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08/11/2008
Radian Reports Second Quarter Financial Results and Announces Capital Plan
PHILADELPHIA, Aug. 11 /PRNewswire-FirstCall/ -- Radian Group Inc. (NYSE: RDN) today reported a net loss for the quarter of $392.5 million, or $4.91 per share, after establishing a pre-tax first-lien premium deficiency reserve of $421.8 million. This compares to net income of $21.1 million, or $0.26 per share, for the second quarter of 2007. Book value per share at June 30, 2008, was $30.54.
"Radian's results in the second quarter were largely impacted by the first-lien premium deficiency reserve we established after updating our future mortgage insurance loss expectations," said S.A. Ibrahim, Chief Executive Officer of Radian. "While our industry continues to be challenged, we remain highly committed to our mortgage insurance business. Radian is in the unique position to fulfill its capital needs through internal resources by contributing our financial guaranty business to our mortgage insurance business. This non-dilutive capital strategy benefits our shareholders and allows Radian to continue to take advantage of market opportunities that will best position the Company for the future."
SECOND QUARTER HIGHLIGHTS
-- Radian Asset Assurance Inc., the principal financial guaranty subsidiary (Radian Asset), declared an ordinary dividend of $107.5 million to Radian Group Inc. $100 million was subsequently contributed to Radian Guaranty to support the mortgage insurance business.
-- Radian Asset has $960 million of statutory surplus, which is part of approximately $3 billion of claims paying resources. Radian expects to contribute the investment in Radian Asset to Radian Guaranty during the third quarter of 2008.
-- A pre-tax first-lien premium deficiency reserve (PDR) of $421.8 million was established after updating the Company's future loss projections. The PDR represents Radian's best estimate of the present value of expected future losses not already included in the June 30, 2008 loss reserves, net of related future premiums. There was a $50.8 million deferred policy acquisition cost (DPAC) write-off in conjunction with the PDR.
-- Captive reinsurance and Smart Home transactions generated significant ceded losses recoverable, the balances of which are $131.1 million and $44.7 million, respectively, at June 30, 2008.
-- First and second lien claims paid were below expectations at $209 million, driven primarily by increased investment in Loss Management efforts.
-- First-lien primary defaults increased 11.0% in the quarter, which compares favorably to the 13.6% increase in first-lien primary defaults added during the first quarter of 2008. Including pool defaults, the increase was 8.9% during the second quarter of 2008, compared to 9.9% during the first quarter of 2008.
-- Radian Guaranty has made multiple guideline changes and pricing increases. In markets where home prices have declined, Radian has increased down payment requirements. Approximately 93% of new insurance written during the second quarter of 2008 was prime. Primary New Insurance Written in the second quarter of 2008 was $9.6 billion.
-- Radian Guaranty remains a Top Tier provider to the GSEs and maintains a stable market share position.
-- Sherman Financial reported overall pretax operating income of $77.8 million for the second quarter of 2008, of which Radian's share is $15.7 million. Radian received $19.5 million of dividends from Sherman during the quarter.
CAPITAL STRATEGY
The book of business in Radian Asset has significantly less exposure to mortgage and mortgage related assets compared to other financial guaranty insurers and new business production across all financial guaranty product lines has been significantly reduced in 2008 and is likely to remain at minimal levels. These combined factors have created an opportunity unique to Radian that will allow Radian Group's investment in Radian Asset to be contributed to Radian Guaranty. Radian expects that this will occur during the third quarter of 2008.
Instrumental to the movement of Radian Asset under Radian Guaranty was the need to get consent from Radian's lenders. The necessary lenders have signed an amendment to our credit facility to allow for that transfer. The amendment will become effective if certain conditions are satisfied, all of which Radian currently expects to be able to satisfy in the time permitted by the amendment.
Radian Group's liquidity position remains strong with over $50 million in cash and liquid investment securities after an impending paydown of $50 million of its credit facility in conjunction with the Radian Asset contribution, with no principal payments on its debt due until 2011. In addition, Radian has at its option the sale of its remaining stake in Sherman.
After taking into consideration the contribution of Radian Asset, Radian Guaranty's resulting risk to capital ratio on a pro forma basis would be 10.3 to 1 at June 30, 2008, allowing it to maintain a strong and sufficient claims paying ability to withstand the stressed macroeconomic environment, while continuing to selectively write new business.
CONFERENCE CALL
Radian will discuss each of these items in its conference call today, Monday, August 11, 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 800-230-1074 inside the U.S., or 612-234-9959 for international callers, using passcode 955796 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 one week, using the following dial-in numbers and passcode: 800-475-6701 inside the U.S., or 320-365-3844 for international callers, passcode 955796.
About Radian
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 http://www.radian.com.
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 June 30, 2008
Exhibit D: Segment Information Quarter Ended June 30, 2007
Exhibit E: Segment Information Six Months Ended June 30, 2008
Exhibit F: Segment Information Six Months Ended June 30, 2007
Exhibit G: Financial Guaranty Supplemental Information-
Quarter and Six Months Ended June 30, 2008
Exhibit H: Financial Guaranty Supplemental Information-
Quarter and Six Months Ended June 30, 2008
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-
Reinsurance Progression Toward Attachment - Summary by Book
Year
Exhibit P: Mortgage Insurance Supplemental Information-
ALT-A
Exhibit Q: Financial Services Supplemental Information
Radian Group Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Exhibit A
Quarter Ended Six Months Ended
June 30 June 30
2008 2007 2008 2007
(In thousands, except per-
share data)
Revenues:
Net premiums written -
insurance $222,645 $242,419 $466,951 $490,849
Net premiums earned -
insurance $249,137 $218,010 $491,058 $432,517
Net investment income 65,128 62,650 131,107 123,646
Change in fair value of
derivative instruments (1) 56,226 (66,246) 764,035 (17,829)
Net (losses) gains on other
financial instruments (8,251) 25,694 (63,135) 39,439
Other income 3,221 3,102 6,835 6,920
Total revenues 365,461 243,210 1,329,900 584,693
Expenses:
Provision for losses 458,879 173,962 1,041,590 281,004
Provision for premium
deficiency (2) 369,807 - 387,897 -
Policy acquisition costs 75,952 (3) 24,198 99,858 52,452
Other operating expenses 63,849 48,213 118,990 102,580
Merger expenses - 9,395 - 12,723
Interest expense 13,832 12,360 26,325 25,416
Total expenses 982,319 268,128 1,674,660 474,175
Equity in net income of
affiliates 15,704 49,507 28,230 72,279
Pretax (loss) income (601,154) 24,589 (316,530) 182,797
Income tax (benefit)
provision (208,630) 3,506 (119,644) 48,247
Net (loss) income $(392,524) $21,083 $(196,886) $134,550
Diluted net (loss) income per
share (4) $(4.91) $0.26 $(2.46) $1.68
(1) Includes premiums earned on derivative contracts.
