News
Read about the progress we’re making across the mortgage and real estate services industry.
08/03/2010
Radian Reports Second Quarter 2010 Financial Results
Mortgage insurance delinquencies declined for second consecutive quarter
New mortgage insurance written grew from first quarter levels
PHILADELPHIA, Aug 03, 2010 (BUSINESS WIRE) --
Radian Group Inc. (NYSE: RDN) today reported a net loss for the quarter ended June 30, 2010, of $475.1 million, or $4.31 per diluted share, which reflects a pre-tax loss from the change in fair value of derivatives of $524.6 million, or $3.09 per share on an after-tax basis. This compares to net income of $231.9 million, or $2.82 per diluted share, for the prior-year quarter. Book value per share at June 30, 2010, was $13.40.
"Our second quarter results include significant fair value impact from the tightening of Radian's credit spread and continued uncertainty regarding the aged delinquencies in our mortgage insurance book," said Chief Executive Officer S.A. Ibrahim. "However, we are pleased with the signs of credit trend stabilization in both our mortgage insurance and financial guaranty businesses, which we believe are integral to Radian's future success and long-term growth."
Ibrahim added, "Radian grew its new insurance written to $2.7 billion, a meaningful jump from the first quarter of the year. We have provided our lending partners with tools to compare the competitive advantage of Radian's products to FHA mortgage insurance, which has contributed to our increase in new business as we seek to recapture market share from FHA."
SECOND QUARTER HIGHLIGHTS
- The net loss in the second quarter was primarily driven by a $524.6 million pre-tax loss recognized on derivatives resulting mainly from an improved market perception of Radian's credit risk that significantly tightened Radian's credit spread, and from the widening of general corporate credit spreads. Unrealized losses reflected in our June 30, 2010, derivative liability using fair value estimates are significantly greater than the company's expected credit losses on these derivative exposures.
- The risk-to-capital ratio for Radian Guaranty Inc., the company's primary mortgage insurance subsidiary, was 17.9:1 at June 30, 2010, compared to a ratio of 16.9:1 at March 31, 2010, and 15.9:1 at June 30, 2009. Radian Group raised $526 million from its May stock offering, and contributed $100 million to Radian Guaranty during the quarter.
- The number of primary and pool delinquent loans decreased by 4.1 percent and 4.3 percent, respectively, from the first quarter of 2010, which was the second consecutive quarterly decline in delinquent loans. In addition, new delinquencies continued to decline slightly in July.
- The mortgage insurance provision for losses was $427.6 million in the second quarter, which includes a modest increase in mortgage insurance reserves of $59.7 million since March 31, 2010, to $3.7 billion. This increase in reserves, when combined with the decline in delinquent loans, further strengthens Radian's reserve per delinquency for both primary and pool loans. The change in reserve resulted from several factors including the continued aging of the delinquency portfolio, second loss deals breaching subordination levels, a decrease in the company's estimate for future rescissions and denials and the decline in delinquencies during the quarter.
- Total mortgage insurance claims paid were $337.3 million for the second quarter, which consisted of $332.8 million of first-liens and $4.5 million of second-liens. For 2010, the company continues to expect mortgage insurance claims paid to be approximately $1.5 billion.
- New mortgage insurance written (NIW) was $2.7 billion in the second quarter, compared to $1.9 billion in the first quarter, and continued to consist of loans with excellent risk characteristics. The company maintained a market share of 21 percent.
- As of June 30, 2010, approximately 15,000 Radian-insured primary loans were in a Home Affordable Modification Program (HAMP) trial period, representing approximately 11 percent of primary delinquencies, and nearly 13,000 Radian-insured loans had completed the HAMP program. In addition, nearly 25 percent of cures reported to Radian in the second quarter were the result of loan modifications, including HAMP.
-
Radian Asset Assurance Inc. continues to serve as an important source
of capital support for Radian Guaranty and is expected to continue to
provide Radian Guaranty with cash infusions over time.
- As of June 30, 2010, Radian Asset had approximately $1.0 billion in statutory surplus with an additional $1.4 billion in claims-paying resources.
- In June, Radian Asset paid an ordinary dividend of approximately $69 million to Radian Guaranty and expects to pay another dividend of approximately $60 million in 2011.
