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02/15/2008
Radian Reports Fourth Quarter Net Loss of $618 Million
Company Maintains Strong Capital Position
PHILADELPHIA, Feb. 15 /PRNewswire-FirstCall/ -- Radian Group Inc. (NYSE: RDN) today reported a net loss of $618 million and a diluted net loss per share of $7.74 for the fourth quarter, ended December 31, 2007. For the full year ended December 31, 2007, Radian reported a net loss of $1.2 billion and a diluted net loss per share of $14.92. Book value per share at December 31, 2007 was $35.10, after the impact of the third and fourth quarter 2007 losses, driven primarily by the C-BASS write-down, credit losses, higher reserves and mark-to-market adjustments.
"2007 was a year of great change for Radian, and I am proud that our team was able to overcome the challenges of unwinding the merger with MGIC while maintaining a solid balance sheet and retaining mortgage customer and GSE confidence," said S.A. Ibrahim, Chief Executive Officer of Radian. "While our disappointing 2007 results clearly illustrate the challenges of the mortgage market, our franchise continues to be strong, which is a testament to the skills and dedication of our workforce."
In the mortgage insurance business, paid claims in the fourth quarter were in-line with the Company's guidance. During the quarter, mortgage insurance loss reserves continued to increase, reflecting the credit, housing and overall economic environment. Radian ended the year with $1.3 billion in mortgage insurance loss reserves.
"We have come through a difficult year and the environment continues to be very challenging," added Mr. Ibrahim. "These challenges will remain with us for the near-term and may intensify, so we are looking at various scenarios and responses. In considering the book value of our company, we think it is important to take into consideration the significant embedded value within our Financial Guaranty business, as well as our ownership stake in Sherman."
"Our claims paying resources in both business segments are strong and we stand to benefit from a stable and well-capitalized financial guaranty business," concluded Mr. Ibrahim.
The market value of Radian's investment portfolio at year-end was $6.41 billion compared to $5.75 billion a year ago.
The key financial highlights of the quarter and year ended December 31,
2007, are as follows:
Total Per Share
9/30/2007 Book Value $3.4B $42.86
Pre-tax After-tax BV per share EPS
impact impact impact
C-BASS ($50) ($33) ($0.41) ($0.41)
Change in Fair Value of
Derivatives* (459) (298) (3.71) (3.73)
Mortgage Insurance Incurred
Losses (630) (410) (5.10) (5.13)
Second Lien Premium
Deficiency (41) (27) (0.34) (0.34)
FG Credit Loss for CDO of
ABS transaction (50) (33) (0.41) (0.41)
All Other (Premiums,
Investment Income and
Expenses) 201 2.21
12/31/2007 Book Value $2.8B $35.10
Quarter Ended 12/31/2007 EPS ($7.74)
*Includes ($120 Million) related to non-corporate CDO transactions,
including a small number of AAA-rated CDOs of ABS and CMBS. This mark
remains subject to possible adjustment.
Radian will discuss each of these items in its conference call today, Friday, February 15, 2008, at 10:00 a.m. Eastern time. The conference call will be broadcast live over the internet at http://www.ir.radian.biz/phoenix.zhtml?c=112301&p=irol-audioarchives or at http://www.radian.com News. The call may also be accessed by dialing 866-254-5941 inside the U.S., or 612-234-9959 for international callers, using passcode 907669 or by referencing Radian.
A replay of the webcast will be available at the Radian website approximately two hours after the live broadcast ends for a period of one year. A replay of the conference call will be available two and a half hours after the call ends for two weeks, using the following dial-in numbers and passcode: 800-475-6701 inside the U.S., or 320-365-3844 for international callers, passcode 907669.
Radian Group Inc. is a global credit risk management company headquartered in Philadelphia with significant operations in New York and London. Radian develops innovative financial solutions by applying its core mortgage credit risk expertise and structured finance capabilities to the credit enhancement needs of the capital markets worldwide, primarily through credit insurance products. The company also provides credit enhancement for public finance and other corporate and consumer assets on both a direct and reinsurance basis and holds strategic interests in credit-based consumer asset businesses. Additional information may be found at www.radian.com
Contact:
For investors: Terri Williams-Perry - phone: 215 231.1486
Email: terri.williams-perry@radian.com
For the media: Rick Gillespie - phone: 215 231.1061
Email: rick.gillespie@radian.com
Steve Frankel / Tim Lynch
Joele Frank, Wilkinson Brimmer Katcher
212 355 4449
Financial Results and Supplemental Information Contents (Unaudited)
For trend information on all schedules, refer to Radian's quarterly financial statistics at http://www.radian.biz/investors/financial/corporate.aspx.
