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Note 5 - Investments | 6 Months Ended
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Jun. 30, 2018
Investments [Abstract] |
Investments | Investments Available for Sale Securities Our available for sale securities within our investment portfolio consisted of the following as of the dates indicated:
| June 30, 2018
(In thousands) | Amortized Cost |  | Fair Value |  | Gross Unrealized Gains |  | Gross Unrealized Losses
Fixed-maturities available for sale: |  |  |  |  |  |  |
U.S. government and agency securities | $ | 72,811 |  |  | $ | 71,045 |  | (1) | $ | 1 |  |  | $ | 1,767 |
State and municipal obligations | 136,649 |  |  | 137,699 |  |  | 2,957 |  |  | 1,907 |
Corporate bonds and notes | 1,987,444 |  |  | 1,933,044 |  |  | 4,617 |  |  | 59,017 |
RMBS | 249,577 |  |  | 243,659 |  | (2) | 1 |  |  | 5,919 |
CMBS | 487,805 |  |  | 477,751 |  |  | 228 |  |  | 10,282 |
Other ABS | 694,613 |  |  | 692,564 |  |  | 1,132 |  |  | 3,181 |
Foreign government and agency securities | 46,826 |  |  | 46,290 |  |  | 116 |  |  | 652 |
Total fixed-maturities available for sale | $ | 3,675,725 |  |  | $ | 3,602,052 |  | (3) | $ | 9,052 |  |  | $ | 82,725 |
______________________
(1) | Includes securities with a fair value of $10.6 million serving as collateral for FHLB advances.
(2) | Includes securities with a fair value of $112.2 million serving as collateral for FHLB advances.
(3) | Includes $16.0 million of fixed maturity securities loaned to third-party Borrowers under securities lending agreements, classified as other assets in our condensed consolidated balance sheets, as further described below.
| December 31, 2017
(In thousands) | Amortized Cost |  | Fair Value |  | Gross Unrealized Gains |  | Gross Unrealized Losses
Fixed-maturities available for sale: |  |  |  |  |  |  |
U.S. government and agency securities | $ | 69,667 |  |  | $ | 69,396 |  |  | $ | 96 |  |  | $ | 367 |
State and municipal obligations | 156,587 |  |  | 161,722 |  |  | 5,834 |  |  | 699 |
Corporate bonds and notes | 1,869,318 |  |  | 1,894,886 |  |  | 33,620 |  |  | 8,052 |
RMBS | 189,455 |  |  | 187,229 |  |  | 636 |  |  | 2,862 |
CMBS | 451,595 |  |  | 453,394 |  |  | 3,409 |  |  | 1,610 |
Other ABS | 672,715 |  |  | 674,548 |  |  | 2,655 |  |  | 822 |
Foreign government and agency securities | 31,417 |  |  | 32,207 |  |  | 823 |  |  | 33 |
Total fixed-maturities available for sale | 3,440,754 |  |  | 3,473,382 |  | (1) | 47,073 |  |  | 14,445 |
Equity securities available for sale (2) | 176,349 |  |  | 176,065 |  | (1) | 1,705 |  |  | 1,989 |
Total debt and equity securities available for sale | $ | 3,617,103 |  |  | $ | 3,649,447 |  |  | $ | 48,778 |  |  | $ | 16,434 |
______________________
(1) | Includes $14.7 million of fixed maturity securities and $13.2 million of equity securities loaned to third-party Borrowers under securities lending agreements, classified as other assets in our condensed consolidated balance sheets, as further described below.
(2) | Primarily consists of investments in fixed-income and equity exchange-traded funds and publicly-traded business development company equities.
For the six months ended June 30, 2018, we did not transfer any securities from the available for sale or trading categories. Gross Unrealized Losses and Fair Value of Available for Sale Securities For securities deemed “available for sale” and that are in an unrealized loss position, the following tables show the gross unrealized losses and fair values, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of the dates indicated. Included in the amounts as of June 30, 2018 and December 31, 2017 are loaned securities under securities lending agreements that are classified as other assets in our condensed consolidated balance sheets, as further described below.