(2) Includes $421.8 million for first-lien and $(52.0) million for
second-lien in the second quarter of 2008, and $421.8 million for
first-lien and $(33.9) million for second-lien for the first six
months of 2008.
(3) Includes the acceleration of $50.8 million of deferred policy
acquisition cost amortization, as a result of the establishment of a
first-lien premium deficiency reserve in the second quarter of 2008.
(4) Weighted average shares outstanding (in thousands)
Average common shares outstanding 79,967 79,627 79,960 79,295
Increase in shares-potential exercise
of options-diluted basis - 918 - 984
Weighted average shares outstanding
(in thousands) 79,967 80,545 79,960 80,279
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 June 30 December 31 June 30
per-share data) 2008 2007 2007
Assets:
Cash and investments $6,535,397 $6,611,836 $6,028,815
Investments in affiliates 112,683 104,354 639,571
Deferred policy acquisition costs 184,765 234,955 232,548
Prepaid federal income taxes 536,343 793,486 860,135
Other assets 1,040,229 465,558 357,016
Total assets $8,409,417 $8,210,189 $8,118,085
Liabilities and stockholders'
equity:
Unearned premiums $1,048,064 $1,094,710 $987,788
Reserve for losses and loss
adjustment expenses 2,287,742 1,598,756 909,371
Reserve for premium deficiency 583,543 195,646 -
Long-term debt and other
borrowings 958,762 953,524 747,929
Variable interest entity debt 85,739 - -
Deferred income taxes - 26,705 888,667
Derivative liabilities 657,426 1,305,665 -
Other liabilities 332,234 314,447 441,612
Total liabilities 5,953,510 5,489,453 3,975,367
Common stock 98 98 97
Additional paid-in capital 448,010 442,312 436,017
Retained earnings 1,981,046 2,181,191 3,609,259
Accumulated other comprehensive
income 26,753 97,135 97,345
Total common stockholders'
equity 2,455,907 2,720,736 4,142,718
Total liabilities and
stockholders' equity $8,409,417 $8,210,189 $8,118,085
Book value per share $30.54 $33.83 $51.53
Treasury Stock Repurchases
(Year-to-Date for Periods Presented)
Total number of shares
repurchased - 398,645 (1) 398,645
Average price paid per share - $57.25 $57.25
Total cost of repurchased shares - $22,822,537 $22,822,537
(1) 0.3 million shares were repurchased in the 2nd quarter of 2007 at a
cost of $18.8 million.
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended June 30, 2008
Exhibit C
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
Revenues:
Net premiums written -
insurance $199,030 $23,615 $- $222,645
Net premiums earned -
insurance $205,096 $44,041 $- $249,137
Net investment income 38,941 26,187 - 65,128
Change in fair value of
derivative instruments 25,173 31,053 - 56,226
Net gains (losses) on
other financial
instruments 10,444 (18,734) 39 (8,251)
Other income 2,999 58 164 3,221
Total revenues 282,653 82,605 203 365,461
Expenses:
Provision for losses 449,296 9,583 - 458,879
Provision for premium
deficiency 369,807 - - 369,807
Policy acquisition costs 63,686 12,266 - 75,952
Other operating expenses 48,703 15,019 127 63,849
Interest expense 7,332 6,500 - 13,832
Total expenses 938,824 43,368 127 982,319
Equity in net income of
affiliates - - 15,704 15,704
Pretax (loss) income (656,171) 39,237 15,780 (601,154)
Income tax (benefit)
provision (221,988) 6,768 6,590 (208,630)
Net (loss) income $(434,183) $32,469 $9,190 $(392,524)
Assets $5,037,309 $3,166,316 $205,792 $8,409,417
Total investments 3,919,870 2,467,199 - 6,387,069
Deferred policy
acquisition costs 11,554 173,211 - 184,765
Reserve for losses and
loss adjustment expenses 2,120,577 167,165 - 2,287,742
Derivative liabilities 308,543 348,883 - 657,426
Unearned premiums 359,080 688,984 - 1,048,064
Stockholders' equity 988,773 1,331,610 135,524 2,455,907
Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended June 30, 2007
Exhibit D
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
Revenues:
Net premiums written -
insurance $197,507 $44,912 $- $242,419
Net premiums earned -
insurance $185,588 $32,422 $- $218,010
Net investment income 36,287 26,320 43 62,650
Change in fair value
of derivative
instruments (49,410) (16,836) - (66,246)
Net gains on other
financial instruments 19,356 5,609 729 25,694
Other income 2,726 126 250 3,102
Total revenues 194,547 47,641 1,022 243,210
Expenses:
Provision for losses 180,152 (6,190) - 173,962
Policy acquisition
costs 12,556 11,642 - 24,198
Other operating
expenses 34,036 12,533 1,644 48,213
Merger expenses 8,990 405 - 9,395
Interest expense 6,341 4,462 1,557 12,360
Total expenses 242,075 22,852 3,201 268,128
Equity in net income
of affiliates - - 49,507 49,507
Pretax (loss) income (47,528) 24,789 47,328 24,589
Income tax (benefit)
provision (19,326) 2,768 20,064 3,506
Net (loss) income $(28,202) $22,021 $27,264 $21,083
