long-term liquidity needs of Radian Group with a combination of: (i) available cash and marketable securities; (ii) our unsecured revolving credit facility; (iii) private or public issuances of debt or equity securities, which we may not be able to do on favorable terms, if at all; (iv) cash received under tax- and expense-sharing arrangements with our subsidiaries; and (v) to the extent available, dividends from our subsidiaries.

Under Pennsylvania’s insurance laws, ordinary dividends and other distributions may only be paid out of an insurer’s positive unassigned surplus, measured as of the end of the prior fiscal year. Radian Guaranty had negative unassigned surplus at December 31, 2016 of $691.3 million, and therefore no ordinary dividends can be paid from Radian Guaranty in 2017. Radian Reinsurance also had negative unassigned surplus of $118.4 million at December 31, 2016. Due in part to the need to set aside contingency reserves, we do not expect that Radian Guaranty or Radian Reinsurance will have positive unassigned surplus, and therefore they will not have the ability to pay ordinary dividends, for the foreseeable future. Under Pennsylvania’s insurance laws, an insurer may request an extraordinary dividend, but payment is subject to the approval of the Pennsylvania Insurance Commissioner.

~~There also can be no assurance that our Services segment will generate sufficient cash flow to pay dividends. See “—Services” below.~~

~~Mortgage Insurance~~

As of September 30, 2017, our Mortgage Insurance segment maintained claims paying resources of $4.3 billion on a statutory basis, which consists of contingency reserves, statutory policyholders’ surplus, unearned premium reserves (premiums received but not yet earned) and loss reserves.

The principal demands for liquidity in our ~~mortgage insurance~~Mortgage business currently include: (i) the payment of claims and potential claim settlement transactions, net of reinsurance; (ii) ~~operating~~ expenses ~~including~~(including those allocated from Radian ~~Group;~~Group); (iii) repayments of FHLB advances; (iv) interest expense and ~~(iii) taxes. We may also require liquidity~~repayments, if any, associated with the Surplus Notes; and (v) taxes, including potential additional purchases of U.S. Mortgage Guaranty Tax and Loss Bonds. See Notes 10 and 16 of Notes to ~~return cash collateral when loaned securities are returned~~Consolidated Financial Statements in our 2020 Form 10-K for additional information related to ~~us. See “Securities Lending Agreements” below.~~

~~Part I. Item 2. Management's DiscussionandAnalysis of Financial Condition and Results of Operations (Cont'd)~~

these non-interest bearing instruments.

The principal sources of liquidity in our mortgage insurance business currently include ~~net~~ insurance premiums, net investment income and cash flows ~~from~~from: (i) investment sales and ~~maturities~~maturities; (ii) FHLB advances; and ~~potentially, FHLB borrowings or~~(iii) capital contributions from Radian Group. We believe that the operating cash flows generated by each of our mortgage insurance subsidiaries will provide these subsidiaries with a substantial portion of the funds necessary to satisfy their ~~claim payments, operating expenses and taxes~~needs for the foreseeable future. However, see “Overview—COVID-19 Impacts” and Note 1 of Notes to Unaudited Condensed Consolidated Financial Statements for discussion about the elevated risks and uncertainties associated with the COVID-19 pandemic, including the impact on our PMIERs Cushion.

As of March 31, 2021, our mortgage insurance subsidiaries maintained claims paying resources of $5.4 billion on a statutory basis, which consists of contingency reserves, statutory policyholders’ surplus, premiums received but not yet earned and loss reserves. In ~~October 2017,~~addition, our reinsurance programs are designed to provide additional claims-paying resources during times of economic stress and elevated losses. See Note 8 of Notes to Unaudited Condensed Consolidated Financial Statements for additional information.

Radian Guaranty’s Risk-to-capital as of March 31, 2021 was 11.9 to 1. Radian Guaranty agreed to terms to commute mortgage insurance coverage on a certain population of performing and non-performing mortgage loans on which we had Pool Insurance risk. In accordance with this agreement, Radian will make a cash payment and will no longer have future claim exposure on these loans. Approximately $14.2 million was recorded as an incurred loss and accrued in IBNR to reflect the estimated payment for future losses, primarily on performing loans in our Legacy Portfolio that are likely to be affected by the expected pool commutation. Because the total payment amount is expected to be less than $20 million and approximately equal to the amount reserved for these loans as of September 30, 2017, this transaction is not expected to ~~have a material impact on Radian’s results of operations.~~

~~In the first quarter of 2017,~~need additional capital to satisfy state insurance regulatory requirements in their current form. At March 31, 2021, Radian Guaranty ~~entered into an agreement~~had statutory policyholders’ surplus of $526.9 million. This balance includes a $210.9 million benefit from U.S. Mortgage Guaranty Tax and Loss Bonds issued by the U.S. Department of the Treasury, which mortgage guaranty insurers such as


Table of Contents Glossary Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Radian Guaranty may purchase in order to ~~commute mortgage insurance coverage on~~be eligible for a tax deduction, subject to certain ~~population~~limitations, related to amounts required to be set aside in statutory contingency reserves. See Note 16 of ~~non-performing mortgage loans. In accordance~~Notes to Consolidated Financial Statements, “Overview—COVID-19 Impacts” and “Item 1A. Risk Factors” in our 2020 Form 10-K for more information about these bonds and the risks associated with ~~this agreement, Radian made a cash payment~~potential corporate tax rate increases, our statutory and PMIERs requirements and the potential effects of $20.5 million and no longer has future claim exposure on these loans. This transaction did not have a material impact on Radian’s results of operations, because the payment amount was approximately equalincreased defaults due to the ~~amount reserved for these loans.~~COVID-19 pandemic.

In August 2016, Radian Guaranty and Radian Reinsurance became members of the FHLB and, as members, may borrow from the FHLB. Borrowings from the FHLB may be used to provide low-cost, supplemental liquidity. As of September 30, 2017, there were no FHLB borrowings outstanding.

Private mortgage insurers, including Radian Guaranty, are required to comply with the PMIERs to remain ~~eligible~~approved insurers of loans purchased by the GSEs. Radian Guaranty currently is an approved mortgage insurer under the PMIERs. At March 31, 2021, Radian Guaranty’s Available Assets under the current PMIERs financial requirements totaled approximately $4.9 billion, resulting in a PMIERs Cushion of $1.5 billion, or 42%, over its Minimum Required Assets.

The following chart summarizes our PMIERs Cushion and isRadian’s excess available resources as of March 31, 2021, December 31, 2020 and March 31, 2020, calculated based on the PMIERs financial requirements in ~~compliance~~effect for each date shown.


PMIERs Excess Available Resources


	$ in millions (1)	March 31, 2021			December 31, 2020			March 31, 2020
¢	Credit Facility	$268	8	%	$268	8	%	$268	9	%
¢	Radian Group Liquidity, Net (2)	989	29		1,068	32		613	21
¢	PMIERs Cushion (3)	1,451	42		1,338	40		1,129	38
	Total	$2,708	79	%	$2,674	80	%	$2,010	68	%

(1)Percentages represent the values shown as a percentage of Minimum Required Assets under the applicable PMIERs financial requirements in effect for the dates shown.

(2)Represents Radian Group’s liquidity, net of the $35 million minimum liquidity requirement under the unsecured revolving credit facility.

(3)Represents Radian Guaranty’s excess of Available Assets over its Minimum Required Assets, calculated in accordance with the PMIERs financial ~~requirements.~~requirements in effect for each date shown.

Our PMIERs Cushion at March 31, 2021, includes a benefit from the application of the Disaster Related Capital Charge that has reduced the total amount of Minimum Required Assets that Radian Guaranty otherwise would have been required to hold against pandemic-related defaults by approximately $580 million as of March 31, 2021, taking into consideration our risk distribution structures in effect as of that date. We expect that application of the Disaster Related Capital Charge will continue to materially reduce Radian Guaranty’s PMIERs Minimum Required Assets for the foreseeable future, but will diminish over time.

Notwithstanding the continued application of the Disaster Related Capital Charge, the total amount of Minimum Required Assets we may be required to hold against defaulted loans will increase over time, because the 0.30 multiplier is applied to a higher base factor for the defaulting loans (including those in forbearance) as they age, with increases taking place upon four, six and 12 missed monthly payments. Additionally, given the lack of an expiration date under the CARES Act, it is difficult to estimate how long the GSEs may continue to offer COVID-19 forbearance programs for new defaults. It is also difficult to assess how long the GSEs may continue to apply the COVID-19 Amendment to loans in a COVID-19 related forbearance program. As described above, the COVID-19 Crisis Period expired March 31, 2021. See ““Item 1. Business—Regulation—Federal Regulation—GSE Requirements” in our 2020 Form 10-K for more information about the Disaster Related Capital Charge, and for further information, including on the expiration of the COVID-19 Crisis Period, see “Overview—Legislative and Regulatory Developments—COVID-19 Amendment to PMIERs.”

Our PMIERs Cushion as of March 31, 2021 includes the benefit from our reinsurance agreements entered with the Eagle Re Insurers through March 31, 2021. In April 2021, Radian ~~Group—Short-Term Liquidity Needs—Capital Support for Subsidiaries~~”Guaranty entered into a fully collateralized reinsurance agreement with Eagle Re 2021-1 Ltd. that will reduce Radian Guaranty’s net RIF by $479 million, and is expected to reduce capital required to be held at Radian Guaranty by reducing the PMIERs Minimum Required Assets by substantially the same amount. This expected growth in PMIERs excess available resources has not been reflected in the information provided above. After


Table of Contents Glossary Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

consideration of the reinsurance agreement with Eagle Re 2021-1 Ltd., Radian Guaranty’s excess of Available Assets over its Minimum Required Assets under PMIERs would have increased from 42% to 64%. See Note 18 of Notes to Unaudited Condensed Consolidated Financial Statements for additional ~~information.~~information on this new agreement.

~~Securities Lending Agreements.~~ In addition to the PMIERs Cushion held at Radian Guaranty, our excess available resources include our unsecured revolving credit facility and holding company liquidity. While these resources may be utilized to enhance Radian Guaranty’s PMIERs Cushion, the impact of the COVID-19 pandemic could affect our ability to remain compliant with the PMIERs financial requirements as the increase in defaults and resulting increase to our Minimum Required Assets could reduce or potentially exhaust our PMIERs Cushion or exceed our Available Assets. See “Item 1A. Risk Factors” in our 2020 Form 10-K for additional information.