CONFERENCE CALL
Radian will discuss each of these items in its conference call today, Tuesday, August 3, 2010, at 10:00 a.m. Eastern time. The conference call will be broadcast live over the Internet at http://www.radian.biz/page?name=Webcasts or at www.radian.com. The call may also be accessed by dialing 800-230-1092 inside the U.S., or 612-288-0329 for international callers, using passcode 165481 or by referencing Radian.
A replay of the webcast will be available on 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 approximately two and a half hours after the call ends for a period of 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 165481.
In addition to the information provided in the company's earnings news release, other statistical and financial information, which is expected to be referred to during the conference call, will be available on Radian's website under Investors >Quarterly Results, or by clicking on http://www.radian.biz/page?name=QuarterlyResults.
About Radian
Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia, provides private mortgage insurance and related risk mitigation products and services to mortgage lenders nationwide through its principal operating subsidiary, Radian Guaranty Inc. These services help promote and preserve homeownership opportunities for homebuyers, while protecting lenders from default-related losses on residential first mortgages and facilitating the sale of low-downpayment mortgages in the secondary market. Additional information may be found at 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/page?name=FinancialReportsCorporate.
| Exhibit A: | Condensed Consolidated Statements of Income |
| Exhibit B: | Condensed Consolidated Balance Sheets |
| Exhibit C: | Segment Information Quarter Ended June 30, 2010 |
| Exhibit D: |
Segment Information Quarter Ended June 30, 2009 |
| Exhibit E: | Segment Information Six Months Ended June 30, 2010 |
| Exhibit F: | Segment Information Six Months Ended June 30, 2009 |
| Exhibit G: |
Financial Guaranty Supplemental Information - For the Quarter and Six Months Ended and as of June 30, 2010 |
| Exhibit H: |
Financial Guaranty Supplemental Information - |
| Exhibit I: |
Mortgage Insurance Supplemental Information - For the Quarter and Six Months Ended and as of June 30, 2010 New Insurance Written and Risk Written |
| Exhibit J: |
Mortgage Insurance Supplemental Information - For the Quarter and Six Months Ended and as of June 30, 2010 Insurance in Force and Risk in Force |
| Exhibit K: |
Mortgage Insurance Supplemental Information - For the Quarter and Six Months Ended and as of June 30, 2010 Risk in Force by LTV and Policy Year and other Risk in Force |
| Exhibit L: |
Mortgage Insurance Supplemental Information - For the Quarter and Six Months Ended and as of June 30, 2010 Claims and Reserves |
| Exhibit M: |
Mortgage Insurance Supplemental Information - For the Quarter and Six Months Ended and as of June 30, 2010 Default Statistics |
| Exhibit N: |
Mortgage Insurance Supplemental Information - For the Quarter and Six Months Ended and as of June 30, 2010 Net Premiums Written and Earned, Smart Home, Captives and Persistency |
| Exhibit O: |
Mortgage Insurance Supplemental Information - For the Quarter Ended and as of June 30, 2010 Reinsurance Progression Toward Attachment - Summary by Book Year |
| Exhibit P: |
Mortgage Insurance Supplemental Information - For the Quarter Ended and as of June 30, 2010 Modified Pool |
| Exhibit Q: |