Exhibit A: Condensed Consolidated Statements of Income
Exhibit B: Condensed Consolidated Balance Sheets
Exhibit C: Segment Information Quarter Ended December 31, 2007
Exhibit D: Segment Information Quarter Ended December 31, 2006
Exhibit E: Segment Information Twelve Months Ended December 31, 2007
Exhibit F: Segment Information Twelve Months Ended December 31, 2006
Exhibit G: Financial Guaranty Insurance Supplemental Information -
Quarter Ended and as of December 31, 2007
Exhibit H: Financial Guaranty Insurance Supplemental Information -
Quarter Ended and as of December 31, 2007
Exhibit I: Mortgage Insurance Supplemental Information: New Insurance
Written and Risk Written
Exhibit J: Mortgage Insurance Supplemental Information: Insurance in
Force and Risk in Force
Exhibit K: Mortgage Insurance Supplemental Information: Risk in Force by
LTV and Policy Year and Other Risk in Force
Exhibit L: Mortgage Insurance Supplemental Information: Claims and
Reserves
Exhibit M: Mortgage Insurance Supplemental Information: Defaults
Exhibit N: Mortgage Insurance Supplemental Information: Net Premiums
Written and Earned, Smart Home, Captives and Persistency
Exhibit O: Mortgage Insurance Supplemental Information: ALT A
Exhibit P: Financial Services Supplemental Information
Radian Group Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Exhibit A
Quarter Ended Year Ended
December 31 December 31
2007 2006 2007 2006
(In thousands, except
per-share data)
Revenues:
Net premiums written $309,620 $278,700 $1,184,885 $1,111,985
Net premiums earned -
insurance $234,368 $217,570 $912,281 $907,042
Net premiums earned -
credit derivatives 26,821 31,349 126,329 108,804
Net premiums earned -
total 261,189 248,919 1,038,610 1,015,846
Net investment income 67,493 60,222 256,098 234,345
Net gains (losses) on
securities (673) 11,255 53,606 40,842
Change in fair value of
derivative instruments (458,512) 23,097 (1,191,785) 16,066
Gain on sale of
affiliates - - 181,734 -
Other income 192 4,391 11,711 20,847
Total revenues (130,311) 347,884 349,974 1,327,946
Expenses:
Provision for losses 687,855 84,389 1,299,363 369,278
Provision for second-lien
premium deficiency 40,470 - 195,646 -
Policy acquisition costs 24,980 31,074 113,175 111,609
Other operating expenses 40,700 61,552 178,171 242,634
Merger expenses - - 14,001 -
Interest expense 14,258 12,256 53,068 48,149
Total expenses 808,263 189,271 1,853,424 771,670
Equity in net income
(loss) of affiliates (39,896) 70,745 (416,541) 256,993
Pretax (loss) income (978,470) 229,358 (1,919,991) 813,269
Income tax (benefit)
provision (360,444) 70,988 (732,651) 231,097
Net (loss) income $(618,026) $158,370 $(1,187,340) $582,172
Diluted net (loss) income
per share (1) $(7.74) $1.96 $(14.92) $7.08
(1) Weighted average
shares outstanding (in
thousands)
Average common shares
outstanding 79,850 79,923 79,556 81,338
Increase in shares-
potential exercise of
options-diluted basis - 770 - 923
Weighted average shares
outstanding
(in thousands) 79,850 80,693 79,556 82,261
For Trend Information, refer to our Quarterly Financial Statistics on
Radian's (RDN) website.
Radian Group Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
Exhibit B
(In thousands, except share and per-share December 31 December 31
data) 2007 2006
Assets:
Cash and investments $6,611,836 $5,803,228
Investments in affiliates 104,354 618,841
Deferred policy acquisition costs 234,955 221,769
Prepaid federal income taxes 793,486 808,740
Other assets 459,295 507,832
Total assets $8,203,926 $7,960,410
Liabilities and stockholders' equity:
Unearned premiums $1,094,710 $943,687
Reserve for losses and loss
adjustment expenses 1,598,756 842,283
Reserve for second-lien premium
deficiency 195,646 -
Long-term debt and other borrowings 948,093 747,770
Current income taxes 137,219 -
Deferred income taxes 73,546 1,129,740
Derivative liabilities 1,150,479 31,739
Other liabilities 182,659 197,634
Total liabilities 5,381,108 3,892,853
Common stock 97 97
Additional paid-in capital 442,312 416,193
Retained earnings 2,284,150 3,489,290
Accumulated other comprehensive income 96,259 161,977
Total common stockholders' equity 2,822,818 4,067,557
Total liabilities and stockholders'
equity $8,203,926 $7,960,410
Book value per share $35.10 $51.23
Treasury Stock Repurchases
(Year-to-Date for Periods Presented)
Total number of shares repurchased 398,645 4,500,000
Average price paid per share $57.25 $58.58
Total cost of repurchased shares $22,822,537 $263,600,341
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended December 31, 2007
Exhibit C
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
Revenues:
Net premiums written $255,292 $54,328 $- $309,620
Net premiums earned -
insurance $200,430 $33,938 $- $234,368
Net premiums earned -
credit derivatives 13,399 13,422 - 26,821
Net premiums earned -
total 213,829 47,360 - 261,189
Net investment income 38,970 28,505 18 67,493
Net gains (losses) on