Even though they hold assets in excess of the minimum statutory capital thresholds and PMIERs financial requirements, the ability of Radian’s mortgage insurance subsidiaries to pay dividends on their common stock is restricted by certain provisions of the insurance laws of Pennsylvania, their state of domicile. In light of Radian Guaranty’s negative unassigned surplus related to operating losses in prior periods, the ongoing need to set aside contingency reserves, and the current ongoing economic uncertainty related to the COVID-19 pandemic, which increased losses in 2020 and could further increase losses in future periods, we do not anticipate that Radian Guaranty will be permitted under applicable insurance laws to pay dividends or other distributions for the foreseeable future without prior approval from the Pennsylvania Insurance Department. Under Pennsylvania’s insurance laws, an insurer must obtain the Pennsylvania Insurance Department’s approval to pay an Extraordinary Distribution. Radian Guaranty sought and received such approval to return capital by paying Extraordinary Distributions to Radian Group in 2019 and 2018. See Note 16 of Notes to Consolidated Financial Statements in our 2020 Form 10-K for additional information on our Extraordinary Distributions, statutory dividend restrictions and contingency reserve requirements.

Radian Guaranty and Radian Reinsurance are both members of the FHLB. As members, they may borrow from ~~time~~the FHLB, subject to ~~time enter into~~ certain ~~short-term~~conditions, which include requirements to post collateral and to maintain a minimum investment in FHLB stock. Advances from the FHLB may be used to provide low-cost, supplemental liquidity for various purposes, including to fund incremental investments. Radian’s current strategy includes using FHLB advances as financing for general cash management purposes and for purchases of additional investment securities ~~lending agreements with third-party Borrowers~~that have similar durations, for the purpose of ~~increasing the yield on~~generating additional earnings from our investment securities portfolio with ~~minimal~~limited incremental risk. ~~Under our securities lending program, Radian Guaranty and Radian Reinsurance loan certain securities in their investment portfolios to these Borrowers for short periods~~As of ~~time. We have the right to request the return~~March 31, 2021, there were $138.8 million of ~~the loaned securities at any time.~~

Under our securities lending agreements, the Borrower generally may return the loaned securities to us at any time, which would require us to return the collateral within the standard settlement period for the loaned securities on the principal exchange or market in which the securities are traded. We manage this liquidity risk associated with the cash collateral by regularly monitoring our available sources of cash and collateral to ensure we can meet short-term liquidity demands in both normal and stressed scenarios. We may use our general liquidity resources to meet any potential cash demands when loaned securities are returned to us.

The credit risk under these programs is reduced by the amounts of collateral received. On a daily basis, the value of the underlying securities that we have loaned to the Borrowers is compared to the value of cash and securities collateral we received from the Borrowers, and additional cash or securities are requested or returned, as applicable. In addition, we are indemnified against counterparty credit risk by the intermediary. For additional information on our securities lending agreements, seeFHLB advances outstanding. See Note 512 of Notes to Unaudited Condensed Consolidated Financial ~~Statements.~~Statements for additional information.

~~Freddie Mac Agreement.~~ At December 31, 2016, Radian Guaranty had $63.9 million in a collateral account invested in and classified as part of our trading securities and pledged to cover Loss Mitigation Activity on the loans subject to the Freddie Mac Agreement. The scheduled final settlement date under the Freddie Mac Agreement occurred during the third quarter of 2017 and resulted in a $54.8 million payment to Freddie Mac and a release of $4.4 million to Radian Guaranty from the funds remaining in the collateral account. As of September 30, 2017, the remaining balance of $5.5 million in the collateral account was invested in and classified as short-term investments and pledged to cover Loss Mitigation Activity and pending claims activity already in process but not yet finalized. As of September 30, 2017, we have $2.8 million remaining in reserve for losses that we expect to pay to Freddie Mac from the remaining funds in the collateral account.

~~Services~~Real Estate

As of ~~September 30, 2017,~~March 31, 2021, our ~~Services~~Real Estate segment maintained cash and liquid investments totaling $58.6 million, primarily held by Radian Title Insurance.

Title insurance companies, including Radian Title Insurance, are subject to comprehensive state regulations, including minimum net worth requirements. Radian Title Insurance was in compliance with all of its minimum net worth requirements at March 31, 2021. In the event the cash ~~equivalents totaling $6.8 million, which included restricted cash~~flows from operations of ~~$1.2 million.~~

~~Part I. Item 2. Management's DiscussionandAnalysis~~the Real Estate segment are not adequate to fund all of ~~Financial Condition and Results~~its needs, including the regulatory capital needs of ~~Operations (Cont'd)~~

~~The principal demands for liquidity in our Services segment include: (i) the payment of employee compensation and other operating expenses, including those allocated from~~ Radian ~~Group; (ii) reimbursements to~~Title Insurance, Radian Group ~~for interest payments related~~may provide additional funds to the ~~original value~~Real Estate segment in the form of an intercompany note or other capital contribution, and if needed for Radian Title Insurance subject to the approval of the ~~Senior Notes due 2019; and (iii) dividends~~Ohio Department of Insurance. Additional capital support may also be required for potential investments in new business initiatives to ~~Radian Group, if any. In addition, the Services segment expects to pay approximately $6.0 million in cash over the next 12 months related to its restructuring plan. See “Overview—Operating Environment and Business Strategy~~—~~Business Strategy~~”~~for additional information.~~

~~The principal sources~~support our strategy of ~~liquidity in~~growing our ~~Services segment are cash generated by operations and, to the extent necessary, capital contributions from Radian Group.~~businesses.

Liquidity levels may fluctuate depending on the levels and contractual timing of our invoicing and the payment practices of ~~the Services~~our Real Estate clients, in combination with the timing of ~~Services’~~our Real Estate segment’s payments for employee compensation and to external vendors. The amount, if any, and timing of the ~~Services~~Real Estate segment’s dividend paying capacity will depend primarily on the amount of excess cash flow generated by the segment.

The Services segment has not generated sufficient cash flows to pay any dividends to Radian Group. Additionally, while cash flow is expected to be sufficient to pay the Services segment’s direct operating expenses, it has not been sufficient to reimburse Radian Group for $59.5 million of its allocated operating expense and interest expense. We do not expect that the Services segment will be able to bring its reimbursement obligations current in the foreseeable future. In the event the cash flow from operations of the Services segment is not adequate to fund all of its needs, Radian Group may provide additional funds to the Services segment in the form of a capital contribution or an intercompany note.

~~Cash Flows~~

~~The following table summarizes our consolidated cash flows from operating, investing and financing activities:~~

(In thousands) Nine Months Ended
September 30,
2017 2016
Net cash provided by (used in):
Operating activities $ 218,425
$ 287,449
Investing activities (75,229 ) (87,055 )
Financing activities (106,321 ) (203,242 )
Effect of exchange rate changes on cash and restricted cash 116
(382 )
Increase (decrease) in cash and restricted cash $ 36,991
$ (3,230 )

~~Operating Activities.~~ Net cash provided by operating activities totaled $218.4 million for the nine months ended September 30, 2017, compared to $287.4 million for the same period in 2016. This decrease in net cash provided by operating activities in the nine months ended September 30, 2017, compared to the same period in 2016, was principally the result of the payments made in connection with the scheduled final settlement of the Freddie Mac Agreement, partially offset by an increase in net premiums written.

~~Investing Activities~~. Net cash used in investing activities decreased in the nine months ended September 30, 2017, compared to the same period in 2016, primarily as a result of a decrease in purchases, net of proceeds, of fixed-maturity investments available for sale, partially offset by an increase in purchases, net of proceeds, of equity securities.

~~Part I. Item 2. Management's DiscussionandAnalysis of Financial Condition and Results of Operations (Cont'd)~~

~~Financing Activities.~~ Net cash used in financing activities decreased for the nine months ended September 30, 2017, compared to the same period in 2016, primarily as a result of: (i) reduced repurchases of our common stock, partially offset by (ii) purchases and redemptions of debt exceeding debt issuances, both as compared to the same period in 2016. For the nine months ended September 30, 2017 our primary financing activities included the issuance of $450 million aggregate principal amount of Senior Notes due 2024 as well as: (i) the purchases of aggregate principal amounts of $141.4 million, $115.9 million and $152.3 million of our Senior Notes due 2019, 2020 and 2021, respectively; (ii) the settlement of our obligations on the remaining $68.0 million aggregate principal amount of our Convertible Senior Notes due 2019; and (iii) the purchase of $21.6 million aggregate principal amount of our Convertible Senior Notes due 2017, all of which were settled in cash for an aggregate amount of $591.7 million during the nine months ended September 30, 2017. During the nine months ended September 30, 2016, cash used in financing activities primarily related to purchases of our Convertible Senior Notes due 2017 and 2019 as well as repurchases of our common stock, partially offset by the issuance of $350 million in aggregate principal amount of Senior Notes due 2021.

~~See “Item 1. Condensed Consolidated Statements of Cash Flows (Unaudited)” for additional information.~~

~~Stockholders’ Equity~~

Stockholders’ equity increased by $115.9 million from December 31, 2016 to September 30, 2017. Stockholders’ equity was impacted primarily by: (i) our net income of $114.3 million for the nine months ended September 30, 2017; (ii) the impact of our recently completed debt and equity transactions to strengthen Radian’s capital position, which decreased stockholder’s equity by $48.3 million, after excluding the $33.4 million after-tax impact from the loss on conversion and debt extinguishment already reflected in our net income; and (iii) net unrealized gains on investment of $36.5 million. See “Overview—~~2017 Developments~~”~~for additional information.~~

Ratings

Radian Group, Radian Guaranty, Radian Reinsurance and Radian ~~Reinsurance~~Title Insurance have been assigned the ratings set forth in the chart below. We believe that ratings often are considered by others in assessing our credit strength and the financial strength of our primary ~~mortgage~~ insurance ~~subsidiary.~~subsidiaries. The following ratings have been independently assigned by third-party statistical rating organizations, are for informational purposes only and are subject to change. See “Item 1A. Risk Factors—The current financial strength ratings assigned to our mortgage insurance subsidiaries could weaken our competitive position


Table of Contents Glossary Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

and potential downgrades by rating agencies to these ratings and the ratings assigned to Radian Group could adversely affect the Company” in our 2020 Form 10-K.