Mortgage Insurance Supplemental Information - For the Quarter and Six Months Ended and as of June 30, 2010 Alt-A Risk in Force |
| Radian Group Inc. and Subsidiaries | ||||||||||||||||
| Condensed Consolidated Statements of Income | ||||||||||||||||
| Exhibit A | ||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||
| June 30 | June 30 | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (In thousands, except per-share data) | ||||||||||||||||
| Revenues: | ||||||||||||||||
| Net premiums written - insurance | $ | 159,901 | $ | 161,901 | $ | 315,402 | $ | 318,657 | ||||||||
| Net premiums earned - insurance | $ | 203,446 | $ | 193,629 | $ | 401,714 | $ | 404,844 | ||||||||
| Net investment income | 48,619 | 53,251 | 93,977 | 109,534 | ||||||||||||
| Change in fair value of derivative instruments | (524,606 | ) | 272,318 | (602,560 | ) | (12,098 | ) | |||||||||
| Net (losses) gains on other financial instruments | (5,938 | ) | 54,384 | (49,554 | ) | 79,454 | ||||||||||
| Net impairment losses recognized in earnings | (38 | ) | (46 | ) | (56 | ) | (870 | ) | ||||||||
| Gain on sale of affiliate | 34,815 | - | 34,815 | - | ||||||||||||
| Other income | (2,072 | ) | 3,888 | 3,703 | 8,020 | |||||||||||
| Total revenues | (245,774 | ) | 577,424 | (117,961 | ) | 588,884 | ||||||||||
| Expenses: | ||||||||||||||||
| Provision for losses | 435,166 | 132,750 | 979,046 | 459,504 | ||||||||||||
| Provision for premium deficiency | (7,354 | ) | 2,184 | (8,585 | ) | (46,000 | ) | |||||||||
| Policy acquisition costs | 16,797 | 25,967 | 31,665 | 39,921 | ||||||||||||
| Other operating expenses | 35,165 | 55,635 | 100,221 | 107,237 | ||||||||||||
| Interest expense | 8,245 | 12,295 | 19,049 | 24,594 | ||||||||||||
| Total expenses | 488,019 | 228,831 | 1,121,396 | 585,256 | ||||||||||||
| Equity in net income of affiliates | 6,570 | 5,110 | 14,668 | 15,662 | ||||||||||||
| Pretax (loss) income | (727,223 | ) | 353,703 | (1,224,689 | ) | 19,290 | ||||||||||
| Income tax (benefit) provision | (252,143 | ) | 121,828 | (439,254 | ) | 4,852 | ||||||||||
| Net (loss) income | $ | (475,080 | ) | $ | 231,875 | $ | (785,435 | ) | $ | 14,438 | ||||||
| Diluted net (loss) income per share (1) | $ | (4.31 | ) | $ | 2.82 | $ | (8.15 | ) | $ | 0.18 | ||||||
| (1) Weighted average shares outstanding (In thousands) | ||||||||||||||||
| Average common shares outstanding | 82,260 | 81,396 | 82,332 | 81,400 | ||||||||||||
| Increase in average shares-common stock offering | 28,022 | - | 14,088 | - | ||||||||||||
| Increase in shares-common stock equivalents-diluted basis | - | 844 | - | 836 | ||||||||||||
| Weighted average shares outstanding | 110,282 | 82,240 | 96,420 | 82,236 | ||||||||||||
| 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 | ||||||||||||
| June 30 | December 31 | June 30 | ||||||||||
| (In thousands, except per-share data) | 2010 | 2009 | 2009 | |||||||||
| Assets: | ||||||||||||
| Cash and investments | $ | 7,277,607 | $ | 6,214,376 | $ | 6,459,233 | ||||||
| Investment in affiliates | 133 | 121,480 | 108,767 | |||||||||
| Deferred policy acquisition costs | 148,623 | 160,281 | 208,882 | |||||||||
| Deferred income taxes, net | 815,674 | 440,948 | 368,281 | |||||||||
| Reinsurance recoverables | 585,938 | 628,572 | 570,245 | |||||||||
| Derivative assets | 21,977 | 68,534 | 179,837 | |||||||||
| Other assets | 524,501 | 442,115 | 560,257 | |||||||||
| Total assets | $ | 9,374,453 | $ | 8,076,306 | $ | 8,455,502 | ||||||
| Liabilities and stockholders' equity: | ||||||||||||
| Unearned premiums | $ | 736,675 | $ | 823,621 | $ | 1,120,359 | ||||||