securities 131 (1,468) 664 (673)
Change in fair value
of derivative
instruments (61,882) (396,630) - (458,512)
Gain on sale of
affiliates - - - -
Other income 1,980 (434) (1,354) 192
Total revenues 193,028 (322,667) (672) (130,311)
Expenses:
Provision for losses 629,582 58,273 - 687,855
Provision for second-
lien premium
deficiency 40,470 - - 40,470
Policy acquisition
costs 13,806 11,174 - 24,980
Other operating
expenses 34,654 12,053 (6,007) 40,700
Merger expenses - - - -
Interest expense 7,942 5,974 342 14,258
Total expenses 726,454 87,474 (5,665) 808,263
Equity in net income
(loss) of affiliates - 5 (39,901) (39,896)
Pretax loss (533,426) (410,136) (34,908) (978,470)
Income tax benefit (198,806) (145,084) (16,554) (360,444)
Net loss $(334,620) $(265,052) $(18,354) $(618,026)
Assets $5,077,001 $3,020,835 $106,090 $8,203,926
Total investments 3,815,618 2,595,431 - 6,411,049
Deferred policy
acquisition costs 62,266 172,689 - 234,955
Reserve for losses
and loss adjustment
expenses 1,345,453 253,304 - 1,598,757
Unearned premiums 364,775 729,935 - 1,094,710
Stockholders' equity 1,590,832 1,111,218 120,768 2,822,818
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended December 31, 2006
Exhibit D
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
Revenues:
Net premiums written $202,362 $76,338 $- $278,700
Net premiums earned -
insurance $186,507 $31,063 $- $217,570
Net premiums earned -
credit derivatives 12,700 18,649 - 31,349
Net premiums earned -
total 199,207 49,712 - 248,919
Net investment income 34,947 25,268 7 60,222
Net gains (losses) on
securities 11,956 (1,068) 367 11,255
Change in fair value of
derivative instruments 1,852 21,245 - 23,097
Other income 2,967 74 1,350 4,391
Total revenues 250,929 95,231 1,724 347,884
Expenses:
Provision for losses 80,328 4,061 - 84,389
Policy acquisition costs 20,628 10,446 - 31,074
Other operating expenses 43,278 13,680 4,594 61,552
Interest expense 6,581 4,278 1,397 12,256
Total expenses 150,815 32,465 5,991 189,271
Equity in net income of
affiliates - - 70,745 70,745
Pretax income 100,114 62,766 66,478 229,358
Income tax provision 30,004 17,716 23,268 70,988
Net income $70,110 $45,050 $43,210 $158,370
Assets $4,626,850 $2,705,078 $628,482 $7,960,410
Total investments 3,426,939 2,318,438 - 5,745,377
Deferred policy
acquisition costs 68,381 153,388 - 221,769
Reserve for losses and
loss adjustment expenses 653,236 189,047 - 842,283
Unearned premiums 249,293 694,394 - 943,687
Stockholders' equity 2,259,796 1,377,263 430,498 4,067,557
Radian Group Inc. and Subsidiaries
Segment Information
Year Ended December 31, 2007
Exhibit E
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
Revenues:
Net premiums written $955,113 $229,772 $- $1,184,885
Net premiums earned -
insurance $779,259 $133,022 $- $912,281
Net premiums earned -
credit derivatives 64,263 62,066 126,329
Net premiums earned -
total 843,522 195,088 - 1,038,610
Net investment income 148,253 107,665 180 256,098
Net gains on securities 39,922 12,525 1,159 53,606
Change in fair value of
derivative instruments (531,842) (659,943) - (1,191,785)
Gain on sale of affiliates - - 181,734 181,734
Other income 11,337 349 25 11,711
Total revenues 511,192 (344,316) 183,098 349,974
Expenses:
Provision for losses 1,201,373 97,990 - 1,299,363
Provision for second-lien
premium deficiency 195,646 - - 195,646
Policy acquisition costs 67,750 45,425 - 113,175
Other operating expenses 130,423 48,683 (935) 178,171
Merger expenses 13,434 567 - 14,001
Interest expense 27,901 19,840 5,327 53,068
Total expenses 1,636,527 212,505 4,392 1,853,424
Equity in net income
(loss) of affiliates - 5 (416,546) (416,541)
Pretax loss (1,125,335) (556,816) (237,840) (1,919,991)
Income tax benefit (431,927) (217,588) (83,136) (732,651)
Net loss $(693,408) $(339,228) $(154,704) $(1,187,340)
Radian Group Inc. and Subsidiaries
Segment Information
Year Ended December 31, 2006
Exhibit F
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
Revenues:
Net premiums written $849,111 $262,874 $- $1,111,985
Net premiums earned - insurance $774,752 $132,290 $- $907,042
Net premiums earned - credit
derivatives 37,263 71,541 - 108,804
Net premiums earned - total 812,015 203,831 - 1,015,846
Net investment income 138,310 95,895 140 234,345
Net gains on securities 30,163 7,827 2,852 40,842
Change in fair value of
derivative instruments 3,682 12,384 - 16,066
Other income 13,075 692 7,080 20,847
Total revenues 997,245 320,629 10,072 1,327,946
Expenses:
Provision for losses 348,618 20,660 - 369,278
Policy acquisition costs 64,964 46,645 - 111,609
Other operating expenses 172,020 59,772 10,842 242,634
Interest expense 26,623 16,590 4,936 48,149
Total expenses 612,225 143,667 15,778 771,670
Equity in net income of
affiliates - - 256,993 256,993
Pretax income 385,020 176,962 251,287 813,269
Income tax provision 102,266 40,880 87,951 231,097
Net income $282,754 $136,082 $163,336 $582,172
Radian Group Inc.