Moody’s(1)

S&P(2)

~~Radian Group~~

~~Ba3~~

Fitch (3)

~~BB+~~

~~Radian Guaranty~~

~~Baa3~~

~~BBB+~~

~~Radian Reinsurance~~

~~N/A~~

~~BBB+~~

Demotech (4)

~~______________________~~


~~(1)~~			~~Based on the August 17, 2017 update, Moody’s outlook for~~ Radian Group ~~and Radian Guaranty currently is Positive.~~

Ba1

BB+

BBB-

N/A

~~(2)~~

~~Based on the September 11, 2017 upgrade, S&P’s outlook for Radian Group,~~ Radian Guaranty ~~and~~

Baa1

BBB+

A-

N/A

Radian Reinsurance ~~currently is Stable.~~

N/A

BBB+

N/A

Radian Title Insurance

N/A

(1)Based on the July 14, 2020 update, Moody’s outlook for Radian Group and Radian Guaranty currently is Stable.

(2)Based on the April 28, 2021 update, S&P’s outlook for Radian Group, Radian Guaranty and Radian Reinsurance is currently Stable.

(3)Based on the May 3, 2021 release, Fitch’s outlook for Radian Group and Radian Guaranty is currently Stable.

(4)Based on the March 12, 2021 release, Demotech’s outlook for Radian Title Insurance is currently Exceptional.

Critical Accounting ~~Policies~~Estimates

As of the filing date of this report, there were no significant changes in our critical accounting ~~policies~~estimates from those discussed in our ~~2016~~2020 Form ~~10-K, other than described below.~~10-K. See Note 12 of Notes to Unaudited Condensed Consolidated Financial Statements for accounting pronouncements issued but not yet adopted that may impact the Company’s consolidated financial position, earnings, cash flows or disclosures.

~~Part I. Item 2. Management's DiscussionandAnalysis of Financial Condition and Results of Operations (Cont'd)~~

In performing the quantitative analysis for our goodwill impairment test as of June 30, 2017, we elected to early adopt the update to the accounting standard regarding goodwill and other intangibles, as discussed in Note 1 of Notes to Unaudited Condensed Consolidated Financial Statements “—Significant Accounting Policies—~~Recent Accounting Pronouncements~~—~~Accounting Standards Adopted During 2017~~.” This update simplifies the subsequent measurement of goodwill by eliminating step two of the goodwill impairment test. Under the new guidance, if indicators for impairment are present, we perform a quantitative analysis to evaluate our long-lived assets for potential impairment, and then determine the amount of the goodwill impairment by comparing a reporting unit’s fair value to its carrying amount. After adjusting the carrying value for any impairment of other intangibles or long-lived assets, an impairment charge is recognized for any excess of the reporting unit’s carrying amount over the reporting unit’s estimated fair value, up to the full amount of the goodwill allocated to the reporting unit.

Other than the change to adopt the update to the accounting standard that eliminates step two of the goodwill impairment test, as described above, our critical accounting policy with regard to goodwill and other intangible assets has remained unchanged from that described in our 2016 Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market ~~Risk.~~Risk

Market risk represents the potential for loss due to adverse changes in the value of financial instruments as a result of changes in market conditions. Examples of market risk include changes in interest rates, credit spreads, foreign currency exchange rates and equity prices. We perform sensitivity analyses to determine the effects of market risk exposures on our investment securities by determining the potential loss in future earnings, fair values or cash flows of market-risk-sensitive instruments resulting from one or more selected hypothetical changes in the above mentioned market risks.

~~Interest-Rate Risk and Credit-Spread Risk~~

The primary market risks in our investment portfolio are interest-rate risk and credit-spread risk, namely the fair value sensitivity of our fixed-income securities to changes in interest rates and credit spreads, respectively. We regularly analyze our exposure to interest-rate risk and credit-spread risk and have determined that the fair value of our investments is materially exposed to changes in both interest rates and credit ~~spreads.~~

spreads. See “Item 1A. Risk Factors—Our ~~sensitivity analysis for interest rates is based on the change~~success depends, in fair value of our fixed-income securities, assuming a hypothetical instantaneous and parallel 100-basis point increase or decrease in the U.S. Treasury yield curve, with all other factors remaining constant. We calculate the duration of our fixed-income securities, expressed in years, in order to estimate the interest-rate sensitivity of these securities, as shown in the table below.

Credit spread represents the additional yield on a fixed-income security, above the risk-free rate, that is paid by an issuer to compensate investors for assuming the credit of the issuer and market liquidity of the fixed income security. We manage credit-spread risk on both an entity and group level, across issuer, maturity, sector and asset class. Our sensitivity analysis for credit-spread risk is based on the change in fair value of our fixed-income securities, assuming a hypothetical 100-basis point increase or decrease in all credit spreads, with the exception of U.S. Treasury and agency obligations for which we have assumed no change in credit spreads, and assuming all other factors remain constant. Actual shifts in credit spreads generally vary by issuer and security, based on issuer-specific and security-specific factors such as credit quality, maturity, sector and asset class. Within a given asset class, investment grade securities generally exhibit less credit-spread volatility than securities with lower credit ratings. Our investment securities portfolio primarily consists of investment grade securities.

To assist us in setting duration targets for the investment portfolio, we analyze: (i) the interest-rate sensitivities of our liabilities including prepayment risk associated with premium flows and credit losses; (ii) entity specific cash flows under various economic scenarios; (iii) return, volatility and correlation of specific asset classes and the interconnection with our liabilities; and (iv) our current risk appetite.

~~The following table illustrates the sensitivity of our investment portfolio to both interest-rate risk and credit-spread risk:~~

Short-term and Available for Sale Trading
($ in millions) September 30,
2017 December 31,
2016 September 30,
2017 December 31,
2016
Carrying value of fixed-income investment portfolio (1)
$ 3,899.6
$ 3,580.0
$ 636.3
$ 879.9
Percentage of fixed-income securities compared to total investment portfolio
85.3 % 80.2 % 13.9 % 19.7 %
Average duration of fixed-income portfolio 4.4 years
5.0 years
5.2 years
5.8 years

Interest-rate risk increase (decrease) in market value
+100 basis points—$ $ (163.9 ) $ (172.6 ) $ (31.7 ) $ (48.0 )
+100 basis points—% (2)
(4.2 )% (4.8 )% (5.0 )% (5.5 )%
- 100 basis points—$ $ 178.6
$ 183.0
$ 34.5
$ 53.1
- 100 basis points—% (2)
4.6 % 5.1 % 5.4 % 6.0 %

Credit-spread risk increase (decrease) in market value
+100 basis points—$ $ (176.6 ) $ (159.5 ) $ (32.3 ) $ (49.3 )
+100 basis points—% (2)
(4.5 )% (4.5 )% (5.1 )% (5.6 )%
- 100 basis points—$ $ 149.0
$ 151.9
$ 28
$ 46.3
- 100 basis points—% (2)
3.8 % 4.2 % 4.4 % 5.3 %

~~______________________~~

~~(1)~~

Total fixed-income securities include fixed-maturity investments available for sale, trading securities and short-term investments and exclude reinvested cash collateral held under securities lending agreements. At September 30, 2017, fixed-income securities shown above also include $129.8 million invested in certain fixed-income exchange traded funds that are classified as equity securities in our condensed consolidated balance sheets, as well as $58.2 million in fixed-income securities loaned under securities lending agreements that are classified as other assets in our condensed consolidated balance sheets.


~~(2)~~	~~Change in value expressed as a percentage of the market value of the related fixed-income portfolio.~~

The decrease in the average duration of our total fixed-income portfolio, from 5.1 years at December 31, 2016 to 4.5 years at September 30, 2017, is primarily due to small changes in portfolio allocations. We decreased our exposure to longer-term, fixed-rate bonds and increased our investments in floating rate securities.

~~Securities Lending Agreements.~~ ~~Radian Guaranty and Radian Reinsurance from time to time enter into certain short-term securities lending agreements with third-party Borrowers for the purpose of increasing the yield~~part, on our investment securities portfolio with minimal incremental risk. Market factors, including changes in interest rates, credit spreads and equity prices, may impact the timing or magnitude of cash outflows for the return of cash collateral. For the purpose of illustrating our interest-rate risk and credit-spread risk, we have included our fixed-income securities loaned in the sensitivity table above. As of September 30, 2017, the carrying value of these securities was $58.2 million. We had no loaned securities at December 31, 2016.

~~Under our securities lending agreements, the Borrower generally may return the loaned securities~~ability to us at any time, which would require us to return the collateral within the standard settlement period for the loaned securities on the principal exchange or market in which the securities are traded. We manage this liquidity risk associated with the cash collateral by regularly monitoring our available sources of cash and collateral to ensure we can meet short-term liquidity demands in both normal and stressed scenarios. We may use our general liquidity resources to meet any potential cash demands when loaned securities are returned to us.

The credit risk under these programs is reduced by the amounts of collateral received. On a daily basis, the value of the underlying securities that we have loaned to the Borrowers is compared to the value of cash and securities collateral we received from the Borrowers, and additional cash or securities are requested or returned, as applicable. In addition, we are indemnified against counterparty credit risk by the intermediary. We also have the right to request the return of the loaned securities at any time. For additional information on our securities lending agreements, see Note 5 of Notes to Unaudited Condensed Consolidated Financial Statements.

~~Foreign Exchange Rate Risk~~

As of September 30, 2017 and December 31, 2016, we did not hold any foreign currency denominated securities in our investment portfolio. Exchange gains and losses on foreign currency transactions from our foreign operations have not been material due to the limited amount of business performed in those locations. Currency risk is further limited because, in general, both the revenues and expenses of our foreign operations are denominated in the same functional currency, based on the country in which the operations occur.

~~Equity Market Price~~

~~None of our equity securities were classified as trading securities. At September 30, 2017, the market value and cost of the equity securities~~risks in our investment portfolio ~~were $161.3 million and $161.2 million, respectively. These amounts include $129.8 million of both~~” in our 2020 Form 10-K.

Our market ~~value and cost of fixed-income exchange traded funds, which are subject to interest-rate~~ risk ~~and credit-spread risk consistent with~~exposures at March 31, 2021 have not materially changed from those identified in our ~~other fixed-income securities. Therefore, these fixed income exchange traded funds have been included in the table above for purposes of illustrating our sensitivity to these risks.~~2020
Form 10-K.

The remaining $31.5 million and $31.4 million of market value and cost, respectively, of equity securities at September 30, 2017, consists of publicly-traded business development company equity securities and equity-related exchange traded funds. Due to our limited basis in these investments at September 30, 2017, our exposure to changes in equity market prices is not significant.