| Reserve for losses and loss adjustment expenses | 3,781,240 | 3,578,982 | 3,304,236 | |||||||||
| Reserve for premium deficiency | 16,772 | 25,357 | 40,861 | |||||||||
| Long-term debt | 665,381 | 698,222 | 856,848 | |||||||||
| VIE debt | 627,638 | 296,080 | 283,242 | |||||||||
| Derivative liabilities | 748,094 | 238,697 | 379,270 | |||||||||
| Payable for securities purchased | 660,805 | 28,921 | 11,667 | |||||||||
| Other liabilities | 358,219 | 381,432 | 392,765 | |||||||||
| Total liabilities | 7,594,824 | 6,071,312 | 6,389,248 | |||||||||
| Common stock | 150 | 100 | 99 | |||||||||
| Additional paid-in capital | 1,002,501 | 473,759 | 469,298 | |||||||||
| Retained earnings | 816,172 | 1,602,143 | 1,764,878 | |||||||||
| Accumulated other comprehensive loss | (39,194 | ) | (71,008 | ) | (168,021 | ) | ||||||
| Total common stockholders' equity | 1,779,629 | 2,004,994 | 2,066,254 | |||||||||
| Total liabilities and stockholders' equity | $ | 9,374,453 | $ | 8,076,306 | $ | 8,455,502 | ||||||
| Book value per share | $ | 13.40 | $ | 24.22 | $ | 25.12 | ||||||
| Radian Group Inc. and Subsidiaries | ||||||||||||||||
| Segment Information | ||||||||||||||||
| Quarter Ended June 30, 2010 | ||||||||||||||||
| Exhibit C | ||||||||||||||||
| (In thousands) | Mortgage Insurance |
Financial Guaranty |
Financial Services |
Total | ||||||||||||
| Revenues: | ||||||||||||||||
| Net premiums written - insurance | $ | 167,909 | $ | (8,008 | ) | $ |
- |
$ | 159,901 | |||||||
| Net premiums earned - insurance | $ | 179,992 | $ | 23,454 | $ | - | $ | 203,446 | ||||||||
| Net investment income | 28,544 | 20,075 | - | 48,619 | ||||||||||||
| Change in fair value of derivative instruments | (1,310 | ) | (523,296 | ) | - | (524,606 | ) | |||||||||
| Net gains (losses) on other financial instruments | 26,468 | (32,406 | ) | - | (5,938 | ) | ||||||||||
| Net impairment losses recognized in earnings | (38 | ) | - | - | (38 | ) | ||||||||||
| Gain on sale of affiliate | - | - | 34,815 | 34,815 | ||||||||||||
| Other income | 1,623 | (3,695 | ) | - | (2,072 | ) | ||||||||||
| Total revenues | 235,279 | (515,868 | ) | 34,815 | (245,774 | ) | ||||||||||
| Expenses: | ||||||||||||||||
| Provision for losses | 427,622 | 7,544 | - | 435,166 | ||||||||||||
| Provision for premium deficiency | (7,354 | ) | - | - | (7,354 | ) | ||||||||||
| Policy acquisition costs | 12,113 | 4,684 | - | 16,797 | ||||||||||||
| Other operating expenses | 25,639 | 9,476 | 50 | 35,165 | ||||||||||||
| Interest expense | 1,549 | 6,696 | - | 8,245 | ||||||||||||
| Total expenses | 459,569 | 28,400 | 50 | 488,019 | ||||||||||||
| Equity in net income of affiliates | - | - | 6,570 | 6,570 | ||||||||||||
| Pretax (loss) income | (224,290 | ) | (544,268 | ) | 41,335 | (727,223 | ) | |||||||||
| Income tax (benefit) provision | (71,763 | ) | (194,848 | ) | 14,468 | (252,143 | ) | |||||||||
| Net (loss) income | $ | (152,527 | ) | $ | (349,420 | ) | $ | 26,867 | $ | (475,080 | ) | |||||
| Cash and investments | $ | 3,886,819 | $ | 3,390,788 | $ | - | $ | 7,277,607 | ||||||||
| Deferred policy acquisition costs | 35,220 | 113,403 | - | 148,623 | ||||||||||||
| Total assets | 5,393,030 | 3,981,423 | - | 9,374,453 | ||||||||||||
| Unearned premiums | 207,354 | 529,321 | - | 736,675 | ||||||||||||
| Reserve for losses and loss adjustment expenses | 3,656,746 | 124,494 | - | 3,781,240 | ||||||||||||
| Derivative liabilities | 358 | 747,736 | - | 748,094 | ||||||||||||
| VIE debt | 253,178 | 374,460 | - | 627,638 | ||||||||||||