Financial Guaranty Supplemental Information
For the Quarter and Year Ended and as of December 31, 2007
Exhibit G
Quarter Ended Year Ended
($ in thousands, except
ratios) December 31 December 31
2007 2006 2007 2006
Net Premiums Written:
Public finance direct $11,461 $30,302 $60,117 $79,655
Public finance reinsurance 19,739 20,526 86,821 81,065
Structured direct 4,567 4,168 16,594 18,772
Structured reinsurance 5,327 5,902 21,933 18,676
Trade credit reinsurance 214 245 1,264 4,599
Net premiums written -
insurance 41,308 61,143 186,729 202,767
Net premiums written - credit
derivatives 13,020 15,195 43,043 60,107
Total Net Premiums Written $54,328 $76,338 $229,772 $262,874
Net Premiums Earned:
Public finance direct $13,459 $9,136 $45,770 $32,517
Public finance reinsurance 10,770 9,509 44,667 37,765
Structured direct 3,878 4,757 17,325 19,446
Structured reinsurance 5,461 5,467 22,957 21,086
Trade credit reinsurance 370 2,194 2,303 21,476
Net premiums earned -
insurance 33,938 31,063 133,022 132,290
Net premiums earned - credit
derivatives 13,422 18,649 62,066 71,541
Total Net Premiums Earned $47,360 $49,712 $195,088 $203,831
Refundings included in earned
premium $7,492 $3,111 $23,309 $11,778
Claims paid:
Trade credit reinsurance $1,557 $1,338 $8,579 $15,144
Other financial guaranty 10,602 248 12,814 7,529
Conseco 2,667 3,513 11,449 15,763
Total $14,826 $5,099 $32,842 $38,436
Incurred losses:
Trade credit reinsurance $(2,967) $(30) $(16,511) $4,991
Other financial guaranty 61,240 4,091 114,501 16,701
Conseco - - - (1,032) (2)
Total $58,273 $4,061 $97,990 $20,660
Loss ratio - GAAP Basis 123.0% 8.2% 50.2% 10.1%
Expense ratio - GAAP Basis (1) 49.0% 48.5% 48.2% 52.2%
172.0% 56.7% 98.4% 62.3%
Net (receipts) payments under
derivatives contracts $(255) $(729) $(31,188) $63,548
(1) Excludes merger expenses.
(2) Resulted from favorable loss development
Radian Group Inc.
Financial Guaranty Supplemental Information
For the Quarter and Year Ended and as of December 31, 2007
Exhibit H
($ in thousands, except ratios) December 31 December 31
2007 2006
Capital and surplus $1,158,537 $1,014,958
Contingency reserve 433,296 336,719
Qualified statutory capital 1,591,833 1,351,677
Unearned premium reserve 886,024 829,340
Loss and loss expense reserve 61,038 96,829
Total statutory policyholders'
reserves 2,538,895 2,277,846
Present value of installment premiums 461,806 345,565
Reinsurance and soft capital facilities 150,000 150,000
Total statutory claims paying
resources $3,150,701 $2,773,411
Net debt service outstanding $164,346,659 $143,728,116
Capital leverage ratio (1) 103 106
Claims paying leverage ratio (2) 52 52
Net par outstanding by product:
Public finance direct $18,228,946 $16,324,170
Public finance reinsurance 43,822,781 37,488,972
Structured direct 47,878,168 44,960,360
Structured reinsurance 6,091,717 5,192,122
Total $116,021,612 $103,965,624
Reinsurance business net par outstanding:
Treaty 59% 59%
Facultative 41% 41%
Reserve for losses and LAE
Specific $26,791 $35,320
Conseco 22,526 33,975
Non-specific 203,987 119,752
Total $253,304 $189,047
(1) Net debt service outstanding divided by qualified statutory capital
(2) Net debt service outstanding divided by total statutory claims paying
resources
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Year Ended and as of December 31, 2007
Exhibit I
Quarter Ended
December 31
2007 % 2006 %
Primary New Insurance Written ($ in
millions)
Flow $10,422 76.7% $6,451 85.2%
Structured 3,174 23.3% 1,123 14.8%
Total Primary $13,596 100.0% $7,574 100.0%
Flow
Prime $8,629 82.8% $4,608 71.4%
Alt-A 832 8.0% 1,276 19.8%
A minus and below 961 9.2% 567 8.8%
Total Flow $10,422 100.0% $6,451 100.0%
Structured
Prime $1,795 56.6% $341 30.4%
Alt-A 1,378 43.4% 685 61.0%
A minus and below 1 0.0% 97 8.6%
Total Structured $3,174 100.0% $1,123 100.0%
Total
Prime $10,424 76.6% $4,949 65.3%
Alt-A 2,210 16.3% 1,961 25.9%
A minus and below 962 7.1% 664 8.8%
Total Primary $13,596 100.0% $7,574 100.0%
Total Primary New Insurance Written
by FICO Score
($ in millions)
Flow
<=619 $518 5.0% $498 7.7%
620-679 2,830 27.1% 2,049 31.8%
680-739 3,914 37.6% 2,246 34.8%
>=740 3,160 30.3% 1,658 25.7%
Total Flow $10,422 100.0% $6,451 100.0%
Structured
<=619 $- 0.0% $98 8.7%
620-679 185 5.8% 333 29.7%
680-739 963 30.3% 428 38.1%
>=740 2,026 63.9% 264 23.5%
Total Structured $3,174 100.0% $1,123 100.0%
Total
<=619 $518 3.8% $596 7.9%
620-679 3,015 22.2% 2,382 31.4%
680-739 4,877 35.9% 2,674 35.3%
>=740 5,186 38.1% 1,922 25.4%
Total Primary $13,596 100.0% $7,574 100.0%