|  | June 30, 2018
($ in thousands) Description of Securities |  | Less Than 12 Months |  | 12 Months or Greater |  | Total
| # of securities |  | Fair Value |  | Unrealized Losses |  | # of securities |  | Fair Value |  | Unrealized Losses |  | # of securities |  | Fair Value |  | Unrealized Losses
U.S. government and agency securities |  | 8 |  |  | $ | 41,506 |  |  | $ | 1,253 |  |  | 3 |  |  | $ | 9,502 |  |  | $ | 514 |  |  | 11 |  |  | $ | 51,008 |  |  | $ | 1,767 |
State and municipal obligations |  | 27 |  |  | 78,350 |  |  | 1,907 |  |  | — |  |  | — |  |  | — |  |  | 27 |  |  | 78,350 |  |  | 1,907 |
Corporate bonds and notes |  | 406 |  |  | 1,548,096 |  |  | 50,572 |  |  | 29 |  |  | 119,977 |  |  | 8,445 |  |  | 435 |  |  | 1,668,073 |  |  | 59,017 |
RMBS |  | 24 |  |  | 168,364 |  |  | 2,175 |  |  | 27 |  |  | 75,189 |  |  | 3,744 |  |  | 51 |  |  | 243,553 |  |  | 5,919 |
CMBS |  | 76 |  |  | 436,659 |  |  | 9,898 |  |  | 8 |  |  | 8,222 |  |  | 384 |  |  | 84 |  |  | 444,881 |  |  | 10,282 |
Other ABS |  | 124 |  |  | 423,815 |  |  | 3,063 |  |  | 10 |  |  | 15,436 |  |  | 118 |  |  | 134 |  |  | 439,251 |  |  | 3,181 |
Foreign government and agency securities |  | 26 |  |  | 39,520 |  |  | 652 |  |  | — |  |  | — |  |  | — |  |  | 26 |  |  | 39,520 |  |  | 652 |
Total |  | 691 |  |  | $ | 2,736,310 |  |  | $ | 69,520 |  |  | 77 |  |  | $ | 228,326 |  |  | $ | 13,205 |  |  | 768 |  |  | $ | 2,964,636 |  |  | $ | 82,725 |
|  | December 31, 2017
($ in thousands) Description of Securities |  | Less Than 12 Months |  | 12 Months or Greater |  | Total
| # of securities |  | Fair Value |  | Unrealized Losses |  | # of securities |  | Fair Value |  | Unrealized Losses |  | # of securities |  | Fair Value |  | Unrealized Losses
U.S. government and agency securities |  | 6 |  |  | $ | 23,309 |  |  | $ | 129 |  |  | 3 |  |  | $ | 9,799 |  |  | $ | 238 |  |  | 9 |  |  | $ | 33,108 |  |  | $ | 367 |
State and municipal obligations |  | 21 |  |  | 65,898 |  |  | 699 |  |  | — |  |  | — |  |  | — |  |  | 21 |  |  | 65,898 |  |  | 699 |
Corporate bonds and notes |  | 152 |  |  | 672,318 |  |  | 4,601 |  |  | 32 |  |  | 139,105 |  |  | 3,451 |  |  | 184 |  |  | 811,423 |  |  | 8,052 |
RMBS |  | 8 |  |  | 19,943 |  |  | 204 |  |  | 26 |  |  | 101,812 |  |  | 2,658 |  |  | 34 |  |  | 121,755 |  |  | 2,862 |
CMBS |  | 35 |  |  | 139,353 |  |  | 1,395 |  |  | 4 |  |  | 3,518 |  |  | 215 |  |  | 39 |  |  | 142,871 |  |  | 1,610 |
Other ABS |  | 92 |  |  | 260,864 |  |  | 777 |  |  | 7 |  |  | 8,297 |  |  | 45 |  |  | 99 |  |  | 269,161 |  |  | 822 |
Foreign government and agency securities |  | 5 |  |  | 7,397 |  |  | 33 |  |  | — |  |  | — |  |  | — |  |  | 5 |  |  | 7,397 |  |  | 33 |
Equity securities |  | 13 |  |  | 149,785 |  |  | 1,989 |  |  | — |  |  | — |  |  | — |  |  | 13 |  |  | 149,785 |  |  | 1,989 |
Total |  | 332 |  |  | $ | 1,338,867 |  |  | $ | 9,827 |  |  | 72 |  |  | $ | 262,531 |  |  | $ | 6,607 |  |  | 404 |  |  | $ | 1,601,398 |  |  | $ | 16,434 |
Although we held securities in an unrealized loss position as of June 30, 2018, we did not consider those securities to be other-than-temporarily impaired as of such date. For all investment categories, the unrealized losses of 12 months or greater duration as of June 30, 2018 were generally caused by interest rate or credit spread movements since the purchase date, and as such, we expect to recover the amortized cost basis of these securities. As of June 30, 2018, we did not have the intent to sell any debt securities in an unrealized loss position, and we determined that it is more likely than not that we will not be required to sell the securities before recovery of their cost basis, which may be at maturity; therefore, we did not consider these investments to be other-than-temporarily impaired at June 30, 2018. Other-than-temporary Impairment Activity. To the extent we determine that a security is deemed to have had an other-than-temporary impairment, an impairment loss is recognized. During the six months ended June 30, 2018, we recorded other-than-temporary impairment losses in earnings of $0.8 million due to our intent to sell certain corporate and state and municipal bonds at a loss. While we recognized other-than-temporary impairment losses related to our intent to sell securities, there were no credit-related impairment losses recognized in earnings during the six months ended June 30, 2018. During the six months ended June 30, 2017, we recorded other-than-temporary impairment losses in earnings of $1.0 million, including $0.5 million related to a convertible note of a non-public company issuer included in debt securities and $0.5 million related to a privately-placed equity security, because we concluded that we would not recover the amortized cost basis of these securities due to credit deterioration. There were no other-than-temporary impairment losses recognized in accumulated other comprehensive income (loss) during the six months ended June 30, 2018 or the year ended December 31, 2017. Trading Securities The trading securities within our investment portfolio, which are recorded at fair value, consisted of the following as of the dates indicated:
