Radian Group Inc. commentes on the action taken by Standard & Poor’s Rating Services (S&P). S&P lowered its financial strength rating on Radian’s principal mortgage insurance (MI) subsidiary, Radian Guaranty, to ‘BBB+’ (negative outlook) from ‘A’ and removed it from Credit Watch.
Radian Group says while it was disappointed by the action, S&P noted several positives for the long-term in Radian’s mortgage insurance business and the MI industry overall. Those include improved credit quality in Radian’s first-lien portfolio and a capital adequacy ratio that S&P said is slightly less than the minimum for a mortgage insurer to be eligible for a ‘AAA’ financial strength rating.
“We do not believe today’s action by S&P reflects the significant progress we have made in developing our internally-sourced capital plan and improving the quality of our mortgage insurance portfolio,” says S.A. Ibrahim, chief executive officer of Radian Group. “It is important to view our rating within the context of the mortgage insurance industry, which continues to face challenging macroeconomic conditions. The rating continues to reflect Radian Guaranty’s investment grade status, and we will maintain close contact with S&P to address their concerns. Radian Guaranty is a long-standing Top Tier provider to the GSEs, and we do not expect that this action will affect our ability to insure loans that are sold to the GSEs. As always, we remain focused on the day-to-day details of operating the business and, most importantly, serving our clients.”