Radian Group is purchasing Clayton Holdings, a provider of mortgage-backed securities due diligence services based in Shelton, Conn., for $305 million. The price includes Radian repaying Clayton's outstanding debt.
The deal is expected to close during the summer, after which Clayton's cash flows are expected to provide an unregulated source of funds to Radian Group.
Radian Guaranty, like many of its peers in the private mortgage insurance business, suffered from a capital crunch during the height of the mortgage bust. The parent company uses its Radian Asset Assurance business as a source of capital to fund the private mortgage insurance operations.
As of the end of the first quarter, Radian Guaranty has statutory capital of $1.4 billion, up from $1.3 billion at the end of 2013 and $1.1 billion on March 31 of that year.
For the first quarter, Radian Group made $203 million, compared with a net loss of $188 million a year.
Radian says it expects to finance the Clayton deal, and redeem nearly $55 million of its own outstanding debt due in June 2015, through debt and stock offerings.