Assets $4,762,306 $2,717,023 $638,756 $8,118,085
Total investments 3,545,036 2,374,941 - 5,919,977
Deferred policy
acquisition costs 70,525 162,023 - 232,548
Reserve for losses
and loss adjustment
expenses 746,095 163,276 - 909,371
Unearned premiums 287,824 699,964 - 987,788
Stockholders' equity 2,270,272 1,456,497 415,949 4,142,718
Radian Group Inc. and Subsidiaries
Segment Information
Six Months Ended June 30, 2008
Exhibit E
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
Revenues:
Net premiums written -
insurance $410,281 $56,670 $- $466,951
Net premiums earned - insurance $409,361 $81,697 $- $491,058
Net investment income 77,786 53,307 14 131,107
Change in fair value of
derivative instruments 96,942 667,093 - 764,035
Net (losses) gains on other
financial instruments (26,289) (36,883) 37 (63,135)
Other income 6,490 179 166 6,835
Total revenues 564,290 765,393 217 1,329,900
Expenses:
Provision for losses 1,020,304 21,286 - 1,041,590
Provision for premium
deficiency 387,897 - - 387,897
Policy acquisition costs 77,146 22,712 - 99,858
Other operating expenses 82,873 35,757 360 118,990
Interest expense 14,422 11,654 249 26,325
Total expenses 1,582,642 91,409 609 1,674,660
Equity in net income of
affiliates - - 28,230 28,230
Pretax (loss) income (1,018,352) 673,984 27,838 (316,530)
Income tax (benefit) provision (357,713) 225,987 12,082 (119,644)
Net (loss) income $(660,639) $447,997 $15,756 $(196,886)
Radian Group Inc. and Subsidiaries
Segment Information
Six Months Ended June 30, 2007
Exhibit F
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
Revenues:
Net premiums written - insurance $403,918 $86,931 $- $490,849
Net premiums earned - insurance $365,831 $66,686 $- $432,517
Net investment income 71,846 51,757 43 123,646
Change in fair value of derivative
instruments (45,072) 27,243 - (17,829)
Net gains on other financial
instruments 30,479 8,433 527 39,439
Other income 5,575 266 1,079 6,920
Total revenues 428,659 154,385 1,649 584,693
Expenses:
Provision for losses 293,006 (12,002) - 281,004
Policy acquisition costs 29,079 23,373 - 52,452
Other operating expenses 70,308 26,768 5,504 102,580
Merger expenses 12,318 405 - 12,723
Interest expense 13,195 9,058 3,163 25,416
Total expenses 417,906 47,602 8,667 474,175
Equity in net income of affiliates - - 72,279 72,279
Pretax income 10,753 106,783 65,261 182,797
Income tax (benefit) provision (5,747) 26,846 27,148 48,247
Net income $16,500 $79,937 $38,113 $134,550
Radian Group Inc.
Financial Guaranty Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2008
Exhibit G
Quarter Ended Six Months Ended
($ in thousands, except ratios) June 30 June 30
2008 2007 2008 2007
Net Premiums Written: (1)
Public finance direct $7,876 $18,130 $13,479 $30,910
Public finance reinsurance 7,221 17,495 24,762 35,649
Structured direct 3,006 2,789 7,188 8,036
Structured reinsurance 5,411 5,693 10,853 11,605
Trade credit reinsurance 101 805 388 731
Total Net Premiums Written - insurance $23,615 $44,912 $56,670 $86,931
Net Premiums Earned: (2)
Public finance direct $12,004 $9,961 $29,814 $21,546
Public finance reinsurance 22,965 11,692 32,835 22,792
Structured direct 3,760 4,389 7,642 9,080
Structured reinsurance 5,092 5,742 10,691 11,936
Trade credit reinsurance 220 638 715 1,332
Total Net Premiums Earned - insurance $44,041 $32,422 $81,697 $66,686
Refundings included in earned
premium $16,664 $5,177 $28,321 $11,763
Claims paid:
Trade credit reinsurance $397 $2,625 $983 $5,271
Other 1,761 803 103,217 (3) 734
Conseco 2,305 3,011 4,373 6,119
Total $4,463 $6,439 $108,573 $12,124
Incurred losses:
Trade credit reinsurance $(3,819) $(8,480) $(5,474) $(11,616)
Other 14,074 2,290 27,432 (386)
Conseco (672) - (672) -
Total $9,583 $(6,190) $21,286 $(12,002)
Loss ratio- GAAP Basis 16.7% (12.8)% 19.5% (11.8)%
Expense ratio- GAAP Basis(4) 47.4% 50.2% 53.7% 49.5%
64.1% 37.4% 73.2% 37.7%
Net payments (receipts) under
derivatives contracts $5,578 $(16,147) $5,578 $(27,375)
(1) Premiums written on credit derivatives for the quarter and six months
ended June 30, 2008 were $13.0 million and $25.9 million,
respectively, compared to $5.6 million and $18.9 million,
respectively, for the quarter and six months ended June 30, 2007.
(2) Premiums earned on credit derivatives for the quarter and six months
ended June 30, 2008 were $13.5 million and $27.2 million,
respectively, compared to $15.8 million and $34.7 million,
respectively, for the quarter and six months ended June 30, 2007.
Premiums earned on credit derivatives are included in change of fair
value of derivative instruments.
(3) Includes a $100 million payment related to one credit that is a CDO of
an ABS that was fully reserved for in 2007.