Item 4. Controls and ~~Procedures.~~Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in ~~Rule~~Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of ~~September 30, 2017,~~March 31, 2021, pursuant to Rule ~~15d-15(e)~~15d-15(b) under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~September 30, 2017,~~March 31, 2021, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control Over Financial Reporting

During the ~~nine-month~~three-month period ended ~~September 30, 2017,~~March 31, 2021, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

Glossary

PART II—OTHER INFORMATION

Item 1. Legal ~~Proceedings.~~Proceedings

We are routinely involved in a number of legal actions and proceedings, including reviews, audits and inquiries by various regulatory entities, as well as litigation and other disputes arising in the ordinary course of our business.

~~We are contesting adjustments resulting from the examination by the IRS~~ See Note 13 of our 2000 through 2007 consolidated federal income tax returns. The IRS opposes the recognition of certain tax losses and deductions that were generated through our investment in a portfolio of non-economic REMIC residual interests and has proposed denying the associated tax benefits of these items. We appealed these proposed adjustmentsNotes to Appeals and made “qualified deposits” with the U.S. Treasury of $85 million in June 2008 relating to the 2000 through 2004 tax years and $4 million in May 2010 relating to the 2005 through 2007 tax years, in order to avoid the accrual of incremental above-market-rate interest with respect to the proposed adjustments.

We attempted to reach a compromised settlement with Appeals, but in September 2014 we received Notices of Deficiency covering the 2000 through 2007 tax years that assert unpaid taxes and penalties of $157 million. The Deficiency Amount has not been reduced to reflect our NOL carryback ability. As of September 30, 2017, there also would be interest of approximately $146 million related to these matters. Depending on the outcome,Unaudited Condensed Consolidated Financial Statements for additional state income taxes, penalties and interest (estimated in the aggregate to be approximately $36 million as of September 30, 2017) also may become due when a final resolution is reached. The Notices of Deficiency also reflected additional amounts due of $105 million, which are primarily associated with the disallowance of the previously filed carryback of our 2008 NOL to the 2006 and 2007 tax years. We currently believe that the disallowance of our 2008 NOL carryback is a precautionary position by the IRS and that we will ultimately maintain the benefit of this NOL carryback claim. On December 3, 2014, we petitioned the U.S. Tax Court to litigate the Deficiency Amount. On September 1, 2015, we received a notice that the case had been scheduled for trial. However, the parties have jointly filed, and the U.S. Tax Court has approved, motions for continuance in this matter to postpone the trial date. Also, in February 2016, the U.S. Tax Court approved a joint motion to consolidate for trial, briefing and opinion our case with a similar case involving MGIC Investment Corporation.During 2016, we held several meetings with the IRS in an attempt to reach a compromised settlement on the issues presented in our dispute. In October 2017, the parties informed the U.S. Tax Court that they believe they have reached agreement in principle on all issues presented in the dispute and that the parties are currently reviewing the computations reflecting the agreed upon settlement terms. The resolution must be reported to the JCT for review and cannot be finalized until the IRS considers the views, if any, expressed by the JCT about the matter. If we are unable to complete a compromised settlement, then the ongoing litigation could take several years to resolve and may result in substantial legal expenses. We can provide no assurance regarding the outcome of any such litigation or whether a compromised settlement with the IRS will ultimately be reached. We currently believe that an adequate provision for income taxes has been made for the potential liabilities that may result from this matter. However, if the ultimate resolution of this matter produces a result that differs materially from our current expectations, there could be a material impact on our effective tax rate, results of operations and cash flows.

On December 22, 2016, Ocwen Loan Servicing, LLC and Homeward Residential, Inc. (collectively, “Ocwen”) filed a complaint against Radian Guaranty (the “Complaint”). Ocwen has also initiated legal proceedings against several other mortgage insurers. The action filed against Radian Guaranty, titled Ocwen, et al. v. Radian Guaranty, is pending in the U.S. District Court for the Eastern District of Pennsylvania (the “Court”). The Complaint alleged breach of contract and bad faith claims and sought monetary damages and declaratory relief in regard to certain claims handling practices on future insurance claims. On December 17, 2016, Ocwen separately filed a parallel arbitration petition against Radian Guaranty (the “Petition”) before the American Arbitration Association (“AAA”) that asserted substantially the same allegations as contained in the Complaint (the Complaint and the Petition are collectively referred to as the “Filings”). The Filings listed 9,420 mortgage insurance certificates (“Certificates”) issued under multiple insurance policies, including Pool Insurance policies, as being the subject of these proceedings. On March 3, 2017, Radian Guaranty filed with the Court: (i) a motion to dismiss Ocwen’s Complaint or, in the alternative, for a more definite statement and (ii) a motion to enjoin Ocwen’s parallel arbitration. On June 5, 2017, Ocwen filed an Amended Complaint and an Amended Petition (collectively, the “Amended Filings”) with the Court and the AAA, respectively, which together list 8,870 Certificates as being the subject of these proceedings. On June 30, 2017, Radian Guaranty filed with the Court renewed motions to dismiss Ocwen’s Amended Complaint and to enjoin Ocwen’s parallel arbitration. In July 2017, the Court denied Radian Guaranty’s motions to dismiss Ocwen’s Amended Complaint and to enjoin Ocwen’s parallel arbitration. In August 2017, Radian Guaranty filed an Answer With Affirmative Defenses and Counterclaim against Ocwen with the Court and in September Radian Guaranty filed an Amended Counterclaim. Also, in September 2017, Radian Guaranty filed an Answer With Affirmative Defenses and Counterclaim against Ocwen with the AAA. In October 2017, Ocwen filed a Motion to Dismiss Radian’s Amended Counterclaim (“Motion”) and Radian filed a Brief in Opposition to the Motion. On October 24, 2017, the Court issued an Order granting in part and denying in part Ocwen’s Motion, and directed Ocwen to answer Radian Guaranty’s Amended Counterclaim. Radian Guaranty believes that Ocwen’s allegations and claims in the legal proceedings described above are without merit and legally deficient, and plans to defend these claims vigorously. We are not able to estimate a reasonably possible loss, if any, or range of loss in this matter because of the preliminary stage of the proceedings.

We also are periodically subject to reviews and audits, as well as inquiries, information-gathering requests and investigations. In connection with these matters, from time to time we receive requests and subpoenas seeking information and documents related to aspects of our business. In March 2017, Green River Capital, a subsidiary of Clayton, received a letter from the staff of the SEC stating that it is conducting an investigation captioned, “In the Matter of Certain Single Family Rental Securitizations,” and that it is requesting information from market participants. The letter asks Green River Capital to provide information regarding ~~broker price opinions that Green River Capital provided on properties included in SFR securitization transactions. Green River Capital is cooperating with the SEC.~~

The legal and regulatory matters discussed above and in our 2016 Form 10-K could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief that could require significant expenditures or have other effects on our business. Management believes, based on current knowledge and after consultation with counsel, that the outcome of such actions will not have a material adverse effect on our consolidated financial condition. However, the outcome of litigation and other legal and regulatory matters and proceedings is inherently uncertain, and it is possible that one or more of the matters currently pending or threatened could have an unanticipated adverse effect on our liquidity, financial condition or results of operations for any particular period.proceedings.

Item 1A. Risk ~~Factors.~~Factors

There have been no material changes to our risk factors from those previously disclosed in our ~~2016~~2020 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of ~~Proceeds.~~Proceeds

Issuance of Unregistered Securities

During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2021, no equity securities of Radian Group were sold that were not registered under the Securities Act.

Issuer Purchases of Equity Securities

The following table provides information about purchases of Radian Group common stock by us (and our affiliated purchasers) during the three months ended March 31, 2021.


($ in thousands, except per-share amounts) Share repurchase program	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (2)
Period:
1/1/2021 to 1/31/2021	—	$	—	—	$	198,860
2/1/2021 to 2/28/2021	—	—		—	198,860
3/1/2021 to 3/31/2021	423,893	20.93		413,141	190,229
Total	423,893			413,141

(1)Includes 10,752 shares tendered by employees as payment of taxes withheld on the vesting of certain restricted stock awards granted under the Company’s equity compensation plans.

(2)On August ~~9, 2017, Radian’s Board~~14, 2019, Radian Group’s board of ~~Directors renewed its~~directors approved a share repurchase program ~~and authorized~~that authorizes the Company to spend up to ~~$50~~$200 million to repurchase Radian Group common ~~stock~~stock. On February 13, 2020, Radian Group’s board of directors authorized a $275 million increase in this program, bringing the open market or in privately negotiated transactions, based on market and business conditions, stock price and other factors. Radian Group has established a trading plan under Rule 10b5-1 of the Exchange Acttotal authorization to ~~implement the program.~~repurchase shares up to $475 million, excluding commissions. During the ~~third quarter of 2017, no shares were purchased under~~three months ended March 31, 2021, the Company entered into a new 10b5-1 plan and ~~therefore the full purchase authority of up to $50 million remained available~~resumed purchases under this ~~program. The authorization~~program which had been temporarily suspended in March 2020 in response to the COVID-19 pandemic. During the three months ended March 31, 2021, the Company purchased 413,141 shares at an average price of $20.91, including commissions, under this share repurchase program which expires on ~~July~~August 31, ~~2018.~~2021. See Note 1314 of Notes to Unaudited Condensed Consolidated Financial ~~Statements.~~

Statements for additional details on our share repurchase programs.

Table of Contents

Glossary

Item 6. Exhibits


Exhibit Number			Exhibit

~~Exhibit No.~~+10.1			~~Exhibit Name~~
~~4.1~~	~~Senior Indenture~~Amendment 2021-1 to Employment Agreement, dated as of March ~~4, 2013~~26, 2021, between the Registrant and ~~U.S. Bank National Association, as Trustee (incorporated by reference to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated February 27, 2013 and filed on March 4, 2013)~~Richard G. Thornberry
+10.2
~~4.2~~	~~Fifth Supplemental Indenture dated~~Radian Group Inc. Equity Compensation Plan (Amended and Restated as of September 26, 2017 between the Registrant and U.S. Bank National Association, as Trustee (incorporated by reference to the Registrant’s Current Report on Form 8-K (file no. 1-11356) dated September 26,May 10, 2017 and ~~filed on September 26, 2017)~~May 13, 2020)
*31
~~4.3~~	~~Form of 4.500% Senior Note due 2024 (included as Exhibit A to the Fifth Supplemental Indenture in Exhibit 4.2)~~

*12	~~Statement of Ratio of Earnings to Fixed Charges~~

*31	Rule 13a - 14(a) Certifications

**32		Section 1350 Certifications
*101.INS			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
*~~101~~101.SCH			~~Pursuant to Rule 405 of Regulation S-T, the following financial information from Radian Group Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 is formatted~~Inline XBRL Taxonomy Extension Schema Document
*101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document
*101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document
*101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document
*101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document
*104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016; (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016; (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2017 and 2016; (iv) Condensed Consolidated Statements of Changes in Common Stockholders’ Equity for the nine months ended September 30, 2017, and 2016; (v) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017, and 2016; and (vi) the Notes to Unaudited Condensed Consolidated Financial Statements.Exhibit 101.INS)

~~_______________________~~

* Filed herewith.

