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Radian Group Inc. Message Board

  • girthner21 girthner21 Nov 12, 2012 8:29 PM Flag

    Commutation with FGIC may be Negative

    OK, so all of you that don't have a clue as to what this means, basically, if Radian reserved more for the potential losses on these insured bonds (the debt other entities that Radian was insuring just in case those entities were unable to pay the debt) than what they paid to commute it, then it may have been positive. In Radian's last 10q, they stated they had reserved about 28 million for the JeffCo debt alone, but most of the rest of what they commuted was low risk municiple bonds so unlikely they had much more than that in they paid 50+ millions to commute the risk back to FGIC. If the total reserves on this insured debt was greater than what they paid to commute then GOOD, but if the reserves for this insured debt was less than the commutation payment then NOT GOOD as that means they had to use unallocated capital to make up the difference. Basic math 50-28=22 million or so that they had to fork out....just wanted everyone to understand what the commutation meant.

    Sentiment: Hold

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