(4) Excludes merger expenses.
Radian Group Inc.
Financial Guaranty Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2008
Exhibit H
($ in thousands, except ratios) June 30 December 31 June 30
2008 2007 2007
Capital and surplus $982,340 $1,158,537 $1,066,378
Contingency reserve 485,972 433,296 380,222
Qualified statutory
capital 1,468,312 1,591,833 1,446,600
Unearned premium reserve 866,504 886,024 846,254
Loss and loss expense reserve 54,391 61,038 73,083
Total statutory
policyholders' reserves 2,389,207 2,538,895 2,365,937
Present value of installment
premiums 430,450 461,806 366,572
Reinsurance and soft capital
facilities 150,000 150,000 150,000
Total statutory claims
paying resources $2,969,657 $3,150,701 $2,882,509
Net debt service outstanding $163,252,124 $164,346,659 $152,351,096
Capital leverage ratio (1) 111 103 105
Claims paying leverage ratio (2) 55 52 53
Net par outstanding by product:
Public finance direct $18,824,907 $18,228,946 $17,131,513
Public finance reinsurance 43,114,460 43,822,781 40,063,123
Structured direct 47,235,046 47,878,168 48,071,745
Structured reinsurance 6,010,331 6,091,717 5,270,740
Total $115,184,744 $116,021,612 $110,537,121
Reinsurance business net par
outstanding:
Treaty 61% 59% 59%
Facultative 39% 41% 41%
Reserve for losses and LAE
Specific $29,053 $26,791 $29,274
Conseco 17,480 22,526 27,855
Non-specific 120,632 203,987 106,147
Total $167,165 $253,304 $163,276
(1) Net debt service outstanding divided by qualified statutory capital
(2) Net debt service outstanding divided by total statutory claims paying
resources
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2008
Exhibit I
Quarter Ended
($ in millions) June 30
2008 % 2007 %
Primary New
Insurance Written
Flow $9,432 97.9% $10,639 63.1%
Structured 205 2.1% 6,211 36.9%
Total Primary $9,637 100.0% $16,850 100.0%
Flow
Prime $8,743 92.7% $7,673 72.1%
Alt-A 475 5.0% 2,026 19.1%
A minus and below 214 2.3% 940 8.8%
Total Flow $9,432 100.0% $10,639 100.0%
Structured
Prime $204 99.5% $581 9.4%
Alt-A 1 0.5% 5,200 83.7%
A minus and below - - 430 6.9%
Total Structured $205 100.0% $6,211 100.0%
Total
Prime $8,947 92.8% $8,254 49.0%
Alt-A 476 5.0% 7,226 42.9%
A minus and below 214 2.2% 1,370 8.1%
Total Primary $9,637 100.0% $16,850 100.0%
Total Primary New
Insurance Written
by FICO Score
Flow
<=619 $104 1.1% $641 6.0%
620-679 1,512 16.0% 3,397 32.0%
680-739 3,452 36.6% 3,854 36.2%
>=740 4,364 46.3% 2,747 25.8%
Total Flow $9,432 100.0% $10,639 100.0%
Structured
<=619 $- - $283 4.6%
620-679 7 3.4% 2,090 33.6%
680-739 64 31.2% 2,761 44.5%
>=740 134 65.4% 1,077 17.3%
Total Structured $205 100.0% $6,211 100.0%
Total
<=619 $104 1.1% $924 5.5%
620-679 1,519 15.8% 5,487 32.6%
680-739 3,516 36.4% 6,615 39.2%
>=740 4,498 46.7% 3,824 22.7%
Total Primary $9,637 100.0% $16,850 100.0%
Percentage of primary
new insurance written
Refinances 35% 41%
95.01% LTV and above 12% 21%
ARMs
Less than 5 years - 7%
5 years and longer 10% 10%
Primary risk written
Flow $2,231 97.9% $2,699 83.4%
Structured 48 2.1% 537 16.6%
Total Primary $2,279 100.0% $3,236 100.0%
Pool risk written $28 $96
Other risk written
Seconds
1st loss $- $3
2nd loss - -
NIMs - 109
International
1st loss-Hong Kong
primary mortgage
insurance - 31
Reinsurance 23 17
Total other risk written $23 $160
Six Months Ended
($ in millions) June 30
2008 % 2007 %
Primary New
Insurance Written
Flow $18,716 93.9% $17,688 58.8%
Structured 1,218 6.1% 12,389 41.2%
Total Primary $19,934 100.0% $30,077 100.0%
Flow
Prime $16,951 90.5% $12,723 71.9%
Alt-A 1,058 5.7% 3,427 19.4%
A minus and below 707 3.8% 1,538 8.7%
Total Flow $18,716 100.0% $17,688 100.0%
Structured
Prime $1,216 99.8% $674 5.5%
Alt-A 2 0.2% 11,105 89.6%
A minus and below - - 610 4.9%
Total Structured $1,218 100.0% $12,389 100.0%
Total
Prime $18,167 91.2% $13,397 44.6%
Alt-A 1,060 5.3% 14,532 48.3%
A minus and below 707 3.5% 2,148 7.1%
Total Primary $19,934 100.0% $30,077 100.0%
Total Primary New
Insurance Written
by FICO Score
Flow
<=619 $369 2.0% $1,127 6.4%
620-679 3,450 18.4% 5,652 31.9%
680-739 7,067 37.8% 6,333 35.8%
>=740 7,830 41.8% 4,576 25.9%
Total Flow $18,716 100.0% $17,688 100.0%
Structured
<=619 $- - $409 3.3%
620-679 17 1.4% 3,466 28.0%
680-739 433 35.5% 5,829 47.0%
>=740 768 63.1% 2,685 21.7%
Total Structured $1,218 100.0% $12,389 100.0%
Total
<=619 $369 1.9% $1,536 5.1%
620-679 3,467 17.4% 9,118 30.3%
680-739 7,500 37.6% 12,162 40.4%
>=740 8,598 43.1% 7,261 24.2%
Total Primary $19,934 100.0% $30,077 100.0%
Percentage of primary
new insurance written
Refinances 38% 46%
95.01% LTV and above 16% 19%
ARMs
Less than 5 years 1% 23%