** Furnished herewith.

+ Management contract, compensatory plan or arrangement.

Table of Contents

Glossary

~~SIGNATURES~~Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	Radian Group Inc.

~~November 3, 2017~~Date:	May 7, 2021	/s/ J. FRANKLIN HALL
		J. Franklin Hall
		Senior Executive Vice President, Chief Financial Officer

		/s/ C~~ATHERINE~~ ~~M. JACKSON~~ROBERT J. QUIGLEY
	~~Catherine M. Jackson~~	Robert J. Quigley
	~~Senior~~	Executive Vice President, Controller and Chief Accounting Officer

~~100~~


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	RDN	New York Stock Exchange



~~TABLE OF CONTENTS~~
				Page ~~Number~~
Glossary of Abbreviations and Acronyms					3
Cautionary Note Regarding Forward-Looking Statements—Safe Harbor Provisions					7

PART I—FINANCIAL INFORMATION
Item 1.1			Financial Statements (Unaudited)		9
Item 2			~~Condensed Consolidated Balance Sheets~~		9
	~~Condensed Consolidated Statements of Operations~~	10
	~~Condensed Consolidated Statements of Comprehensive Income (Loss)~~	11
	~~Condensed Consolidated Statements of Changes in Common Stockholders’ Equity~~	12
	~~Condensed Consolidated Statements of Cash Flows~~	13
	~~Notes to Unaudited Condensed Consolidated Financial Statements~~	14
	~~Note 1 - Condensed Consolidated Financial Statements—Business Overview and Significant Accounting Policies~~	14
	~~Note 2 - Net Income (Loss) Per Share~~	20
	~~Note 3 - Segment Reporting~~	21
	~~Note 4 - Fair Value of Financial Instruments~~	25
	~~Note 5 - Investments~~	28
	~~Note 6 - Goodwill and Other Intangible Assets, Net~~	33
	~~Note 7 - Reinsurance~~	36
	~~Note 8 - Other Assets~~	37
	~~Note 9 - Income Taxes~~	38
	~~Note 10 - Losses and Loss Adjustment Expense~~	39
	~~Note 11 - Long-Term Debt~~	42
	~~Note 12 - Commitments and Contingencies~~	43
	~~Note 13 - Capital Stock~~	45
	~~Note 14 - Accumulated Other Comprehensive Income (Loss)~~	46
	~~Note 15 - Statutory Information~~	46
	~~Note 16 - Subsequent Events~~	48
~~Item 2.~~	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5039
Item 3.3			Quantitative and Qualitative Disclosures About Market Risk		9261
Item 4.4			Controls and Procedures		9461

PART II—OTHER INFORMATION
Item 1.1			Legal Proceedings		9562
Item ~~1A.~~1A			Risk Factors		9662
Item 2.2			Unregistered Sales of Equity Securities and Use of Proceeds		9762
Item 6.6			Exhibits		9963

~~SIGNATURES~~Signatures					~~100~~64



Term		Definition
~~2014 Master Policy~~		~~Radian Guaranty’s Master Policy that became effective October 1, 2014~~
~~2016~~2020 Form 10-K	Annual Report on Form 10-K for the year ended December 31, ~~2016~~2020, filed with the SEC on February 26, 2021
2014 Master Policy		Radian Guaranty’s master insurance policy, setting forth the terms and conditions of our mortgage insurance coverage, which became effective October 1, 2014
2020 Master Policy		Radian Guaranty’s master insurance policy, setting forth the terms and conditions of our mortgage insurance coverage, which became effective March 1, 2020
2016 Single Premium QSR Agreement		Quota share reinsurance agreement entered into with a panel of third-party reinsurance providers in the first quarter of 2016 and subsequently amended in the fourth quarter of 2017
2018 Single Premium QSR ~~Transaction~~Agreement		Quota share reinsurance agreement entered into with a panel of third-party reinsurance providers in October 2017 to cede a portion of Single Premium ~~Policy~~ NIW beginning January 1, 2018
~~ABS~~2020 Single Premium QSR Agreement		~~Asset-backed securities~~Quota share reinsurance agreement entered into with a panel of third-party reinsurance providers in January 2020 to cede a portion of Single Premium NIW beginning January 1, 2020
~~Alt-A~~ABS		~~Alternative-A loans, representing loans for which the underwriting documentation is generally limited as compared to fully documented loans (considered a non-prime loan grade)~~Asset-backed securities
~~AMT~~All Other		~~Alternative minimum tax~~Radian’s non-reportable operating segments and other business activities, including: (i) income (losses) from assets held by our holding company; (ii) related general corporate operating expenses not attributable or allocated to our reportable segments; (iii) for all periods prior to its sale in the first quarter of 2020, income and expenses related to Clayton; (iv) for all periods presented, the income and expenses related to our traditional appraisal services; and (v) certain other immaterial revenue and expense items
~~AOCI~~ASU		~~Accumulated other comprehensive income (loss)~~Accounting Standards Update, issued by the FASB to communicate changes to GAAP
~~Appeals~~		~~Internal Revenue Service Office of Appeals~~
Available Assets	As defined in the PMIERs, assets primarily including the most liquid assets of a mortgage insurer, and reduced by, among other items, premiums received but not yet earned and reinsurance funds withheld
~~Back-end~~CARES Act		~~With respect to credit risk transfer programs established by the GSEs, policies written~~Coronavirus Aid, Relief, and Economic Security Act signed into law on ~~loans that are already part of an existing GSE portfolio, as contrasted with loans that are to be purchased by the GSEs in the future~~March 27, 2020
~~BofA Settlement Agreement~~		The Confidential Settlement Agreement and Release dated September 16, 2014, by and among Radian Guaranty and Countrywide Home Loans, Inc. and Bank of America, N.A., as a successor to BofA Home Loan Servicing f/k/a Countrywide Home Loan Servicing LP (the “Insureds”), entered into in order to resolve various actual and potential claims or disputes as to mortgage insurance coverage on certain Subject Loans
~~Borrower~~	~~With respect to our securities lending agreements, the third-party institutions to which we loan certain securities in our investment portfolio for short periods of time~~
Claim Curtailment	Our legal right, under certain conditions, to reduce the amount of a claim, including due to servicer negligence
Claim Denial		Our legal right, under certain conditions, to deny a claim
Claim Severity		The total claim amount paid divided by the original coverage amount
Clayton		Clayton ~~Holdings~~Services LLC, a ~~Delaware domiciled~~former indirect ~~non-insurance~~ subsidiary of Radian Group that was sold on January 21, 2020, through which we provided services related to loan acquisition, RMBS securitization and distressed asset reviews and servicer and loan surveillance
~~CMBS~~CLO		Collateralized loan obligations
CMBS		Commercial mortgage-backed securities
~~Convertible Senior Notes due 2017~~COVID-19		~~Our 3.000% convertible unsecured senior notes due November 2017 ($450 million original principal amount)~~The novel coronavirus disease declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention in March 2020
~~Convertible Senior Notes due 2019~~COVID-19 Amendment		~~Our 2.250% convertible unsecured senior notes due March 2019 ($400 million original principal amount)~~Amendment to the PMIERs effective June 30, 2020, primarily to recognize the COVID-19 pandemic as a nationwide “FEMA Declared Major Disaster” and to set forth guidelines on the application of the Disaster Related Capital Charge to COVID-19 Defaulted Loans
~~Cures~~COVID-19 Crisis Period		Time period extending from March 1, 2020 to March 31, 2021
COVID-19 Defaulted Loans		All non-performing loans that either: (i) have an Initial Missed Payment occurring during the COVID-19 Crisis Period or (ii) are subject to a forbearance plan granted in response to a financial hardship related to COVID-19 (which is assumed under the COVID-19 Amendment to be the case for any loan that has an Initial Missed Payment occurring during the COVID-19 Crisis Period and is subject to a forbearance plan), the terms of which are materially consistent with the terms of forbearance plans offered by the GSEs
Cures		Loans that were in default as of the beginning of a period and are no longer in default because payments were received ~~and~~such that the loan is no longer 60 or more days past due
Default to Claim Rate		The ~~assumed~~ percentage of defaulted loans that ~~will~~are assumed to result in a claim


~~Deficiency Amount~~Term			Definition
Demotech			Demotech, Inc.
Disaster Related Capital Charge			Under the PMIERs, multiplier of 0.30 applied to the required asset amount factor for each non-performing loan: (i) backed by a property located in a FEMA Designated Area and (ii) either subject to a certain forbearance plan or with an initial default date occurring within a certain timeframe
Dodd-Frank Act			Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended
Eagle Re Issuer(s)			A group of unaffiliated special purpose insurers (VIEs) domiciled in Bermuda, comprising Eagle Re 2018-1 Ltd., Eagle Re 2019-1 Ltd., Eagle Re 2020-1 Ltd., and/or Eagle Re 2020-2 Ltd., which provide reinsurance coverage under Radian Guaranty’s Excess-of-Loss Program. Effective in April 2021, also includes Eagle Re 2021-1 Ltd.
Excess-of-Loss Program			The ~~assessed tax liabilities, penalties and interest associated~~credit risk protection obtained by Radian Guaranty in the form of excess-of-loss reinsurance, which indemnifies the ceding company against loss in excess of a specific agreed limit, up to a specified sum. The program includes reinsurance agreements with the Eagle Re Issuers in connection with various issuances of mortgage insurance-linked notes. The program also includes a separate agreement with a ~~formal Notice~~third-party reinsurer, representing a pro rata share of ~~Deficiency letter from~~ the ~~IRS~~credit risk alongside the risk assumed by Eagle Re 2018-1 Ltd., an Eagle Re Issuer.
Exchange Act			Securities Exchange Act of 1934, as amended