(In thousands) | June 30, 2018 |  | December 31, 2017
Trading securities: |  |  |
State and municipal obligations | $ | 200,702 |  |  | $ | 214,841 |
Corporate bonds and notes | 256,652 |  |  | 307,271 |
RMBS | 24,790 |  |  | 29,520 |
CMBS | 49,347 |  |  | 50,561 |
Foreign government and agency securities | 4,143 |  |  | 4,241 |
Total (1) | $ | 535,634 |  |  | $ | 606,434 |
______________________
(1) | At December 31, 2017, includes a de minimis amount of loaned securities under securities lending agreements that are classified as other assets in our consolidated balance sheets, as further described below.
Securities Lending Agreements During the third quarter of 2017, we commenced participation in a securities lending program whereby we loan certain securities in our investment portfolio to Borrowers for short periods of time. These securities lending agreements are collateralized financing arrangements whereby we transfer securities to third parties through an intermediary in exchange for cash or other securities. In all of our securities lending agreements, the securities we transfer to Borrowers (loaned securities) may be transferred or loaned by the Borrowers; however, we maintain effective control over all loaned securities, including: (i) retaining ownership of the securities; (ii) receiving the related investment or other income; and (iii) having the right to request the return of the loaned securities at any time. Although we report such securities at fair value within other assets in our condensed consolidated balance sheets, the detailed information regarding investments provided in this Note includes these securities. Under our securities lending agreements, the Borrower is required to provide to us collateral, consisting of cash or securities, in amounts generally equal to or exceeding (i) 102% of the value of the loaned securities (105% in the case of foreign securities) or (ii) another agreed-upon percentage not less than 100% of the market value of the loaned securities. Any cash collateral we receive may be invested in liquid assets. The Borrower generally may return the loaned securities to us at any time, which would require us to return the collateral within the standard settlement period for the loaned securities on the principal exchange or market in which the securities are traded. We manage this liquidity risk associated with cash collateral by maintaining the cash collateral in a short-term money-market fund with daily availability. The credit risk under these programs is reduced by the amounts of collateral received. On a daily basis, the value of the underlying securities that we have loaned to the Borrowers is compared to the value of cash and securities collateral we received from the Borrowers, and additional cash or securities are requested or returned, as applicable. In addition, we are indemnified against counterparty credit risk by the intermediary. Key balances related to our securities lending agreements consisted of the following as of the dates indicated:
(In thousands) | June 30, 2018 |  | December 31, 2017
Loaned securities (1): |  |  |
Corporate bonds and notes | $ | 16,199 |  |  | $ | 13,862 |
Foreign government and agency securities | 222 |  |  | 867 |
Equity securities | 21,929 |  |  | 13,235 |
Total loaned securities, at fair value | $ | 38,350 |  |  | $ | 27,964 |
Total loaned securities, at amortized cost | $ | 39,503 |  |  | $ | 27,846 |
Securities collateral on deposit from Borrowers (2) | 92 |  |  | 9,342 |
Reinvested cash collateral, at estimated fair value (3) | 39,224 |  |  | 19,357 |
______________________
(1) | Our securities loaned under securities lending agreements are reported at fair value within other assets in our condensed consolidated balance sheets. All of our securities lending agreements are classified as overnight and revolving. None of the amounts are subject to offsetting.
(2) | Securities collateral on deposit with us from Borrowers may not be transferred or re-pledged unless the Borrower is in default, and is therefore not reflected in our condensed consolidated financial statements.
(3) | All cash collateral received has been reinvested in accordance with the securities lending agreements and is included in short-term investments in our condensed consolidated balance sheets. Amounts payable on the return of cash collateral under securities lending agreements are included within other liabilities in our condensed consolidated balance sheets.