5 years and longer 8% 8%
Primary risk written
Flow $4,547 93.5% $4,445 85.9%
Structured 314 6.5% 731 14.1%
Total Primary $4,861 100.0% $5,176 100.0%
Pool risk written $59 $185
Other risk written
Seconds
1st loss $- $6
2nd loss - 21
NIMs - 377
International
1st loss-Hong Kong
primary mortgage
insurance 51 50
Reinsurance 42 34
Total other risk written $93 $488
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2008
Exhibit J
($ in millions) June 30 June 30
2008 % 2007 %
Primary insurance in force
Flow $115,425 76.3% $91,098 71.0%
Structured 35,754 23.7% 37,172 29.0%
Total Primary $151,179 100.0% $128,270 100.0%
Prime $105,049 69.5% $80,984 63.1%
Alt-A 34,239 22.6% 35,671 27.8%
A minus and below 11,891 7.9% 11,615 9.1%
Total Primary $151,179 100.0% $128,270 100.0%
Primary risk in force
Flow $29,003 85.6% $22,702 83.2%
Structured 4,879 14.4% 4,580 16.8%
Total Primary $33,882 100.0% $27,282 100.0%
Flow
Prime $23,125 79.7% $17,677 77.9%
Alt-A 3,759 13.0% 3,305 14.5%
A minus and below 2,119 7.3% 1,720 7.6%
Total Flow $29,003 100.0% $22,702 100.0%
Structured
Prime $2,537 52.0% $1,653 36.1%
Alt-A 1,499 30.7% 1,756 38.3%
A minus and below 843 17.3% 1,171 25.6%
Total Structured $4,879 100.0% $4,580 100.0%
Total
Prime $25,662 75.7% $19,330 70.9%
Alt-A 5,258 15.5% 5,061 18.5%
A minus and below 2,962 8.8% 2,891 10.6%
Total Primary $33,882 100.0% $27,282 100.0%
Total Primary Risk in Force by FICO
Score
Flow
<=619 $1,607 5.5% $1,458 6.4%
620-679 8,365 28.9% 7,037 31.0%
680-739 10,744 37.0% 8,264 36.4%
>=740 8,287 28.6% 5,943 26.2%
Total Flow $29,003 100.0% $22,702 100.0%
Structured
<=619 $784 16.1% $1,121 24.5%
620-679 1,312 26.9% 1,571 34.3%
680-739 1,492 30.5% 1,262 27.5%
>=740 1,291 26.5% 626 13.7%
Total Structured $4,879 100.0% $4,580 100.0%
Total
<=619 $2,391 7.0% $2,579 9.4%
620-679 9,677 28.6% 8,608 31.6%
680-739 12,236 36.1% 9,526 34.9%
>=740 9,578 28.3% 6,569 24.1%
Total Primary $33,882 100.0% $27,282 100.0%
Percentage of primary risk in force
Refinances 31% 33%
95.01% LTV and above 24% 20%
ARMs
Less than 5 years 10% 16%
5 years and longer 9% 9%
Pool risk in force
Prime $2,119 70.8% $2,206 70.2%
Alt-A 291 9.7% 297 9.5%
A minus and below 584 19.5% 638 20.3%
Total $2,994 100.0% $3,141 100.0%
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2008
Exhibit K
($ in millions) June 30 June 30
2008 % 2007 %
Total Primary Risk in Force by LTV
95.01% and above $8,076 23.8% $5,549 20.3%
90.01% to 95.00% 10,546 31.1% 8,227 30.2%
85.01% to 90.00% 11,576 34.2% 9,497 34.8%
85.00% and below 3,684 10.9% 4,009 14.7%
Total $33,882 100.0% $27,282 100.0%
Total Primary Risk in Force by
Policy Year
2004 and prior $7,960 23.5% $10,029 36.7%
2005 4,575 13.5% 5,704 20.9%
2006 5,516 16.3% 6,482 23.8%
2007 11,069 32.7% 5,067 18.6%
2008 4,762 14.0% - -
Total $33,882 100.0% $27,282 100.0%
Total Pool Risk in Force by Policy
Year
2004 and prior $1,848 61.7% $2,019 64.3%
2005 589 19.7% 650 20.7%
2006 258 8.6% 281 8.9%
2007 243 8.1% 191 6.1%
2008 56 1.9% - -
Total Pool risk in Force $2,994 100.0% $3,141 100.0%
Other risk in force
Seconds
1st loss $312 $495
2nd loss 460 590
NIMs 485 796
International
1st loss-Hong Kong primary
mortgage insurance 469 384
Reinsurance 151 79
Credit default swaps 8,619 7,872
Other
Domestic credit default swaps 206 212
Total other risk in force $10,702 $10,428
Risk to capital ratio-STAT Basis 20.8:1 10.6:1
Risk to capital ratio-STAT Basis
excluding AAA-rated CDS 16.7:1 8.6:1
Risk to capital ratio-Radian Guaranty
only 14.9:1 10.5:1
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2008
Exhibit L
Quarter Ended Six Months Ended
($ in thousands) June 30 June 30
2008 2007 2008 2007
Direct claims paid
Prime $64,048 $34,226 $124,706 $67,351
Alt-A 47,746 21,755 83,478 41,753
A minus and below 49,270 35,027 97,631 64,107
Seconds and other 47,775 21,071 93,212 34,692
Total $208,839 $112,079 $399,027 $207,903
Average claim paid
Prime $36.7 $28.4 $36.7 $28.2
Alt-A 51.1 40.9 50.5 40.3
A minus and below 35.4 31.1 36.3 30.4
Seconds 34.2 27.8 34.3 28.2
Total $38.2 $30.9 $38.2 $30.8
Loss ratio - GAAP Basis 211.4% 87.2% 238.3% 72.8%
Expense ratio - GAAP
Basis (2) 55.3% 22.5% 38.5% 24.7%
266.7% 109.7% 276.8% 97.5%
Reserve for losses by
category
Prime $559,947 $212,191
Alt-A 722,813 182,537
A minus and below 410,373 246,062
Pool insurance 71,508 37,531
Seconds 178,859 37,251
Other 1,237 1,004
Reserve for losses, net 1,944,737 716,576
Reinsurance
recoverable 175,840 (1) 29,519 (1)
Total $2,120,577 $746,095
(1) Reinsurance recoverable on ceded losses related to captives
($131.1 million) and Smart Home ($44.7 million).