Extraordinary Distribution		A dividend or distribution of capital that is required to be approved by an insurance company’s primary regulator that is greater than would be permitted as an ordinary distribution (which does not require regulatory approval)
~~Term~~		~~Definition~~
Fannie Mae	Federal National Mortgage Association
FASB		Financial Accounting Standards Board
FEMA		Federal Emergency Management Agency, an agency of the U.S. Department of Homeland Security
FEMA Designated Area		Generally, an area that has been subject to a disaster, designated by FEMA as an individual assistance disaster area for the purpose of determining eligibility for various forms of federal assistance
FHA		Federal Housing Administration
FHFA		Federal ~~Home~~Housing Finance Agency
FHLB		Federal Home Loan Bank of Pittsburgh
FICO		Fair Isaac Corporation (“FICO”) credit scores, ~~used throughout this report,~~ for Radian’s portfolio statistics, represent the borrower’s credit score at origination and, in circumstances where there ~~is more than one borrower,~~are multiple borrowers, the lowest of the borrowers’ FICO ~~score for the primary borrower~~scores is utilized
Fitch		Fitch Ratings, Inc.
Foreclosure Stage Default		The ~~Stage~~stage of ~~Default indicating that the~~default of a loan in which a foreclosure sale has been scheduled or held
Freddie Mac		Federal Home Loan Mortgage Corporation
~~Freddie Mac Agreement~~GAAP		~~The Master Transaction Agreement between Radian Guaranty and Freddie Mac entered into~~Generally accepted accounting principles in ~~August 2013~~the U.S., as amended from time to time
~~Front-end~~GSE(s)		With respect to credit risk transfer programs established by the GSEs, policies written on loans that are to be purchased by the GSEs in the future, as contrasted with loans that are already part of an existing GSE portfolio
~~GAAP~~	~~Accounting principles generally accepted in the United States of America~~
~~Green River Capital~~	~~Green River Capital LLC, a wholly-owned subsidiary of Clayton~~
~~GSEs~~	Government-Sponsored Enterprises (Fannie Mae and Freddie Mac)
HARP		Home Affordable Refinance Program
IBNR		Losses incurred but not reported
IIF		Insurance in force, equal to the aggregate unpaid principal balances of the underlying loans
~~IRS~~Initial Missed Payment		~~Internal Revenue Service~~The first missed monthly payment, which would be reported to us as delinquent as of the last day of the month for which it was due. (For example, for a loan first reported to the approved insurer in May as having missed its payments due on April 1 and May 1, the Initial Missed Payment shall be deemed to have occurred on April 30. In this example, the loan would become a non-performing primary mortgage guaranty insurance loan in May and, if applicable, the Disaster Related Capital Charge would be applied for May, June, and July.)
~~JCT~~LAE		~~Congressional Joint Committee on Taxation~~
~~LAE~~	Loss adjustment expenses, which include the cost of investigating and adjusting losses and paying claims
~~Legacy Loans~~LIBOR		With respect to the BofA Settlement Agreement, loans that were originated or acquired by an Insured and were insured by Radian Guaranty prior to January 1, 2009, excluding such loans that were refinanced under HARP 2 (the FHFA’s extension of and enhancements to HARP)London Inter-bank Offered Rate
~~Legacy Portfolio~~		~~Mortgage insurance written during the poor underwriting years of 2005 through 2008, together with business written prior to 2005~~
Loss Mitigation Activity/Activities	Activities such as Rescissions, Claim Denials, Claim Curtailments and cancellations
LTV		Loan-to-value ratio, calculated as the ~~percentage~~ratio of the original loan amount to the original value of the property, expressed as a percentage



x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Term			Definition
Master Policies			The Prior Master Policy, ~~and~~ the 2014 Master Policy, ~~collectively~~and the 2020 Master Policy, together
Minimum Required ~~Assets~~Asset(s)			A risk-based minimum required asset amount, as defined in the PMIERs, calculated based on net RIF (RIF, net of credits permitted for reinsurance) and a variety of measures related to expected credit performance and other factors, including the impact of the Disaster Related Capital Charge
Model Act			Mortgage Guaranty ~~Insurers~~Insurance Model Act,

as issued by the National Association of Insurance Commissioners to establish minimum capital and surplus requirements for mortgage insurers

~~Term~~	~~Definition~~
Monthly and Other Recurring Premiums (or Recurring Premium Policies)	Insurance premiums or policies, respectively, where premiums are paid on a monthly or other installment basis, ~~excluding~~in contrast to Single Premium Policies
Monthly Premium Policies		Insurance policies where premiums are paid on a monthly installment basis
Moody’s		Moody’s Investors Service
Mortgage ~~Insurance~~		Radian’s ~~Mortgage Insurance~~mortgage insurance and risk services business segment, which provides credit-related insurance coverage, principally through private mortgage insurance on residential first-lien mortgage loans, as well as other credit risk management and contract underwriting solutions to mortgage lending institutions and mortgage credit investors
~~NAIC~~MPP Requirement		~~National Association of Insurance Commissioners~~Certain states’ statutory or regulatory risk-based capital requirement that the mortgage insurer must maintain a minimum policyholder position, which is calculated based on both risk and surplus levels
NIW		New insurance written, representing the aggregate original principal amount of the mortgages underlying the Primary Mortgage Insurance
NOL		Net operating loss; for tax purposes, accumulated during years ~~the~~a company reported more tax deductions than taxable income. NOLs may be carried back or carried forward a certain number of years, depending on ~~each jurisdiction, thus reducing the~~various factors which can reduce a company’s tax ~~liability~~liability.
~~Notices of Deficiency~~		~~Formal letters from the IRS informing the taxpayer of an IRS determination of tax deficiency and appeal rights~~
~~OCI~~	~~Other comprehensive income (loss)~~
Persistency Rate	The percentage of ~~insurance in force~~IIF that remains in force over a period of time
PMIERs		Private Mortgage Insurer Eligibility Requirements ~~effective on December 31, 2015,~~ issued by the GSEs under oversight of the FHFA to set forth requirements an approved insurer must meet and maintain to provide mortgage guaranty insurance on loans acquired by the ~~GSEs~~GSEs. The current PMIERs requirements, sometimes referred to as PMIERs 2.0, incorporate the most recent revisions to the PMIERs that became effective on March 31, 2019.
PMIERs Cushion		Under PMIERs, Radian Guaranty's excess of Available Assets over Minimum Required Assets
Pool Mortgage Insurance		~~Pool~~ Insurance ~~differs from primary insurance in~~ that ~~our maximum liability is not limited to~~provides a ~~specific coverage percentage~~lender or investor protection against default on a group or “pool” of mortgages, rather than on an individual mortgage ~~loan. Instead,~~loan basis, generally subject to an aggregate exposure limit, or “stop loss,” isand/or deductible applied to the initial aggregate loan balance ~~on a group or “pool”~~ of ~~mortgages~~the entire pool, pursuant to the terms of the applicable insurance agreement
~~Post-legacy~~Primary Mortgage Insurance		~~The time period subsequent~~Insurance that provides a lender or investor protection against default on an individual mortgage loan basis, at a specified coverage percentage for each loan, pursuant to ~~2008~~the terms of the applicable Master Policy
~~Post-legacy Portfolio~~		~~Mortgage insurance on loans written subsequent to 2008~~
Prior Master Policy	Radian Guaranty’s master insurance policy, setting forth the terms and conditions of our mortgage insurance coverage, which was in effect prior to the effective date of ~~its~~the 2014 Master Policy
QM		Qualified mortgage; a mortgage that possesses certain low-risk characteristics that enable it to qualify for lender protection under the ability to repay rule instituted by the Dodd-Frank Act
QSR ~~Transactions~~Program		The quota share reinsurance agreements entered into with a third-party reinsurance provider in the second and fourth quarters of 2012, collectively
Radian		Radian Group Inc. together with its consolidated subsidiaries
Radian Group		Radian Group Inc., ~~the registrant~~our insurance holding company
Radian Guaranty		Radian Guaranty Inc., a Pennsylvania domiciled insurance subsidiary of Radian Group and our approved insurer under the PMIERs, through which we provide mortgage insurance products and services
Radian Reinsurance		Radian Reinsurance Inc., a Pennsylvania domiciled insurance subsidiary of Radian Group, through which we provide mortgage credit risk insurance and reinsurance, including through participation in credit risk transactions issued by the GSEs
Radian Title Insurance		Radian Title Insurance Inc., an Ohio domiciled insurance company and an indirect subsidiary of Radian Group, through which we offer title insurance


Term		Definition
RBC States		Risk-based capital states, which are those states that currently impose a statutory or regulatory risk-based capital requirement
~~Red Bell~~		~~Red Bell~~ Real Estate ~~LLC,~~	Radian’s business segment that offers a ~~wholly-owned subsidiary~~broad array of ~~Clayton~~title, valuation, asset management and other real estate services to market participants across the real estate value chain
~~Reinstatements~~Rescission		~~Reversals of previous Rescissions, Claim Denials and Claim Curtailments~~
~~REMIC~~	~~Real Estate Mortgage Investment Conduit~~
~~REO~~	~~Real estate owned~~
~~Rescission~~	Our legal right, under certain conditions, to unilaterally rescind coverage on our mortgage insurance policies if we determine that a loan did not qualify for insurance
RIF		Risk in force; for ~~primary insurance,~~Primary Mortgage Insurance, RIF is equal to the underlying loan unpaid principal balance multiplied by the insurance coverage percentage, whereas for Pool Mortgage Insurance, it represents the remaining exposure under the agreements


