Mortgage insurer Radian Guaranty (RDN) managed to commute $827 million in reinsurance exposure as the firm continues to work on its risk-to-capital position.
The company earlier in the year announced other commutations and plans for future deals to commute risk on mortgage deals to enhance its overall capital position.
Radian said its financial guaranty subsidiary Radian Asset Assurance entered into a deal with Financial Guaranty Insurance Corp. this week to commute $827 million in reinsurance coverage that Radian offered to FGIC.
The commuted portfolio accounts for 13% of Radian's reinsurance exposure. Commuting the risk gets Radian off the hook for covering added risk beyond FGIC.
"Entering into this agreement is another example of our efforts to actively reduce our financial guaranty exposure, which is an important component of our capital management strategy," said Radian CEO S.A. Ibrahim.
The deal is subject to a court's approval.
If the deal goes through, Radian Asset will have to make a $52.4 million payment to FGIC to get the remaining amount it insures commuted.