(2) Includes the acceleration of $50.8 million of deferred policy
acquisition cost amortization, as a result of the establishment of a
first-lien premium deficiency reserve in the second quarter of 2008
and excludes merger expenses.
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2008
Exhibit M
June 30 December 31 June 30
2008 2007 2007
Default Statistics
Primary insurance:
Flow
Prime
Number of insured loans 602,571 565,563 520,488
Number of loans in default 26,604 20,632 14,795
Percentage of loans in default 4.42% 3.65% 2.84%
Alt-A
Number of insured loans 72,715 74,559 68,454
Number of loans in default 11,702 7,980 5,034
Percentage of loans in default 16.09% 10.70% 7.35%
A minus and below
Number of insured loans 62,874 63,853 56,073
Number of loans in default 11,637 10,087 7,456
Percentage of loans in default 18.51% 15.80% 13.30%
Total Flow
Number of insured loans 738,160 703,975 645,015
Number of loans in default 49,943 38,699 27,285
Percentage of loans in default 6.77% 5.50% 4.23%
Structured
Prime
Number of insured loans 70,857 64,789 57,500
Number of loans in default 5,447 4,707 3,612
Percentage of loans in default 7.69% 7.27% 6.28%
Alt-A
Number of insured loans 84,369 97,526 98,242
Number of loans in default 13,344 8,783 4,992
Percentage of loans in default 15.82% 9.01% 5.08%
A minus and below
Number of insured loans 24,422 28,747 32,612
Number of loans in default 8,003 8,659 8,278
Percentage of loans in default 32.77% 30.12% 25.38%
Total Structured
Number of insured loans 179,648 191,062 188,354
Number of loans in default 26,794 22,149 16,882
Percentage of loans in default 14.91% 11.59% 8.96%
Total Primary Insurance
Prime
Number of insured loans 673,428 630,352 577,988
Number of loans in default 32,051 25,339 18,407
Percentage of loans in default 4.76% 4.02% 3.18%
Alt-A
Number of insured loans 157,084 172,085 166,696
Number of loans in default 25,046 16,763 10,026
Percentage of loans in default 15.94% 9.74% 6.01%
A minus and below
Number of insured loans 87,296 92,600 88,685
Number of loans in default 19,640 18,746 15,734
Percentage of loans in default 22.50% 20.24% 17.74%
Total Primary Insurance
Number of insured loans 917,808 895,037 833,369
Number of loans in default 76,737 (1) 60,848 (1) 44,167 (1)
Percentage of loans in default 8.36% 6.80% 5.30%
Pool insurance:
Number of loans in
default 27,944 (2) 26,526 (2) 21,409 (2)
(1) Includes approximately 272, 2,595 and 2,318 defaults at June 30, 2008,
December 31, 2007 and June 30, 2007, respectively, where reserves have
not been established because no claim payment is currently
anticipated.
(2) Includes approximately 20,880, 20,193 and 16,101 defaults at June 30,
2008, December 31, 2007 and June 30, 2007, 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 Six Months Ended and as of June 30, 2008
Exhibit N
Quarter Ended Six Months Ended
June 30 June 30
2008 2007 2008 2007
Net Premiums Written (In
thousands)(1)
Primary and Pool Insurance $191,769 $184,492 $392,246 $376,600
Seconds 2,905 6,450 6,386 17,629
International 4,356 6,565 11,649 9,689
Total Net Premiums Written -
insurance $199,030 $197,507 $410,281 $403,918
Net Premiums Earned
(In thousands)(2)
Primary and Pool Insurance $193,938 $174,174 $387,421 $341,329
Seconds 4,964 8,723 11,128 17,895
International 6,194 2,691 10,812 6,607
Total Net Premiums Earned -
insurance $205,096 $185,588 $409,361 $365,831
SMART HOME (In millions)
Ceded Premiums Written $3.7 $3.2 $6.9 $6.4
Ceded Premiums Earned $3.7 $3.1 $6.9 $6.0
Captives
Premiums ceded to captives (In
millions) $34.1 $30.0 $69.8 $58.1
% of total premiums 14.7% 14.5% 15.1% 14.3%
NIW subject to captives (In
millions) $3,415 $6,146 $8,164 $11,140
% of primary NIW 35.4% 36.5% 41.0% 37.0%
IIF included in captives (3) 37.2% 34.6%
RIF included in captives (3) 41.7% 40.5%
Persistency (twelve months ended
June 30) 81.2% 71.1%
June 30 June 30
2008 2007
SMART HOME
% of Primary RIF included in Smart
Home Transactions (3) 4.3% 7.4%
(1) Premiums written on credit derivatives for the quarter and six months
ended June 30, 2008 were $5.6 million and $14.5 million, respectively,
compared to $19.5 million and $35.4 million, respectively, for the
quarter and six months ended June 30, 2007.