Risk-to-capital
~~Term~~	~~Definition~~
~~Risk-to-capital~~	Under certain state regulations, a ~~minimum~~maximum ratio of ~~statutory capital~~net RIF calculated relative to the level of ~~net RIF~~statutory capital
RMBS		Residential mortgage-backed securities
S&P		Standard & Poor’s Financial Services LLC
~~SAPP~~SAP		Statutory accounting principles and practices, ~~include~~including those required or permitted, if applicable, by the insurance departments of the respective states of domicile of our insurance subsidiaries
SEC		United States Securities and Exchange Commission
~~Second-lien~~Securities Act		~~Second-lien mortgage loan~~Securities Act of 1933, as amended
~~Senior Notes due 2017~~		~~Our 9.000% unsecured senior notes due June 2017 ($195.5 million original principal amount, of which the remaining outstanding principal was redeemed in August 2016)~~
~~Senior Notes due 2019~~	~~Our 5.500% unsecured senior notes due June 2019 ($300 million original principal amount)~~
~~Senior Notes due 2020~~	~~Our 5.250% unsecured senior notes due June 2020 ($350 million original principal amount)~~
~~Senior Notes due 2021~~	~~Our 7.000% unsecured senior notes due March 2021 ($350 million original principal amount)~~
Senior Notes due 2024	Our 4.500% unsecured senior notes due October 2024 ($450 million original principal amount)
~~Services~~Senior Notes due 2025		~~Radian’s Services business segment, which provides services and solutions to the real estate and mortgage finance industries~~Our 6.625% unsecured senior notes due March 2025 ($525 million original principal amount)
~~Servicing Only Loans~~Senior Notes due 2027		~~With respect to the BofA Settlement Agreement, loans other than Legacy Loans that were or are serviced by the Insureds and were 90 days or more past~~Our 4.875% unsecured senior notes due ~~as of July 31, 2014, or, if servicing has been transferred to a servicer other than the Insureds, 90 days or more past due as of the transfer date~~March 2027 ($450 million original principal amount)
~~SFR~~Single Premium NIW		NIW on Single ~~family rental~~Premium Policies
Single Premium ~~Policy/~~Policy / Policies		Insurance policies where premiums are paid in a single payment, ~~and~~which includes policies written on an individual basis (as each loan is originated) and on an aggregated basis (in which each individual loan in a group of loans is insured in a single transaction, typically shortly after the loans have been originated)
Single Premium QSR ~~Transaction~~Program		~~Quota share reinsurance agreement entered into with a panel of third-party reinsurance providers in~~The 2016 Single Premium QSR Agreement, the ~~first quarter of 2016~~2018 Single Premium QSR Agreement and the 2020 Single Premium QSR Agreement, collectively
Stage of Default		The stage a loan is in relative to the foreclosure process, based on whether a foreclosure sale has been scheduled or held
Statutory RBC Requirement		Risk-based capital requirement imposed by the RBC States, requiring a minimum surplus level and, in certain states, a minimum ratio of statutory capital relative to the level of risk
~~Subject Loans~~Surplus Notes		~~Loans covered under the BofA Settlement Agreement, comprising Legacy Loans~~Collectively: (i) a $100 million 0.0% intercompany surplus note issued by Radian Guaranty to Radian Group, due December 31, 2027 and ~~Servicing Only Loans~~(ii) a $200 million 3.0% intercompany surplus note issued by Radian Guaranty to Radian Group, due January 31, 2030
Time in Default		The time period from the point a loan reaches default status (based on the month the default occurred) to the current reporting date
~~U.S.~~VIE		~~The United States of America~~
~~U.S. Treasury~~	~~United States Department of the Treasury~~
VA	~~U.S. Department of Veterans Affairs~~
~~ValuAmerica~~	~~ValuAmerica, Inc., a wholly-owned subsidiary of Clayton~~Variable interest entity



($ in thousands, except per-share amounts)	September 30, 2017			December 31, 2016

Assets
Investments (Note 5)
Fixed-maturities available for sale—at fair value (amortized cost $3,218,614 and $2,856,468)	$	3,256,581		$	2,838,512
Equity securities available for sale—at fair value (cost $161,159 and $1,330)	161,303			1,330
Trading securities—at fair value	636,225			879,862
Short-term investments—at fair value (includes $36,782 and $0 of reinvested cash collateral held under securities lending agreements)	491,956			741,531
Other invested assets	599			1,195
Total investments	4,546,664			4,462,430
Cash	61,917			52,149
Restricted cash	36,888			9,665
Accounts and notes receivable	97,020			77,631
Deferred income taxes, net (Note 9)	356,181			411,798
Goodwill and other intangible assets, net (Note 6)	66,967			276,228
Prepaid reinsurance premium	239,620			229,438
Other assets (Note 8)	439,016			343,835
Total assets	$	5,844,273		$	5,863,174

Liabilities and Stockholders’ Equity
Unearned premiums	$	717,589		$	681,222
Reserve for losses and loss adjustment expense (“LAE”) (Note 10)	556,488			760,269
Long-term debt (Note 11)	1,026,806			1,069,537
Reinsurance funds withheld	194,353			158,001
Other liabilities	360,835			321,859
Total liabilities	2,856,071			2,990,888
Commitments and contingencies (Note 12)
Stockholders’ equity
Common stock: par value $.001 per share; 485,000,000 shares authorized at September 30, 2017 and December 31, 2016; 232,894,636 and 232,091,921 shares issued at September 30, 2017 and December 31, 2016, respectively; 215,298,551 and 214,521,079 shares outstanding at September 30, 2017 and December 31, 2016, respectively	233			232
Treasury stock, at cost: 17,596,085 and 17,570,842 shares at September 30, 2017 and December 31, 2016, respectively	(893,754		)	(893,332		)
Additional paid-in capital	2,747,393			2,779,891
Retained earnings	1,110,057			997,890
Accumulated other comprehensive income (loss) (“AOCI”) (Note 14)	24,273			(12,395		)
Total stockholders’ equity	2,988,202			2,872,286
Total liabilities and stockholders’ equity	$	5,844,273		$	5,863,174



	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per-share amounts)	2017		2016		2017		2016
Revenues:
Net premiums earned—insurance	$	236,702	$	238,149	$	687,598	$	688,184
Services revenue	39,571		45,877		115,400		118,989
Net investment income	32,540		28,430		93,643		84,470
Net gains (losses) on investments and other financial instruments	2,480		7,711		4,960		69,524
Other income	760		716		2,118		2,836
Total revenues	312,053		320,883		903,719		964,003
Expenses:
Provision for losses	35,841		55,785		99,976		148,501
Policy acquisition costs	5,554		6,119		18,406		17,901
Cost of services	27,240		29,447		81,250		80,362
Other operating expenses	64,195		62,119		201,322		182,480
Restructuring and other exit costs (Note 1)	12,038		—		12,038		—
Interest expense	15,715		19,783		47,832		63,863
Loss on induced conversion and debt extinguishment (Note 11)	45,766		17,397		51,469		75,075
Impairment of goodwill (Note 6)	—		—		184,374		—
Amortization and impairment of other intangible assets	2,890		3,292		25,042		9,931
Total expenses	209,239		193,942		721,709		578,113
Pretax income	102,814		126,941		182,010		385,890
Income tax provision	37,672		44,138		67,738		138,726
Net income	$	65,142	$	82,803	$	114,272	$	247,164

Net income per share:
Basic	$	0.30	$	0.39	$	0.53	$	1.17
Diluted	$	0.30	$	0.37	$	0.52	$	1.09

Weighted-average number of common shares outstanding—basic	215,279		214,387		215,194		210,858
Weighted-average number of common and common equivalent shares outstanding—diluted	219,391		225,968		220,230		230,672

Dividends per share	$	0.0025	$	0.0025	$	0.0075	$	0.0075



	Nine Months Ended September 30,
(In thousands)	2017			2016
Common Stock
Balance, beginning of period	$	232		$	224
Impact of extinguishment of Convertible Senior Notes due 2017 and 2019 (Note 11)	—			17
Issuance of common stock under incentive and benefit plans	1			—
Shares repurchased under share repurchase program (Note 13)	—			(9		)
Balance, end of period	233			232

Treasury Stock
Balance, beginning of period	(893,332		)	(893,176		)
Repurchases of common stock under incentive plans	(422		)	(21		)
Balance, end of period	(893,754		)	(893,197		)

Additional Paid-in Capital
Balance, beginning of period	2,779,891			2,716,618
Issuance of common stock under incentive and benefit plans	4,761			1,711
Share-based compensation	10,290			17,632
Impact of extinguishment of Convertible Senior Notes due 2017 and 2019 (Note 11)	(52,408		)	143,078
Cumulative effect of adoption of the accounting standard update for share-based payment transactions	756			—
Termination of capped calls (Note 11)	4,109			—
Shares repurchased under share repurchase program (Note 13)	(6		)	(100,179		)
Balance, end of period	2,747,393			2,778,860

Retained Earnings
Balance, beginning of period	997,890			691,742
Net income	114,272			247,164
Dividends declared	(1,614		)	(1,568		)
Cumulative effect of adoption of the accounting standard update for share-based payment transactions, net of tax	(491		)	—
Balance, end of period	1,110,057			937,338

Accumulated Other Comprehensive Income (Loss) (“AOCI”)
Balance, beginning of period	(12,395		)	(18,477		)
Net foreign currency translation adjustment, net of tax	136			(346		)
Net unrealized gains (losses) on investments, net of tax	36,532			84,318
Net actuarial gains (losses)	—			(22		)
Balance, end of period	24,273			65,473

Total Stockholders’ Equity	$	2,988,202		$	2,888,706



	At September 30, 2017
(In thousands)	Mortgage Insurance		Services (1)		Total
Total assets	$	5,630,687	$	213,586	$	5,844,273

	At December 31, 2016
(In thousands)	Mortgage Insurance		Services		Total
Total assets	$	5,506,338	$	356,836	$	5,863,174



	September 30, 2017				December 31, 2016
(In thousands)	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Other invested assets	$	599	$	3,404	$	1,195	$	3,789
Liabilities:
Long-term debt	1,026,806		1,095,409		1,069,537		1,214,471



	September 30, 2017
($ in thousands) Description of Securities	Less Than 12 Months					12 Months or Greater					Total
($ in thousands) Description of Securities	# of securities	Fair Value		Unrealized Losses		# of securities	Fair Value		Unrealized Losses		# of securities	Fair Value		Unrealized Losses
U.S. government and agency securities	8	$	37,926	$	604	2	$	1,580	$	10	10	$	39,506	$	614
State and municipal obligations	17	60,210		439		—	—		—		17	60,210		439
Corporate bonds and notes	108	439,016		5,104		5	11,013		303		113	450,029		5,407
RMBS	29	114,243		1,862		5	14,262		315		34	128,505		2,177
CMBS	30	122,980		1,009		3	1,811		182		33	124,791		1,191
Other ABS	64	174,128		478		1	1,484		4		65	175,612		482
Foreign government and agency securities	2	1,196		6		—	—		—		2	1,196		6
Equity securities	11	79,856		500		—	—		—		11	79,856		500
Total	269	$	1,029,555	$	10,002	16	$	30,150	$	814	285	$	1,059,705	$	10,816