Percentage of primary new insurance
written
Refinances 27% 38%
95.01% LTV and above 32% 24%
ARMs
Less than 5 years 1% 16%
5 years and longer 14% 7%
Primary risk written ($ in millions)
Flow $2,684 77.9% $1,590 91.8%
Structured 763 22.1% 142 8.2%
Total Primary $3,447 100.0% $1,732 100.0%
Pool risk written (In millions) $34 $26
Other risk written (In millions)
Seconds
1st loss $- $4
2nd loss - 27
NIMs - 264
International
1st loss-Hong Kong primary
mortgage insurance 34 34
Reinsurance 18 14
Other
Domestic credit default swaps - -
Total other risk written $52 $343
Year Ended
December 31
2007 % 2006 %
Primary New Insurance Written ($ in
millions)
Flow $40,335 70.6% $25,364 63.2%
Structured 16,797 29.4% 14,753 36.8%
Total Primary $57,132 100.0% $40,117 100.0%
Flow
Prime $29,800 73.9% $18,578 73.2%
Alt-A 6,847 17.0% 4,836 19.1%
A minus and below 3,688 9.1% 1,950 7.7%
Total Flow $40,335 100.0% $25,364 100.0%
Structured
Prime $3,436 20.5% $4,000 27.1%
Alt-A 12,515 74.5% 9,222 62.5%
A minus and below 846 5.0% 1,531 10.4%
Total Structured $16,797 100.0% $14,753 100.0%
Total
Prime $33,236 58.2% $22,578 56.3%
Alt-A 19,362 33.9% 14,058 35.0%
A minus and below 4,534 7.9% 3,481 8.7%
Total Primary $57,132 100.0% $40,117 100.0%
Total Primary New Insurance Written
by FICO Score
($ in millions)
Flow
<=619 $2,348 5.8% $1,603 6.3%
620-679 11,988 29.7% 7,693 30.3%
680-739 14,891 36.9% 9,210 36.4%
>=740 11,108 27.6% 6,858 27.0%
Total Flow $40,335 100.0% $25,364 100.0%
Structured
<=619 $538 3.2% $1,545 10.5%
620-679 3,947 23.5% 4,303 29.2%
680-739 7,123 42.4% 5,760 39.0%
>=740 5,189 30.9% 3,145 21.3%
Total Structured $16,797 100.0% $14,753 100.0%
Total
<=619 $2,886 5.1% $3,148 7.9%
620-679 15,935 27.9% 11,996 29.9%
680-739 22,014 38.5% 14,970 37.3%
>=740 16,297 28.5% 10,003 24.9%
Total Primary $57,132 100.0% $40,117 100.0%
Percentage of primary new insurance
written
Refinances 37% 35%
95.01% LTV and above 25% 15%
ARMs
Less than 5 years 13% 24%
5 years and longer 11% 14%
Primary risk written ($ in millions)
Flow $10,325 85.3% $6,386 82.0%
Structured 1,785 14.7% 1,404 18.0%
Total Primary $12,110 100.0% $7,790 100.0%
Pool risk written (In millions) $261 $359
Other risk written (In millions)
Seconds
1st loss $9 $47
2nd loss 21 233
NIMs 377 502
International
1st loss-Hong Kong primary
mortgage insurance 130 65
Reinsurance 67 21
Other
Domestic credit default swaps - 32
Total other risk written $604 $900
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Year Ended and as of December 31, 2007
Exhibit J
December 31 December 31
2007 % 2006 %
Primary insurance in force ($ in
millions)
Flow $105,246 73.6% $83,529 73.3%
Structured 37,820 26.4% 30,374 26.7%
Total Primary $143,066 100.0% $113,903 100.0%
Prime $93,577 65.4% $76,854 67.5%
Alt-A 37,031 25.9% 25,571 22.4%
A minus and below 12,458 8.7% 11,478 10.1%
Total Primary $143,066 100.0% $113,903 100.0%
Primary risk in force ($ in millions)
Flow $26,531 83.9% $20,724 81.9%
Structured 5,091 16.1% 4,587 18.1%
Total Primary $31,622 100.0% $25,311 100.0%
Flow
Prime $20,616 77.7% $16,283 78.6%
Alt-A 3,810 14.4% 2,880 13.9%
A minus and below 2,105 7.9% 1,561 7.5%
Total Flow $26,531 100.0% $20,724 100.0%
Structured
Prime $2,116 41.5% $1,903 41.5%
Alt-A 1,978 38.9% 1,354 29.5%
A minus and below 997 19.6% 1,330 29.0%
Total Structured $5,091 100.0% $4,587 100.0%
Total
Prime $22,732 71.9% $18,186 71.9%
Alt-A 5,788 18.3% 4,234 16.7%
A minus and below 3,102 9.8% 2,891 11.4%
Total Primary $31,622 100.0% $25,311 100.0%
Total Primary Risk in Force by FICO
Score
($ in millions)
Flow
<=619 $1,639 6.2% $1,342 6.5%
620-679 8,059 30.4% 6,391 30.8%
680-739 9,773 36.8% 7,556 36.5%
>=740 7,060 26.6% 5,435 26.2%
Total Flow $26,531 100.0% $20,724 100.0%
Structured
<=619 $936 18.4% $1,331 29.0%
620-679 1,490 29.3% 1,619 35.3%
680-739 1,488 29.2% 1,095 23.9%
>=740 1,177 23.1% 542 11.8%
Total Structured $5,091 100.0% $4,587 100.0%
Total
<=619 $2,575 8.1% $2,673 10.6%
620-679 9,549 30.2% 8,010 31.6%
680-739 11,261 35.6% 8,651 34.2%
>=740 8,237 26.1% 5,977 23.6%
Total Primary $31,622 100.0% $25,311 100.0%
Percentage of primary risk in force
Refinances 31% 33%
95.01% LTV and above 24% 18%
ARMs
Less than 5 years 12% 19%
5 years and longer 10% 9%
Pool risk in force ($ in millions)
Prime $2,111 70.2% $2,182 72.9%
Alt-A 293 9.8% 295 9.9%
A minus and below 600 20.0% 514 17.2%
Total $3,004 100.0% $2,991 100.0%
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Year Ended and as of December 31, 2007
Exhibit K
December 31 December 31
2007 % 2006 %
Total Primary Risk in Force by LTV
($ in millions)