(2) Premiums earned on credit derivatives for the quarter and six months
ended June 30, 2008 were $5.8 million and $18.9 million, respectively,
compared to $21.1 million and $36.8 million, respectively, for the
quarter and six months ended June 30, 2007. Premiums earned on credit
derivatives are included in change of fair value of derivative
instruments.
(3) Radian reinsures the middle layer risk positions, while retaining a
significant portion of the total risk comprising the first loss and
most remote risk positions.
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter Ended and as of June 30, 2008
Exhibit O
Reinsurance Progression Toward Attachment - Summary by Book Year (1)
June 30
($ in millions) 2008
Original Progression Ever-to-
Book RIF to Date Captive
Book as of June Attachment Current Incurred Benefit
Year (2): 30 2008 Point RIF Losses (3)
Pre-2005 0-50% $1,337 $240
Pre-2005 50-75% 1,155 158
Pre-2005 75-99% 514 81
Pre-2005 Attached 17 5 $1
Pre-2005
Total $26,334 $3,023 $484 $1
2005 0-50% $187 $4
2005 50-75% 430 17
2005 75-99% 392 21
2005 Attached 896 95 $29
2005 Total $3,333 $1,905 $137 $29
2006 0-50% $146 $3
2006 50-75% 524 18
2006 75-99% 153 7
2006 Attached 1,800 169 $74
2006 Total $3,547 $2,623 $197 $74
2007 0-50% $913 $15
2007 50-75% 2,876 91
2007 75-99% - -
2007 Attached 1,055 63 $21
2007 Total $5,288 $4,844 $169 $21
2008 0-50% $1,483 $3
2008 50-75% 90 2
2008 75-99% - -
2008 Attached - - $-
2008 Total $1,601 $1,573 $5 $-
Quota Share 0-50% $27 $-
Quota Share 50-75% - -
Quota Share 75-99% 6 1
Quota Share Attached 85 17 $8
Quota Share
Total $309 $118 $18 $8
Total Captive
(Including
Quota Share) $40,412 $14,086 $1,010 $133
SmartHome 0-50% $127 $24
SmartHome 50-75% - -
SmartHome 75-99% 622 115
SmartHome Attached 703 154 $45
Total
SmartHome $3,900 $1,452 $293 $45
Reinsurance Progression Toward Attachment - Summary by Book Year (1)
March 31 December 31
($ in millions) 2008 2007
Original
Book RIF Progression Ever-to- Ever-to-
Book as of to Attach- Date Captive Date Captive
Year June 30 ment Current Incurred Benefit Current Incurred Benefit
(2): 2008 Point RIF Losses (3) RIF Losses (3)
Pre-2005 0-50% $1,444 $235 $2,209 $279
Pre-2005 50-75% 1,651 194 1,145 144
Pre-2005 75-99% 96 31 32 19
Pre-2005 Attached 18 5 $1 12 3 $1
Pre-2005
Total $26,334 $3,209 $465 $1 $3,398 $445 $1
2005 0-50% $536 $13 $697 $13
2005 50-75% 327 13 429 15
2005 75-99% 245 12 945 53
2005 Attached 881 69 $8 11 2 $-
2005 Total $3,333 $1,989 $107 $8 $2,082 $83 $-
2006 0-50% $632 $12 $851 $12
2006 50-75% 72 2 332 10
2006 75-99% 446 21 1,470 71
2006 Attached 1,593 110 $29 210 10 $1
2006 Total $3,547 $2,743 $145 $29 $2,863 $103 $1
2007 0-50% $3,900 $63 $4,058 $36
2007 50-75% 242 6 580 12
2007 75-99% 185 7 4 -
2007 Attached 644 24 $2 1 - $-
2007 Total $5,288 $4,971 $100 $2 $4,643 $48 $-
2008 0-50% $756 $- $- $-
2008 50-75% - - - -
2008 75-99% - - - -
2008 Attached - - $- - - $-
2008 Total $1,601 $756 $- $- $- $- $-
Quota
Share 0-50% $23 $- $20 $-
Quota
Share 50-75% 7 - 7 1
Quota
Share 75-99% - 1 - -
Quota
Share Attached 88 13 $5 90 9 $4
Quota
Share
Total $309 $118 $14 $5 $117 $10 $4
Total
Captive
(Including
Quota
Share) $40,412 $13,786 $831 $45 $13,103 $689 $6
SmartHome 0-50% $134 $23 $142 $23
SmartHome 50-75% - - 693 92
SmartHome 75-99% 657 101 - -
SmartHome Attached 764 133 $25 833 112 $10
Total
SmartHome $3,900 $1,555 $257 $25 $1,668 $227 $10
(1) Data presented in aggregate for all trusts for captives active at each
period end only. Actual trust attachment and exit points vary by
individual contract. Attachment is calculated at the contract/deal
level and is based on Total Incurred Losses which are defined as
claims paid ever-to-date plus loss reserves.
(2) Book year figures may include loans from additional periods pursuant
to reinsurance agreement terms and conditions.
(3) Captive Benefit is defined as ceded reserves at period end plus
ever-to-date claims paid by the trust.
Radian Group Inc.