| Radian Group Inc. and Subsidiaries | ||||||||||||||||
| Segment Information | ||||||||||||||||
| Quarter Ended June 30, 2009 | ||||||||||||||||
| Exhibit D | ||||||||||||||||
| (In thousands) | Mortgage Insurance |
Financial Guaranty |
Financial Services |
Total | ||||||||||||
| Revenues: | ||||||||||||||||
| Net premiums written - insurance | $ | 154,919 | $ | 6,982 |
$ |
- |
$ | 161,901 | ||||||||
| Net premiums earned - insurance | $ | 170,047 | $ | 23,582 | $ | - | $ | 193,629 | ||||||||
| Net investment income | 32,298 | 20,951 | 2 | 53,251 | ||||||||||||
| Change in fair value of derivative instruments | (6,557 | ) | 278,875 | - | 272,318 | |||||||||||
| Net gains on other financial instruments | 12,590 | 41,794 | - | 54,384 | ||||||||||||
| Net impairment losses recognized in earnings | (46 | ) | - | - | (46 | ) | ||||||||||
| Other income | 3,748 | 66 | 74 | 3,888 | ||||||||||||
| Total revenues | 212,080 | 365,268 | 76 | 577,424 | ||||||||||||
| Expenses: | ||||||||||||||||
| Provision for losses | 142,802 | (10,052 | ) | - | 132,750 | |||||||||||
| Provision for premium deficiency | 2,184 | - | - | 2,184 | ||||||||||||
| Policy acquisition costs | 7,921 | 18,046 | - | 25,967 | ||||||||||||
| Other operating expenses | 35,590 | 19,909 | 136 | 55,635 | ||||||||||||
| Interest expense | 2,619 | 9,676 | - | 12,295 | ||||||||||||
| Total expenses | 191,116 | 37,579 | 136 | 228,831 | ||||||||||||
| Equity in net income of affiliates | - | - | 5,110 | 5,110 | ||||||||||||
| Pretax income | 20,964 | 327,689 | 5,050 | 353,703 | ||||||||||||
| Income tax provision | 7,948 | 112,019 | 1,861 | 121,828 | ||||||||||||
| Net income | $ | 13,016 | $ | 215,670 | $ | 3,189 | $ | 231,875 | ||||||||
| Cash and investments | $ | 3,919,403 | $ | 2,539,830 | $ | - | $ | 6,459,233 | ||||||||
| Deferred policy acquisition costs | 28,674 | 180,208 | - | 208,882 | ||||||||||||
| Total assets | 5,073,729 | 3,259,249 | 122,524 | 8,455,502 | ||||||||||||
| Unearned premiums | 304,336 | 816,023 | - | 1,120,359 | ||||||||||||
| Reserve for losses and loss adjustment expenses | 3,122,444 | 181,792 | - | 3,304,236 | ||||||||||||
| Derivative liabilities | 23,086 | 356,184 | - | 379,270 | ||||||||||||
| VIE debt | 283,242 | - | - | 283,242 | ||||||||||||
| Radian Group Inc. and Subsidiaries | ||||||||||||||||
| Segment Information | ||||||||||||||||
| Six Months Ended June 30, 2010 | ||||||||||||||||
| Exhibit E | ||||||||||||||||
| (In thousands) | Mortgage Insurance |
Financial Guaranty |
Financial Services |
Total | ||||||||||||
| Revenues: | ||||||||||||||||
| Net premiums written - insurance | $ | 324,941 | $ | (9,539 | ) |
$ |
- |
$ | 315,402 | |||||||
| Net premiums earned - insurance | $ | 357,331 | $ | 44,383 | $ | - | $ | 401,714 | ||||||||
| Net investment income | 54,903 | 39,074 | - | 93,977 | ||||||||||||
| Change in fair value of derivative instruments | (1,033 | ) | (601,527 | ) | - | (602,560 | ) | |||||||||
| Net gains (losses) on other financial instruments | 25,049 | (74,603 | ) | - | (49,554 | ) | ||||||||||
| Net impairment losses recognized in earnings | (56 | ) | - | - | (56 | ) | ||||||||||
| Gain on sale of affiliate | - | - | 34,815 | 34,815 | ||||||||||||
| Other income | 3,422 | 218 | 63 | 3,703 | ||||||||||||
| Total revenues | 439,616 | (592,455 | ) | 34,878 | (117,961 | ) | ||||||||||
| Expenses: | ||||||||||||||||
| Provision for losses | 956,713 | 22,333 | - | 979,046 | ||||||||||||
| Provision for premium deficiency | (8,585 | ) | - | - | (8,585 | ) | ||||||||||
| Policy acquisition costs | 22,617 | 9,048 | - | 31,665 | ||||||||||||