95.01% and above $7,529 23.8% $4,441 17.6%
90.01% to 95.00% 9,674 30.6% 8,005 31.6%
85.01% to 90.00% 10,600 33.5% 9,062 35.8%
85.00% and below 3,819 12.1% 3,803 15.0%
Total $31,622 100.0% $25,311 100.0%
Total Primary Risk in Force by
Policy Year ($ in millions)
2003 and prior $5,521 17.5% $7,113 28.1%
2004 3,350 10.6% 4,565 18.1%
2005 5,112 16.2% 6,538 25.8%
2006 6,016 19.0% 7,095 28.0%
2007 11,623 36.7% - -
Total $31,622 100.0% $25,311 100.0%
Total Pool Risk in Force by Policy
Year ($ in millions)
2003 and prior $1,723 57.4% $1,758 58.8%
2004 166 5.5% 290 9.7%
2005 595 19.8% 651 21.7%
2006 265 8.8% 292 9.8%
2007 255 8.5% - -
Total Pool risk in Force $3,004 100.0% $2,991 100.0%
Other risk in force (In millions)
Seconds
1st loss $377 $592
2nd loss 548 610
NIMs 604 592
International
1st loss-Hong Kong primary
mortgage insurance 465 335
Reinsurance 103 47
Credit default swaps 8,202 7,897
Other
Domestic credit default swaps 212 212
Financial guaranty wrap - 37
Total other risk in force $10,511 $10,322
Risk to capital ratio-STAT Basis 14.4:1 10.4:1
Risk to capital ratio-STAT Basis
excluding AAA-rated CDS 11.6:1 8.3:1
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Year Ended and as of December 31, 2007
Exhibit L
Quarter Ended Year Ended
December 31 December 31
2007 2006 2007 2006
Direct claims paid
(In thousands)
Prime $53,203 $28,903 $164,155 $117,471
Alt-A 35,203 16,654 105,858 64,018
A minus and below 46,966 25,996 150,098 93,662
Seconds and other 29,295 9,590 89,269 38,204
Total $164,667 $81,143 $509,380 $313,355
Average claim paid (In
thousands)
Prime $35.0 $26.7 $31.2 $26.1
Alt-A 49.0 37.9 44.6 35.6
A minus and below 36.5 30.2 33.2 28.3
Seconds 38.6 29.2 31.9 26.8
Total $38.4 $29.9 $34.1 $28.4
Loss ratio - GAAP Basis 294.4% 40.3% 142.4% 42.9%
Expense ratio - GAAP
Basis (2) 22.7% 32.1% 23.5% 29.2%
317.1% 72.4% 165.9% 72.1%
Reserve for losses by
category (In thousands):
Prime $343,705 $198,133
Alt-A 450,106 136,411
A minus and below 361,240 228,012
Pool insurance 54,394 31,116
Seconds 112,751 36,166
Other 1,268 1,635
Reserve for losses, net 1,323,464 631,473
Reinsurance
recoverable 21,989 (1) 21,763 (1)
Total $1,345,453 $653,236
(1) Reinsurance recoverable on ceded losses.
(2) Excludes merger expenses.
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Year Ended and as of December 31, 2007
Exhibit M
December 31 December 31
2007 2006
Default Statistics
Primary insurance:
Flow
Prime
Number of insured loans 565,563 500,464
Number of loans in default 20,632 15,141
Percentage of loans in default 3.65% 3.03%
Alt-A
Number of insured loans 74,559 63,469
Number of loans in default 7,980 4,348
Percentage of loans in default 10.70% 6.85%
A minus and below
Number of insured loans 63,853 52,440
Number of loans in default 10,087 7,250
Percentage of loans in default 15.80% 13.83%
Total Flow
Number of insured loans 703,975 616,373
Number of loans in default 38,699 26,739
Percentage of loans in default 5.50% 4.34%
Structured
Prime
Number of insured loans 64,789 62,680
Number of loans in default 4,707 3,300
Percentage of loans in default 7.27% 5.26%
Alt-A
Number of insured loans 97,526 70,164
Number of loans in default 8,783 3,647
Percentage of loans in default 9.01% 5.20%
A minus and below
Number of insured loans 28,747 36,597
Number of loans in default 8,659 9,014
Percentage of loans in default 30.12% 24.63%
Total Structured
Number of insured loans 191,062 169,441
Number of loans in default 22,149 15,961
Percentage of loans in default 11.59% 9.42%
Total Primary Insurance
Prime
Number of insured loans 630,352 563,144
Number of loans in default 25,339 18,441
Percentage of loans in default 4.02% 3.27%
Alt-A
Number of insured loans 172,085 133,633
Number of loans in default 16,763 7,995
Percentage of loans in default 9.74% 5.98%
A minus and below
Number of insured loans 92,600 89,037
Number of loans in default 18,746 16,264
Percentage of loans in default 20.24% 18.27%
Total Primary Insurance
Number of insured loans 895,037 785,814
Number of loans in default 60,848 (1) 42,700 (1)
Percentage of loans in default 6.80% 5.43%
Pool insurance:
Number of loans in default 26,526 (2) 18,681 (2)
(1) Includes approximately 2,595 and 1,161 defaults at December 31, 2007
and December 31, 2006 respectively, where reserves have not been
established because no claim payment is currently anticipated.
(2) Includes approximately 20,193 and 13,309 defaults at December 31,
2007 and December 31, 2006, respectively, where reserves have not been
established because no claim payment is currently anticipated.
