-- Enhances holding company liquidity by
redeeming $325 million surplus note –
-- Board authorizes $125 million share
repurchase program and early redemption of $196 million of Senior
Notes –
Radian Group Inc. announced today that on June 30, 2016, Radian
Guaranty Inc., its mortgage insurance subsidiary, redeemed its $325
million surplus note due to Radian Group, which immediately
resulted in a $325 million increase to Radian Group’s available
liquidity. The redemption of the surplus note was approved by the
Pennsylvania Insurance Department. Following the redemption, Radian
Group maintained more than $700 million of available liquidity as
of June 30, 2016.
“Our redemption of the entire $325 million surplus note at the
earliest possible date further enhances our liquidity position and
reflects Radian’s strong financial performance and positive future
outlook,” said Radian’s Chief Executive Officer S.A. Ibrahim.
The company plans to utilize a portion of its liquidity in order
to accelerate its capital plan, with the objective of better
positioning Radian Group for a return to investment grade ratings
in the future. As a result, Radian’s Board of Directors has
authorized the following actions:
- A share repurchase of up to $125
million of the company’s common stock
- The early redemption of the remaining
$196 million face value of its 9.00% Senior Notes due 2017
In addition, Radian’s capital strategy continues to include
opportunistically removing the company’s outstanding Convertible
Senior Notes from its capital structure and potentially the
redemption, repurchase, or exchange of a portion of its other
outstanding senior debt.
Ibrahim added, “The Board of Directors and management team
continue to believe that Radian’s business fundamentals, growth
prospects and long-term strategy are not reflected in the company’s
current stock price. With our common stock trading at a significant
discount to book value, we believe a share repurchase program
represents an extremely attractive investment opportunity.
“Our strong balance sheet and liquidity position enable us to
return value to stockholders through a share repurchase and further
strengthen our capital position through debt redemption while
simultaneously growing and strengthening our businesses.”
Background on Early Redemption of Surplus Note
On December 30, 2015, Radian Group transferred $325 million of
cash and marketable securities to Radian Guaranty in exchange for a
surplus note, which was scheduled to mature on December 31, 2025.
Based on its compliance with PMIERs and positive trends reflected
in its capital projections, Radian Guaranty was able to obtain
regulatory approval to redeem the entire note on June 30, 2016,
which represented the earliest possible redemption date. Radian
remains in compliance with the PMIERs and, as of June 30, 2016,
estimates that Radian Guaranty’s Available Assets exceed its
Minimum Required Assets by approximately $150 - 200 million.
Share Repurchase Program
Radian’s Board of Directors has authorized a share repurchase
program that enables the company to spend up to $125 million to
repurchase its common stock. The shares may be purchased in the
open market or in privately negotiated transactions.
The authorization provides Radian the flexibility to repurchase
shares opportunistically from time to time, based on market and
business conditions, stock price and other factors. The
authorization expires on June 30, 2017. Radian may utilize a Rule
10b5-1 plan, which would permit the company to purchase shares, at
pre-determined price targets, when it may otherwise be precluded
from doing so.
Shares of Radian Group are currently trading below the company’s
March 31, 2016 book value per share of $12.42. Based on the closing
price on July 5, 2016, the $125 million share repurchase program
represents approximately 12.7 million shares of Radian's common
stock, or 5.9 percent of shares outstanding as of March 31,
2016.
Early Redemption of Senior Notes due 2017
Radian’s Board of Directors has also authorized the company to
redeem $196 million principal amount of its 9.000% Senior Notes due
2017, which represents the balance outstanding. The Notes would be
redeemed in accordance with the terms of the indenture governing
the Notes, which provides for redemption at a price that includes a
make-whole premium calculated pursuant to the indenture (assuming a
redemption date of June 30, 2016, estimated to be approximately $14
million) plus any interest accrued and unpaid at the redemption
date.
ABOUT RADIAN
Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia,
provides private mortgage insurance, risk management products and
real estate services to financial institutions. Radian offers
products and services through two business segments:
- Mortgage Insurance, through its
principal mortgage insurance subsidiary Radian Guaranty Inc. This
private mortgage insurance protects lenders from default-related
losses, facilitates the sale of low-downpayment mortgages in the
secondary market and enables homebuyers to purchase homes more
quickly with downpayments less than 20%.
- Mortgage and Real Estate Services,
through its principal services subsidiary Clayton, as well as Green
River Capital, Red Bell Real Estate and ValuAmerica. These
solutions include information and services that financial
institutions, investors and government entities use to evaluate,
acquire, securitize, service and monitor loans and asset-backed
securities.
Additional information may be found at www.radian.biz.
FORWARD LOOKING STATEMENTS
All statements in this press release that address events,
developments or results that we expect or anticipate may occur in
the future are "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, Section 21E of the
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. 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 risks emerge from time to time and it is
not possible for us to predict all risks that may affect us. 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:
- changes in general economic, market and
regulatory conditions;
- factors that may affect the company’s
ability and willingness to repurchase shares under the proposed
repurchase program and the possibility that the program may be
suspended or terminated;
- factors that may affect the company’s
ability and willingness to early redeem its Senior Notes due 2017
or to take actions with respect to our other remaining debt;
and
- our ability to successfully execute and
implement our business plans and strategies.
For more information regarding these risks and uncertainties as
well as certain additional risks that we face, you should refer to
the Risk Factors detailed in Item 1A of Part I of our Annual Report
on Form 10-K for the year ended December 31, 2015, and subsequent
reports and registration statements filed from time to time with
the U.S. Securities and Exchange Commission. 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 presentation.
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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version on businesswire.com: http://www.businesswire.com/news/home/20160706005431/en/
Radian Group Inc.Emily Riley,
215-231-1035emily.riley@radian.biz
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