| Other operating expenses | 71,872 | 28,149 | 200 | 100,221 | ||||||||||||
| Interest expense | 3,669 | 15,380 | - | 19,049 | ||||||||||||
| Total expenses | 1,046,286 | 74,910 | 200 | 1,121,396 | ||||||||||||
| Equity in net income of affiliates | - | 78 | 14,590 | 14,668 | ||||||||||||
| Pretax (loss) income | (606,670 | ) | (667,287 | ) | 49,268 | (1,224,689 | ) | |||||||||
| Income tax (benefit) provision | (217,610 | ) | (238,889 | ) | 17,245 | (439,254 | ) | |||||||||
| Net (loss) income | $ | (389,060 | ) | $ | (428,398 | ) | $ | 32,023 | $ | (785,435 | ) | |||||
| Radian Group Inc. and Subsidiaries | ||||||||||||||||
| Segment Information | ||||||||||||||||
| Six Months Ended June 30, 2009 | ||||||||||||||||
| Exhibit F | ||||||||||||||||
| (In thousands) | Mortgage Insurance |
Financial Guaranty |
Financial Services |
Total | ||||||||||||
| Revenues: | ||||||||||||||||
| Net premiums written - insurance | $ | 316,878 | $ | 1,779 |
$ |
- |
$ | 318,657 | ||||||||
| Net premiums earned - insurance | $ | 347,930 | $ | 56,914 | $ | - | $ | 404,844 | ||||||||
| Net investment income | 63,643 | 45,889 | 2 | 109,534 | ||||||||||||
| Change in fair value of derivative instruments | (35,133 | ) | 23,035 | - | (12,098 | ) | ||||||||||
| Net gains on other financial instruments | 25,667 | 53,787 | - | 79,454 | ||||||||||||
| Net impairment losses recognized in earnings | (847 | ) | (23 | ) | - | (870 | ) | |||||||||
| Other income | 7,566 | 219 | 235 | 8,020 | ||||||||||||
| Total revenues | 408,826 | 179,821 | 237 | 588,884 | ||||||||||||
| Expenses: | ||||||||||||||||
| Provision for losses | 464,486 | (4,982 | ) | - | 459,504 | |||||||||||
| Provision for premium deficiency | (46,000 | ) | - | - | (46,000 | ) | ||||||||||
| Policy acquisition costs | 13,660 | 26,261 | - | 39,921 | ||||||||||||
| Other operating expenses | 71,284 | 35,742 | 211 | 107,237 | ||||||||||||
| Interest expense | 8,313 | 16,281 | - | 24,594 | ||||||||||||
| Total expenses | 511,743 | 73,302 | 211 | 585,256 | ||||||||||||
| Equity in net income of affiliates | - | - | 15,662 | 15,662 | ||||||||||||
| Pretax (loss) income | (102,917 | ) | 106,519 | 15,688 | 19,290 | |||||||||||
| Income tax (benefit) provision | (27,136 | ) | 26,249 | 5,739 | 4,852 | |||||||||||
| Net (loss) income | $ | (75,781 | ) | $ | 80,270 | $ | 9,949 | $ | 14,438 | |||||||
| Radian Group Inc. | ||||||||||||||||||
| Financial Guaranty Supplemental Information | ||||||||||||||||||
| For the Quarter and Six Months Ended and as of June 30, 2010 | ||||||||||||||||||
| Exhibit G | ||||||||||||||||||
| (In thousands) | Quarter Ended June 30 |
Six Months Ended June 30 |
||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||||
| Net Premiums Earned: | ||||||||||||||||||
| Public finance direct | $ | 15,897 | $ | 11,935 | $ | 28,233 | $ | 26,387 | ||||||||||
| Public finance reinsurance | 6,196 | 18,949 | 13,109 | 27,226 | ||||||||||||||
| Structured direct | 443 | 2,058 | 1,160 | 3,835 | ||||||||||||||
| Structured reinsurance | 932 | 5,655 | 1,847 | 14,296 | ||||||||||||||
| Trade credit reinsurance | 3 | 39 | 51 | 135 | ||||||||||||||
| Net Premiums Earned - insurance | 23,471 | 38,636 | 44,400 | 71,879 | ||||||||||||||
| Impact of commutations | (17 | ) | (15,054 | ) | (17 | ) | (14,965 | ) | ||||||||||
| Total Net Premiums Earned - insurance | $ | 23,454 | $ | 23,582 | $ | 44,383 | $ | 56,914 | ||||||||||
| Refundings included in earned premium | $ | 10,205 | $ | 10,479 | $ | 19,738 | $ | 23,523 | ||||||||||