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Year Ended and as of December 31, 2007
Exhibit N
Quarter Ended Year Ended
December 31 December 31
2007 2006 2007 2006
Net Premiums Written
(In thousands)
Primary and Pool Insurance $223,372 $162,875 $835,961 $723,213
Seconds 4,896 15,469 27,236 57,935
International 16,796 10,696 35,306 20,375
Net premiums written - insurance 245,064 189,040 898,503 801,523
Net premiums written - credit
derivatives 10,228 13,322 56,610 47,588
Total Net Premiums Written $255,292 $202,362 $955,113 $849,111
Net Premiums Earned (In thousands)
Primary and Pool Insurance $189,170 $173,413 $730,966 $715,136
Seconds 7,579 11,564 32,744 52,588
International 3,681 1,530 15,549 7,028
Net premiums earned - insurance 200,430 186,507 779,259 774,752
Net premiums earned - credit
derivatives 13,399 12,700 64,263 37,263
Total Net Premiums Earned $213,829 $199,207 $843,522 $812,015
SMART HOME (In millions)
Ceded Premiums Written $1.3 $3.5 $11.0 $12.0
Ceded Premiums Earned $2.1 $3.7 $11.4 $12.3
Captives
Premiums ceded to captives
(In millions) $33.2 $25.4 $121.6 $96.7
% of total premiums 14.8% 12.6% 14.1% 11.7%
NIW subject to captives
(In millions) $6,776 $3,457 $23,322 $13,157
% of primary NIW 49.8% 45.6% 40.8% 32.8%
IIF included in captives (1) 36.5% 34.1%
RIF included in captives (1) 41.6% 38.9%
Persistency (twelve months ended
December 31) 75.4% 67.3%
December 31 December 31
2007 2006
SMART HOME
% of Primary RIF included in Smart
Home Transactions (1) 5.3% 10.1%
(1) Radian reinsures the middle layer risk positions, while retaining a
significant portion of the total risk comprising the first loss and
most remote risk positions.
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Year Ended and as of December 31, 2007
ALT-A
Exhibit O
Quarter Ended
($ in millions) December 31
2007 % 2006 %
Primary New Insurance Written by FICO
Score
<=619 $3 0.1% $3 0.2%
620-659 43 1.9% 208 10.6%
660-679 94 4.3% 351 17.9%
680-739 785 35.5% 903 46.0%
>=740 1,285 58.2% 496 25.3%
Total $2,210 100.0% $1,961 100.0%
Primary Risk in Force by FICO Score
<=619 $38 0.7% $24 0.6%
620-659 725 12.5% 729 17.2%
660-679 826 14.3% 681 16.1%
680-739 2,653 45.8% 1,897 44.8%
>=740 1,546 26.7% 903 21.3%
Total $5,788 100.0% $4,234 100.0%
Primary Risk in Force by LTV
95.01% and above $379 6.6% $120 2.8%
90.01% to 95.00% 1,668 28.8% 1,237 29.2%
85.01% to 90.00% 2,317 40.0% 1,832 43.3%
85.00% and below 1,424 24.6% 1,045 24.7%
Total $5,788 100.0% $4,234 100.0%
Primary Risk in Force by Policy Year
2003 and prior $641 11.1% $846 20.0%
2004 461 8.0% 712 16.8%
2005 846 14.6% 1,157 27.3%
2006 1,273 22.0% 1,519 35.9%
2007 2,567 44.3% - -
Total $5,788 100.0% $4,234 100.0%
Year Ended
($ in millions) December 31
2007 % 2006 %
Primary New Insurance Written by
FICO Score
<=619 $110 0.6% $28 0.2%
620-659 1,889 9.7% 1,600 11.4%
660-679 2,783 14.4% 2,019 14.4%
680-739 9,158 47.3% 6,756 48.0%
>=740 5,422 28.0% 3,655 26.0%
Total $19,362 100.0% $14,058 100.0%
Radian Group Inc.
Financial Services Supplemental Information
For the Quarter and Year Ended and as of December 31, 2007
Exhibit P
Quarter Ended Year Ended
December 31 December 31
(In thousands) 2007 2006 2007 2006
Investment in Affiliates-
Selected Information
C-BASS
Balance, beginning of
period - $431,472 $451,395 $364,364
Net income (loss) for
period - 31,598 (451,395) 133,900
Dividends received - 11,675 - 46,869
Balance, end of period $- $451,395 $- $451,395
Sherman
Balance, beginning of
period $94,110 $129,064 $167,412 $81,753
Net income for period 10,098 39,146 84,848 123,835
Dividends received - - 51,512 103,740
Other comprehensive
income (loss) 107 (798) (567) (743)
(Sale) purchase of
ownership interest - (95,866) 66,307
Balance, end of period $104,315 $167,412 $104,315 $167,412
Portfolio Information:
C-BASS
Servicing portfolio N/A $60,600,000
Total assets N/A 8,799,261
Servicing income N/A 40,589 N/A $142,407
Net interest income N/A 73,836 N/A 285,844
Total revenues N/A 144,479 N/A 571,162
Sherman
Total assets $2,242,087 $1,213,049
Net revenues $379,320 $329,293 $1,259,933 $1,059,381
Radian owns a 46% interest in C-BASS and a 21.8% interest in Sherman.
Prior to September 2007, we owned an interest in Sherman consisting of
40.96% of the Class A Common Units of Sherman (Class A Common Units
represent 94% of the total equity in Sherman) and 50% of the Preferred
Units of Sherman.
