Radian Group Inc. has moved hundreds of millions of dollars into its mortgage insurance subsidiary in order to meet new agency capital requirements.
U.S. mortgage insurance companies that insure loans backed or owned by Fannie Mae or Freddie Mac are subject to new requirements as of Thursday.
The Private Mortgage Insurer Eligibility Requirements
set financial and operational standards that insurers must meet for approval by the secondary lenders.
Fannie and Freddie were required to implement the PMIERs by their regulator and conservator, the Federal Housing Finance Agency.
Radian transferred $325 million in cash and marketable securities during the fourth quarter to mortgage insurance subsidiary Radian Guaranty Inc., an announcement Wednesday said. The subsidiary provided a surplus note in exchange for the assets.
In addition, a $50 million contribution was made
to an exclusive affiliated re-insurer of Radian Guaranty.
The moves were made to ensure compliance with the PMIERs and push Radian Guaranty’s liquidity past $300 million.
“The combination of the surplus note and capital contribution will provide Radian Guaranty with an initial cushion above the projected amount required to satisfy the PMIERs’ financial requirements,” the statement said. “This cushion is expected to increase based in part on expected future financial performance at Radian Guaranty; as a result, Radian Guaranty is not expected to require any additional capital contributions in order to remain compliant.”
Previously data reported by the Philadelphia-based mortgage insurer indicate that it had $175 billion primary insurance in force as of Sept. 30.