(In thousands)	September 30, 2017
Loaned securities: (1)
Corporate bonds and notes	$	33,557
Foreign government and agency securities	120
Equity securities	27,199
Total loaned securities, at fair value	$	60,876

Total loaned securities, at amortized cost	$	60,740
Securities collateral on deposit from Borrowers (2)	25,589
Reinvested cash collateral, at estimated fair value (3)	36,782



(In thousands)	Goodwill		Accumulated Impairment Losses			Net
Balance at December 31, 2015	$	197,265	$	(2,095	)	$	195,170
Goodwill acquired	—		—			—
Impairment losses	—		—			—
Balance at December 31, 2016	197,265		(2,095		)	195,170
Goodwill acquired	126		—			126
Impairment losses	—		(184,374		)	(184,374		)
Balance at September 30, 2017	$	197,391	$	(186,469	)	$	10,922



	September 30, 2017
(In thousands)	Original Amount Acquired		Accumulated Amortization and Impairment			Net Carrying Amount
Client relationships (1)	$	83,363	$	(40,625	)	$	42,738
Technology (2)	15,250		(8,382		)	6,868
Trade name and trademarks	8,340		(2,787		)	5,553
Client backlog	6,680		(5,813		)	867
Non-competition agreements	185		(166		)	19
Total	$	113,818	$	(57,773	)	$	56,045



2017	$	2,754
2018	10,316
2019	8,790
2020	7,412
2021	5,834
2022	5,081
Thereafter	15,858
Total	$	56,045



	QSR Transactions
	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2017		2016		2017		2016
Ceded premiums written (1)	$	4,621	$	6,730	$	15,137	$	22,048
Ceded premiums earned (1)	6,826		10,597		22,064		33,094
Ceding commissions written	1,323		1,922		4,328		6,291
Ceding commissions earned (2)	2,925		3,974		10,198		12,199
Ceded losses, net	257		495		517		1,259



	Single Premium QSR Transaction
	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2017		2016		2017		2016
Ceded premiums written (1)	$	13,248	$	13,004	$	36,064	$	222,085	(3)
Ceded premiums earned (1)	6,771		8,608		18,941		21,748
Ceding commissions written	5,156		5,482		14,002		61,258
Ceding commissions earned (2)	3,536		4,382		9,721		11,173
Ceded losses	406		719		1,443		1,635



	Convertible Senior Notes due 2017						Convertible Senior Notes due 2019
(In thousands)	September 30, 2017			December 31, 2016			September 30, 2017		December 31, 2016
Liability component:
Principal	$	526		$	22,233		$	—	$	68,024
Debt discount, net (1)	(5		)	(1,221		)	—		(5,461		)
Debt issuance costs (1)	—			(65		)	—		(550		)
Net carrying amount	$	521		$	20,947		$	—	$	62,013



	Three Months Ended September 30, 2017									Nine Months Ended September 30, 2017
(In thousands)	Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax
Balance at beginning of period	$	27,878		$	9,761		$	18,117		$	(19,063	)	$	(6,668	)	$	(12,395	)
OCI:
Unrealized gains (losses) on investments:
Unrealized holding gains (losses) arising during the period	9,598			3,359			6,239			52,069			18,224			33,845
Less: Reclassification adjustment for net gains (losses) included in net income (loss) (1)	170			59			111			(4,134		)	(1,447		)	(2,687		)
Net unrealized gains (losses) on investments	9,428			3,300			6,128			56,203			19,671			36,532
Net foreign currency translation adjustments	39			11			28			205			69			136
OCI	9,467			3,311			6,156			56,408			19,740			36,668
Balance at end of period	$	37,345		$	13,072		$	24,273		$	37,345		$	13,072		$	24,273

	Three Months Ended September 30, 2016									Nine Months Ended September 30, 2016
(In thousands)	Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax
Balance at beginning of period	$	95,548		$	33,443		$	62,105		$	(28,425	)	$	(9,948	)	$	(18,477	)
OCI:
Unrealized gains (losses) on investments:
Unrealized holding gains (losses) arising during the period	10,682			3,739			6,943			133,253			46,639			86,614
Less: Reclassification adjustment for net gains (losses) included in net income (loss) (1)	5,685			1,990			3,695			3,533			1,237			2,296
Net unrealized gains (losses) on investments	4,997			1,749			3,248			129,720			45,402			84,318
Net foreign currency translation adjustments	(47		)	(11		)	(36		)	(523		)	(177		)	(346		)
Net actuarial loss	240			84			156			(34		)	(12		)	(22		)
OCI	5,190			1,822			3,368			129,163			45,213			83,950
Balance at end of period	$	100,738		$	35,265		$	65,473		$	100,738		$	35,265		$	65,473


~~(1)~~ Table of Contents Glossary			~~Included in net gains (losses) on investments and other financial instruments on our consolidated statements of operations.~~Radian Group Inc. Notes to Unaudited Condensed Consolidated Financial Statements


	Three Months Ended March 31,
(In millions)	2021		2020
Statutory net income (loss)
Radian Guaranty	$	166.8	$	195.5
Radian Reinsurance	1.9		23.9
Other Mortgage Subsidiaries	0		0.7
Radian Title Insurance	1.3		0.1

(In millions)	March 31, 2021		December 31, 2020
Statutory policyholders’ surplus
Radian Guaranty	$	526.9	$	481.5
Radian Reinsurance	361.0		360.7
Other Mortgage Subsidiaries	41.5		41.3
Radian Title Insurance	29.7		28.8



	September 30, 2017			December 31, 2016
($ in millions)
RIF, net (1)	$	38,712.8		$	35,357.8

Common stock and paid-in capital	$	1,866.2		$	2,041.0
Unassigned earnings (deficit)	(740.3		)	(691.3		)
Statutory policyholders’ surplus	1,125.9			1,349.7
Contingency reserve	1,565.7			1,260.6
Statutory capital	$	2,691.6		$	2,610.3

Risk-to-capital	14.4:1			13.5:1


~~(1)~~	~~Excludes risk ceded through reinsurance contracts (to third parties and affiliates) and RIF on defaulted loans.~~



~~Index to Management’s Discussion and Analysis of Financial Condition and Results of Operations~~
	~~PAGE~~
~~Overview~~	50
~~Results of Operations—Consolidated~~	56
~~Results of Operations—Mortgage Insurance~~	63
~~Results of Operations—Services~~	79
~~Off-Balance Sheet Arrangements~~	82
~~Liquidity and Capital Resources~~	83
~~Critical Accounting Policies~~	90


Item			Page
Overview			39
Key Factors Affecting Our Results			42
Mortgage Insurance Portfolio			43
Results of Operations—Consolidated			46
Results of Operations—Mortgage			50
Results of Operations—Real Estate			55
Results of Operations—All Other			55
Liquidity and Capital Resources			56
Critical Accounting Estimat es			61



~~RADIAN’S LONG-TERM STRATEGIC OBJECTIVES~~
~~• Grow~~Table of Contents Glossary Part I. Item 2. Management’s Discussion and ~~diversify earnings per share while maintaining attractive returns on equity~~Analysis of Financial Condition and Results of Operations ~~» Write high-quality and profitable NIW~~ ~~» Position our Services business to drive profitability by growing fee-based revenue streams that are more predictable and recurring~~ ~~» Diversify earnings by expanding our mortgage credit-risk products beyond traditional mortgage~~ ~~insurance, while balancing the appropriate risk and return profile~~
~~• Coordinate innovative product offerings and delivery to the marketplace, including integrated Mortgage Insurance and Services solutions~~
~~• Implement operational excellence initiatives to enhance our culture of continuous improvement~~


		Insurance in Force as of:
	Vintage written in: ($ in billions)	March 31, 2021			December 31, 2020			March 31, 2020
¢	2021	$20.0	8.4	%	$—	—	%	$—	—	%
¢	2020	92.3	38.6		98.8	40.2		16.6	6.9
¢	2019	37.5	15.7		44.6	18.1		64.4	26.6
¢	2018	19.9	8.3		23.5	9.5		39.2	16.2
¢	2017	18.0	7.5		21.2	8.6		35.1	14.5
¢	2016	15.0	6.3		17.5	7.1		27.5	11.4
¢	2009 - 2015	22.2	9.3		25.7	10.5		40.7	16.9
¢	2008 & Prior (2)	14.0	5.9		14.8	6.0		18.1	7.5
	Total	$238.9	100.0	%	$246.1	100.0	%	$241.6	100.0	%



					$ Change							$ Change
	Three Months Ended September 30,				Favorable (Unfavorable)			Nine Months Ended September 30,				Favorable (Unfavorable)
(In millions, except per-share amounts)	2017		2016 (1)		2017 vs. 2016			2017		2016 (1)		2017 vs. 2016
Pretax income	$	102.8	$	126.9	$	(24.1	)	$	182.0	$	385.9	$	(203.9	)
Net income	65.1		82.8		(17.7		)	114.3		247.2		(132.9		)
Diluted net income per share	0.30		0.37		(0.07		)	0.52		1.09		(0.57		)
Book value per share at September 30	13.88		13.47		0.41			13.88		13.47		0.41

Net premiums earned—insurance	236.7		238.1		(1.4		)	687.6		688.2		(0.6		)
Services revenue	39.6		45.9		(6.3		)	115.4		119.0		(3.6		)
Net investment income	32.5		28.4		4.1			93.6		84.5		9.1
Net gains (losses) on investments and other financial instruments	2.5		7.7		(5.2		)	5.0		69.5		(64.5		)
Provision for losses	35.8		55.8		20.0			100.0		148.5		48.5
Cost of services	27.2		29.4		2.2			81.3		80.4		(0.9		)
Other operating expenses	64.2		62.1		(2.1		)	201.3		182.5		(18.8		)
Restructuring and other exit costs	12.0		—		(12.0		)	12.0		—		(12.0		)
Interest expense	15.7		19.8		4.1			47.8		63.9		16.1
Loss on induced conversion and debt extinguishment	45.8		17.4		(28.4		)	51.5		75.1		23.6
Impairment of goodwill	—		—		—			184.4		—		(184.4		)
Amortization and impairment of other intangible assets	2.9		3.3		0.4			25.0		9.9		(15.1		)
Income tax provision	37.7		44.1		6.4			67.7		138.7		71.0

Adjusted pretax operating income (2)	$	155.6	$	139.9	$	15.7		$	444.6	$	401.5	$	43.1


~~(2)~~	~~See “—Use of Non-GAAP Financial Measure” below.~~