All statements in this news release that address events, developments or results that we expect or anticipate may occur in the future are "forward- looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995. These statements, which include, without limitation, projections regarding our future performance and financial condition are made on the basis of management's current views and assumptions with respect to future events. Any forward-looking statement is not a guarantee of future performance and actual results could differ materially from those contained in the forward looking information. The forward-looking statements, as well as our prospects as a whole, are subject to risks and uncertainties, including the following: actual or perceived changes in general financial and political conditions, such as extended national or regional economic recessions, changes in housing demand or mortgage originations, changes in housing values (in particular, further deterioration in the housing, mortgage and related credit markets, which would harm our future consolidated results of operations and, if more severe than our current predictions, could cause our ultimate projected losses for our mortgage insurance business to be worse than expected), changes in the liquidity in the capital markets and the further contraction of credit markets, population trends and changes in household formation patterns, changes in unemployment rates, changes or volatility in interest rates or consumer confidence, changes in credit spreads, changes in the way investors perceive the strength of private mortgage insurers or financial guaranty providers, investor concern over the credit quality and specific risks faced by the particular businesses, municipalities or pools of assets covered by our insurance; actual or perceived economic changes or catastrophic events in geographic regions (both domestic and international) where our mortgage insurance or financial guaranty insurance in force is more concentrated; our ability to successfully acquire additional capital in the event that capital is required to support our long- term liquidity needs and to protect our credit and financial strength ratings; a decrease in the volume of home mortgage originations due to reduced liquidity in the lending market, tighter underwriting standards and a deterioration in housing markets throughout the United States; the loss of a customer for whom we write a significant amount of mortgage insurance or financial guaranty insurance or the influence of large customers; disruption in the servicing of mortgages covered by our insurance policies; the aging of our mortgage insurance portfolio, which could cause losses to increase, and changes in severity or frequency of losses associated with certain of our products that are riskier than traditional mortgage insurance or financial guaranty insurance policies; the performance of our insured portfolio of higher risk loans, such as Alt-A and sub-prime loans, and adjustable rate products, such as adjustable rate mortgages and interest-only mortgages, which have resulted in increased losses in 2007 and may result in further losses; reduced opportunities for loss mitigation in markets where housing values fail to appreciate or begin to decline; changes in persistency rates of our mortgage insurance policies caused by changes in refinancing activity, appreciating or depreciating home values and changes in the mortgage insurance cancellation requirements of mortgage lenders and investors; downgrades or threatened downgrades of, or other ratings actions with respect to, our credit ratings or the insurance financial strength ratings assigned by the major rating agencies to any of our rated insurance subsidiaries at any time (in particular, our credit rating and the financial strength ratings of our mortgage insurance subsidiaries that are currently under review for possible downgrade); heightened competition for our mortgage insurance business from others such as the Federal Housing Administration and the Veterans' Administration or other private mortgage insurers, from alternative products such as "80-10-10" loans or other forms of simultaneous second loan structures used by mortgage lenders, from investors using forms of credit enhancement other than mortgage insurance as a partial or complete substitution for private mortgage insurance and from mortgage lenders that demand increased participation in revenue sharing arrangements such as captive reinsurance arrangements; changes in the charters or business practices of Federal National Mortgage Association and Federal Home Loan Mortgage Corp., the largest purchasers of mortgage loans that we insure; heightened competition for financial guaranty business from other financial guaranty insurers, including those recently downgraded to ratings equal to or lower than our ratings, from other forms of credit enhancement such as letters of credit, guaranties and credit default swaps provided by foreign and domestic banks and other financial institutions and from alternative structures that may permit insurers to securitize assets more cost-effectively without the need for the types of credit enhancement we offer, or result in our having to reduce the premium we charge for our products; the application of existing federal or state consumer, lending, insurance, securities and other applicable laws and regulations, or changes in these laws and regulations or the way they are interpreted; including, without limitation: (i) the possibility of private lawsuits or investigations by state insurance departments and state attorneys general alleging that services offered by the mortgage insurance industry, such as captive reinsurance, pool insurance and contract underwriting, are violative of the Real Estate Settlement Procedures Act and/or similar state regulations, or (ii) legislative and regulatory changes affecting demand for private mortgage insurance or financial guaranty insurance; the possibility that we may fail to estimate accurately the likelihood, magnitude and timing of losses in connection with establishing loss reserves for our mortgage insurance or financial guaranty businesses, the premium deficiency for our second-lien mortgage insurance business or to estimate accurately the fair value amounts of derivative contracts in our mortgage insurance and financial guaranty businesses in determining gains and losses on these contracts; changes in accounting guidance from the Securities and Exchange Commission or the Financial Accounting Standards Board (in particular changes regarding income recognition and the treatment of loss reserves in the financial guaranty industries); our ability to profitably grow our insurance businesses in international markets, which depends on a number of factors such as foreign governments' monetary policies and regulatory requirements, foreign currency exchange rate fluctuations, and our ability to develop and market products appropriate to foreign markets; legal and other limitations on the amount of dividends we may receive from our subsidiaries; and vulnerability to the performance of our strategic investments, including in particular, our investment in Sherman Financial Services Group LLC. For more information regarding these risks and uncertainties, as well as certain additional risks that we face, you should refer to the Risk Factors detailed in Part I, Item 1A of our annual report on Form 10-K for the year ended December 31, 2006 as well as the updates to these risks included in Item 1A of Part II of our quarterly report on Form 10-Q for the quarter ended September 30, 2007. We caution you not to place undue reliance on these forward-looking statements, which are current only as of the date of this news release. We do not intend to, and we disclaim any duty or obligation to, update or revise any forward-looking statements made in this report to reflect new information or future events or for any other reason.
SOURCE Radian Group Inc.
CONTACT:
Investors:
Terri Williams-Perry
+1-215-231-1486
terri.williams-perry@radian.com
Media:
Rick Gillespie
+1-215-231-1061
rick.gillespie@radian.com
Steve Frankel
or
Tim Lynch
both of Joele Frank, Wilkinson Brimmer Katcher
+1-212-355-4449