News
Read about the progress we’re making across the mortgage and real estate services industry.
07/21/2009
Radian Announces Commutation of $9.8 Billion Ambac Portfolio
Reduces financial guaranty exposure by 10 percent; Provides capital support for MI business
"A key component of our capital plan is to provide capital support and
cash infusions over time to our core mortgage insurance business," noted
The Commutation Agreement provides, among other things, for Radian Asset
to make a
About Radian
Forward-Looking Statements
Some of the statements in this release constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. Generally, words such as "may," "will," "should," "could," "would," "anticipate," "expect," "intend," "estimate," "plan," "project," "continue," "goal" and "believe," or other variations on these and other similar expressions identify forward-looking statements. Forward-looking statements are only predictions and, as such, are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are based upon assumptions as to future events or our future financial performance that may not prove to be accurate. These statements speak only as of the date they were made, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Actual outcomes and results may differ materially from what is expressed or implied in these forward-looking statements. Factors that could cause actual results to differ from those projected in such forward-looking statements include, without limitation, the following:
-- changes in general financial and political conditions, such as a
deepening of the existing national economic recession, further
decreases in housing demand, mortgage originations or 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), a further reduction in the liquidity in the
capital markets and further contraction of credit markets, further
increases 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;
-- catastrophic events or further economic changes in geographic regions
where our mortgage insurance or financial guaranty insurance in force
is more concentrated;
-- our ability to successfully execute upon our internally sourced
capital plan (which depends, in part, on the performance of our
financial guaranty portfolio), and if necessary, to obtain additional
capital to support new business writings in our mortgage insurance
business and the long-term liquidity needs of our holding company
(including significant payment obligations in 2010 and 2011); and to
protect our credit ratings and the financial strength ratings of
Radian Guaranty Inc. , our principal mortgage insurance subsidiary,
from further downgrades;
-- a further decrease in the volume of home mortgage originations due to
reduced liquidity in the lending market, tighter underwriting
standards and the ongoing deterioration in housing markets throughout
the U.S.;
-- our ability to maintain adequate risk-to-capital ratios and surplus
requirements in our mortgage insurance business in light of on-going
losses in this business and in our financial guaranty portfolio;
-- our ability to continue to mitigate losses through increased levels of
rescissions and denials, which have positively impacted our provision
for losses;
-- the concentration of our mortgage insurance business among a
relatively small number of large customers;
-- 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 of adjustable rate
products, such as adjustable rate mortgages and interest-only
mortgages, which have resulted in increased losses and are expected to
result in further losses;
-- reduced opportunities for loss mitigation in markets where housing
values fail to appreciate or continue to decline;
-- changes in persistency rates of our mortgage insurance policies;
-- an increase in the risk profile of our existing mortgage insurance
portfolio due to mortgage refinancing in the current housing market;
-- further downgrades or threatened downgrades of, or other ratings
actions with respect to, our credit ratings or the ratings assigned by
the major rating agencies to any of our rated insurance subsidiaries
at any time (in particular, the credit rating of Radian Group Inc. and
the financial strength ratings assigned to Radian Guaranty Inc. );
-- 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 rating
agencies);
-- changes in the charters or business practices of Federal National
Mortgage Association ("Fannie Mae ") and Freddie Mac , the largest
purchasers of mortgage loans that we insure, and our ability to remain
an eligible provider to both Freddie Mac and Fannie Mae ;
-- 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 outcome of existing
investigations or the possibility of private lawsuits or other 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 (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 premium deficiencies for our mortgage insurance
businesses, 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;
-- the ability of our primary insurance customers in our financial
guaranty reinsurance business to provide appropriate surveillance and
to mitigate losses adequately with respect to our assumed insurance
portfolio;
-- volatility in our earnings caused by changes in the fair value of our
derivative instruments and our need to reevaluate the premium
deficiency in our mortgage insurance business on a quarterly basis;
-- changes in accounting guidance from the Securities and Exchange
Commission or the Financial Accounting Standards Board;
-- legal and other limitations on amounts we may receive from our
subsidiaries as dividends or through our tax -- and expense-sharing
arrangements with our subsidiaries; and
-- our investment in Sherman Financial Group LLC , which could be
negatively affected in the current credit environment if Sherman is
unable to maintain sufficient sources of funding for its business
activities or remain in compliance with its credit facilities.
For more information regarding these risks and uncertainties as well as
certain additional risks that we face, you should review the risks described
under Item 1A, "Risk Factors" under our Annual Report on Form 10-K for the
year ended
SOURCE
CONTACT: For investors
terri.williams-perry@radian.com
or
For the media
rick.gillespie@radian.com
both of
Web Site: http://www.radian.com