Net Gains (Losses) on Investments and Other Financial Instruments Net gains (losses) on investments and other financial instruments consisted of:
| Three Months Ended June 30, |  | Six Months Ended June 30,
(In thousands) | 2018 |  | 2017 |  | 2018 |  | 2017
Net realized gains (losses): |  |  |  |  |  |  |
Fixed-maturities available for sale | $ | (1,691 | ) |  | $ | (1,180 | ) |  | $ | (4,811 | ) |  | $ | (3,689 | )
Equity securities | 498 |  |  | 385 |  |  | 640 |  |  | 385 |
Trading securities | (112 | ) |  | (349 | ) |  | (650 | ) |  | (6,043 | )
Short-term investments | (7 | ) |  | (38 | ) |  | (7 | ) |  | (32 | )
Other invested assets | 201 |  |  | — |  |  | 263 |  |  | — |
Other gains (losses) | 23 |  |  | — |  |  | 35 |  |  | 18 |
Net realized gains (losses) on investments | (1,088 | ) |  | (1,182 | ) |  | (4,530 | ) |  | (9,361 | )
Other-than-temporary impairment losses | — |  |  | (1,000 | ) |  | (844 | ) |  | (1,000 | )
Net unrealized gains (losses) on investment securities (1) | (5,733 | ) |  | 6,938 |  |  | (18,537 | ) |  | 12,164 |
Total net gains (losses) on investments | (6,821 | ) |  | 4,756 |  |  | (23,911 | ) |  | 1,803 |
Net gains (losses) on other financial instruments | (583 | ) |  | 575 |  |  | (2,380 | ) |  | 677 |
Net gains (losses) on investments and other financial instruments | $ | (7,404 | ) |  | $ | 5,331 |  |  | $ | (26,291 | ) |  | $ | 2,480 |
______________________
(1) | These amounts include unrealized gains (losses) on investment securities other than securities available for sale. For the three and six months ended June 30, 2017, the unrealized gains (losses) on investments exclude the net change in unrealized gains and losses on equity securities. Prior to the implementation of the update to the standard for the accounting of financial instruments effective January 1, 2018, the unrealized gains (losses) associated with equity securities were classified in accumulated other comprehensive income.
Net Unrealized Gains (Losses) on Investment Securities The net changes in unrealized gains (losses) from trading securities and equity securities still held at period end were as follows for the periods indicated:
| Three Months Ended June 30, |  | Six Months Ended June 30,
(In thousands) | 2018 |  | 2017 |  | 2018 |  | 2017
Net changes in unrealized gains (losses) (1): |  |  |  |  |  |  |
Equity securities | $ | 224 |  |  | $ | — |  |  | $ | (702 | ) |  | $ | — |
Trading securities (2) | (5,801 | ) |  | 5,913 |  |  | (16,801 | ) |  | 7,979 |
Net unrealized gains (losses) on investment securities | $ | (5,577 | ) |  | $ | 5,913 |  |  | $ | (17,503 | ) |  | $ | 7,979 |
______________________
(1) | Related only to securities still held at period end. All amounts shown are included in net gains (losses) on investments and other financial instruments. Prior to the implementation of the update to the standard for the accounting of financial instruments effective January 1, 2018, the unrealized losses associated with equity securities were classified in accumulated other comprehensive income.
(2) | Includes a de minimis amount of net changes in unrealized gains (losses) related to short-term securities.
Contractual Maturities The contractual maturities of fixed-maturity investments available for sale were as follows:
| June 30, 2018
| Available for Sale
(In thousands) | Amortized Cost |  | Fair Value
Due in one year or less (1) | $ | 45,836 |  |  | $ | 45,694 |
Due after one year through five years (1) | 789,095 |  |  | 774,712 |
Due after five years through 10 years (1) | 1,012,314 |  |  | 973,838 |
Due after 10 years (1) | 396,485 |  |  | 393,834 |
RMBS (2) | 249,577 |  |  | 243,659 |
CMBS (2) | 487,805 |  |  | 477,751 |
Other ABS (2) | 694,613 |  |  | 692,564 |
Total (3) | $ | 3,675,725 |  |  | $ | 3,602,052 |
______________________
(1) | Actual maturities may differ as a result of calls before scheduled maturity.
(2) | RMBS, CMBS and Other ABS are shown separately, as they are not due at a single maturity date.
(3) | Includes securities loaned under securities lending agreements.
Other At June 30, 2018, Radian had an aggregate amount of $122.8 million of U.S. government and agency securities and RMBS, classified as fixed-maturities available for sale within our investment securities portfolio, serving as collateral for our FHLB advances. There were no FHLB advances outstanding at December 31, 2017. See Note 12 for additional information. Securities on deposit with various state insurance commissioners amounted to $15.4 million and $11.8 million at June 30, 2018 and December 31, 2017, respectively.

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