Volatility in the mortgage insurance space is not stopping Radian Group (RDN) from pursuing strategic growth opportunities. The insurer is partnering with the National League of Cities to explore the possibility of creating a new public finance mutual bond insurance firm. The nonprofit said it saw an opportunity to form the "next generation bond insurer," which will provide bondholders "with a superior level of credit enhancement, while allowing municipal issuers to benefit from lower-cost financing." Bond insurers such as MBIA Inc. (MBI) and Ambac Financial Group crumbled under the weight of soured mortgages the past few years, and many companies stopped writing new insurance for municipal bonds, which often fund infrastructure improvements like new roads, bridges and schools. Both Radian and the National League of Cities acknowledged their venture will likely "involve the support of private capital from third-party investors." "Radian is an established and experienced bond insurer that has the resources, people, infrastructure, transparency, and vision to help NLC, its members, and the thousands of local governmental issuers that access the municipal bond market each year," said Donald Borut, executive director of nonprofit  advocacy group. David Beidler, president of Radian Asset Assurance, said "a mutual bond insurance company with a public finance book of business would restore capacity that was lost in recent years." Radian is reshaping its business strategy to compete in a shifting market. The Philadelphia-based insurer recently laid off 7% of its staff and terminated the employment of its chief operating officer Robert Griffith. Write to Kerri Panchuk.