A deal that will reduce Radian Asset Assurance Inc.’s policies is expected to help the mortgage insurer with its capital position.
An announcement Tuesday from parent Radian Group Inc. said that the financial guaranty insurance subsidiary has entered a three-part transaction with subsidiaries of Assured Guaranty Ltd.
The deal includes the commutation of a $12.9 billion portfolio re-insured by Radian Asset. In addition, $1.8 billion in public finance business will be ceded.
As part of the commutation and re-insurance transactions, Radian Asset will transfer net unearned premiums of $108 million.
The transaction also calls for the sale of Municipal and Infrastructure Assurance Corp. for $91 million.
Regulatory approval is required before the sale can close.
Statutory capital will increase by $100 million as a result of the agreement, Radian said. That includes around $6 million in statutory capital to be generated from the sale of MIAC, which is expected to take place in the first quarter.
Radian Guaranty Inc. disclosed in November that it was seeking capital ratio waivers in 12 states.
“By reducing our financial guaranty net par outstanding by 21 percent, we are strengthening Radian Asset’s statutory capital position,” Radian Chief Executive Officer S.A. Ibrahim said in today’s statement.
Ibrahim noted that great “great strides” had been made as a result of the transaction in the preservation of holding-company liquidity and the subsidiary company’s capital position.
More details were promised at a Feb. 23 conference call.