Mortgage Insurance Supplemental Information
For the Quarter Ended and as of June 30, 2008
ALT-A
Exhibit P
Quarter Ended
($ in millions) June 30
2008 % 2007 %
Primary New Insurance
Written by FICO Score
<=619 $2 0.4% $84 1.2%
620-659 8 1.7% 1,090 15.1%
660-679 22 4.6% 1,221 16.9%
680-739 230 48.3% 3,383 46.8%
>=740 214 45.0% 1,448 20.0%
Total $476 100.0% $7,226 100.0%
Primary Risk in Force
by FICO Score
<=619 $36 0.7% $38 0.7%
620-659 654 12.4% 767 15.2%
660-679 772 14.7% 811 16.0%
680-739 2,509 47.7% 2,313 45.7%
>=740 1,287 24.5% 1,132 22.4%
Total $5,258 100.0% $5,061 100.0%
Primary Risk in Force by LTV
95.01% and above $364 6.9% $239 4.7%
90.01% to 95.00% 1,367 26.0% 1,299 25.7%
85.01% to 90.00% 2,187 41.6% 2,044 40.4%
85.00% and below 1,340 25.5% 1,479 29.2%
Total $5,258 100.0% $5,061 100.0%
Primary Risk in Force
by Policy Year
2004 and prior $984 18.7% $1,272 25.1%
2005 746 14.2% 966 19.1%
2006 1,178 22.4% 1,389 27.5%
2007 2,112 40.2% 1,434 28.3%
2008 238 4.5% - -
Total $5,258 100.0% $5,061 100.0%
Six Months Ended
($ in millions) June 30
2008 % 2007 %
Primary New Insurance
Written by FICO Score
<=619 $3 0.3% $92 0.6%
620-659 17 1.6% 1,679 11.6%
660-679 53 5.0% 2,386 16.4%
680-739 531 50.1% 7,023 48.3%
>=740 456 43.0% 3,352 23.1%
Total $1,060 100.0% $14,532 100.0%
Radian Group Inc.
Financial Services Supplemental Information
For the Quarter and Six Months Ended and as of June 30, 2008
Exhibit Q
Quarter Ended Six Months Ended
June 30 June 30
(In thousands ) 2008 2007 2008 2007
Investment in Affiliates-
Selected Information
C-BASS
Balance, beginning of period $- $444,591 $- $451,395
Net income for period - 23,209 - 16,405
Balance, end of period $- $467,800 $- $467,800
Sherman
Balance, beginning of period $116,929 $143,698 $104,315 $167,412
Net income for period 15,704 26,298 28,230 55,874
Dividends received 19,499 - 19,499 51,512
Other comprehensive (loss)
income (490) 1,741 (402) (37)
Balance, end of period $112,644 $171,737 $112,644 $171,737
Portfolio Information:
C-BASS
Servicing portfolio N/A $58,100,000 N/A
Total assets N/A 6,619,605 N/A
Servicing income N/A 48,621 N/A $91,747
Net interest income N/A 66,572 N/A 145,424
Total revenues N/A 101,099 N/A 140,080
Sherman
Total assets $2,432,122 $1,778,299
Total revenues $295,842 $285,439 $588,657 $569,227
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.
Forward Looking Statements
All statements made 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 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:
-- 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 could cause losses for our businesses 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;
-- economic changes or catastrophic events in geographic regions where our mortgage insurance or financial guaranty insurance in force is more concentrated;
-- our ability to successfully obtain additional capital, if necessary, to support our long-term liquidity needs and to protect our credit ratings and the financial strength ratings of Radian Guaranty Inc., our primary mortgage insurance subsidiary;
-- 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 U.S.;
-- our ability to maintain adequate risk-to-capital ratios, leverage ratios and surplus requirements in our mortgage insurance business in light of on-going losses in this business;
-- a decrease in the volume of municipal bonds, and other public finance and structured finance transactions that we insure, or a decrease in the volume of such transactions for which issuers or investors seek or demand financial guaranty insurance;
-- 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;
-- reduction in the volume of reinsurance business available to us from one or more of our primary financial guaranty insurer customers due to adverse changes in their ability to generate new profitable direct financial guaranty insurance or their need for us to reinsure their risk;
-- disruption in the servicing of mortgages covered by our insurance policies;
-- the aging of our mortgage insurance portfolio 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 Alternative-A ("Alt-A") and subprime loans, and adjustable rate products, such as adjustable rate mortgages and interest-only mortgages, which have resulted in increased losses in 2007 and 2008 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, in the rate of appreciation or depreciation of home values and changes in the mortgage insurance cancellation requirements of mortgage lenders and investors;
-- recapture of reinsurance business by the primary insurers under our financial guaranty reinsurance arrangements, which would reduce written and earned premiums in our financial guaranty business and correspondingly reduce the amount of capital required to be held against this risk;
-- 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 assigned to Radian Guaranty Inc., which are currently on CreditWatch Negative or negative outlook);
-- heightened competition for our mortgage insurance business from others such as the Federal Housing Administration and the Veterans' Administration or other private mortgage insurers (in particular those that have been assigned higher ratings from the major ratings agencies;
-- changes in the charters or business practices of Federal National Mortgage Association and Freddie Mac, the largest purchasers of mortgage loans that we insure, and our ability to retain our "Top Tier" eligibility requirement from both Freddie Mac and Fannie Mae;
-- heightened competition for financial guaranty business from other financial guaranty insurers, 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 formal 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, (ii) legislative and regulatory changes affecting demand for private mortgage insurance or financial guaranty insurance, or (iii) legislation and regulatory changes limiting or restricting our use of (or requirements for) additional capital, the products we may offer, the form in which we may execute the credit protection we provide or the aggregate notional amount of any product we may offer for any one transaction or in the aggregate;
-- 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, or the premium deficiency for our first- and 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;
-- volatility in our earnings caused by changes in the fair value of our derivative instruments and our need to reevaluate the premium deficiencies in our mortgage insurance business on a quarterly basis;
-- changes in accounting guidance from the Securities and Exchange Commission ("SEC") or the Financial Accounting Standards Board;
-- legal and other limitations on amounts we may receive from our subsidiaries as dividends or through tax and expense sharing arrangements with our subsidiaries; and
-- vulnerability to the performance of our strategic investments, including in particular, our investment in Sherman Financial 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 Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2007 as well as the material changes to these risks discussed in our Quarterly Reports on Form 10-Q. We caution you not to place undue reliance on these forward-looking statements, which are current only as of the date on which we issued 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 release 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, or media, Rick Gillespie, +1-215-231-1061, rick.gillespie@radian.com