| Claims paid: | ||||||||||||||||||
| Trade credit reinsurance | $ | (2 | ) | $ | 693 | $ | 1,084 | $ | 871 | |||||||||
| Financial Guaranty | 21,841 | 23,876 | 25,198 | 38,785 | ||||||||||||||
| Total | $ | 21,839 | $ | 24,569 | $ | 26,282 | $ | 39,656 | ||||||||||
|
Impact of adoption of amendment to accounting standard regarding VIEs on January 1, 2010: |
||||||||||||||||||
| (In millions) | ||||||||||||||||||
| Balance Sheet Increase (Decrease): | ||||||||||||||||||
| Investments | $ | 89.4 | ||||||||||||||||
| Other assets | 121.0 | |||||||||||||||||
| VIE debt | 321.0 | |||||||||||||||||
| Derivative liabilities | (128.6 | ) | ||||||||||||||||
| Derivative liabilities-VIE | 17.4 | |||||||||||||||||
| Other liabilities | 0.6 | |||||||||||||||||
| Income Statement Increase (Decrease): | ||||||||||||||||||
| Net investment income | $ | 2.7 | ||||||||||||||||
| Net (losses) gains on other financial instruments | (60.9 | ) | ||||||||||||||||
| Change in fair value of derivative instruments | 57.5 | |||||||||||||||||
| Other income | 3.9 | |||||||||||||||||
| Other operating expenses | 2.0 | |||||||||||||||||
| Interest expense | 1.2 | |||||||||||||||||
| Radian Group Inc. | |||||||||||||
| Financial Guaranty Supplemental Information | |||||||||||||
| For the Quarter and Six Months Ended and as of June 30, 2010 | |||||||||||||
| Exhibit H | |||||||||||||
| ($ in thousands, except ratios) | June 30 2010 |
December 31 2009 |
June 30 2009 |
||||||||||
|
Statutory Information: |
|||||||||||||
| Capital and surplus | $ |
974,174 |
$ |
1,062,637 |
$ |
914,458 |
|||||||
| Contingency reserve | 400,615 | 366,108 | 504,464 | ||||||||||
| Qualified statutory capital | 1,374,789 | 1,428,745 | 1,418,922 | ||||||||||
| Unearned premium reserve | 550,952 | 595,819 | 690,512 | ||||||||||
| Loss and loss expense reserve | 102,831 | 128,754 | 104,441 | ||||||||||
| Total statutory policyholders' reserves | 2,028,572 | 2,153,318 | 2,213,875 | ||||||||||
| Present value of installment premiums | 227,634 | 260,662 | 389,730 | ||||||||||
| Soft capital facilities | 150,000 | 150,000 | 150,000 | ||||||||||
| Total statutory claims paying resources | $ | 2,406,206 | $ | 2,563,980 | $ | 2,753,605 | |||||||
| Net debt service outstanding | $ | 102,502,428 | $ | 110,207,923 | $ | 131,821,119 | |||||||
| Capital leverage ratio (1) | 75 | 77 | 93 | ||||||||||
| Claims paying leverage ratio (2) | 43 | 43 | 48 | ||||||||||
| Net par outstanding by product: | |||||||||||||
| Public finance direct | $ | 16,718,347 | $ | 17,536,616 | $ | 18,329,451 | |||||||
| Public finance reinsurance | 22,774,238 | 24,180,588 | 32,830,674 | ||||||||||
| Structured direct | 39,902,271 | 43,528,366 | 44,679,632 | ||||||||||
| Structured reinsurance | 1,872,802 | 2,174,433 | 4,816,874 | ||||||||||
| Total (3) | $ | 81,267,658 | $ | 87,420,003 | $ | 100,656,631 | |||||||
|
Reserve for losses and LAE-GAAP Basis: |
|||||||||||||
| Financial Guaranty | $ | 119,256 | $ | 121,833 | $ | 171,459 | |||||||
| Trade Credit | 5,238 | 6,611 | 10,333 | ||||||||||
| Total | $ | 124,494 | $ | 128,444 | $ | 181,792 | |||||||
| (1) The capital leverage ratio is derived by dividing net debt service outstanding by qualified statutory capital. |
| (2) The claims paying leverage ratio is derived by dividing net debt service outstanding by total statutory claims paying resources. |
| (3) Included in public finance net par outstanding is $2.0 billion, $2.2 billion and $3.1 billion at June 30, 2010, December 31, 2009 and June 30, 2009, respectively, for legally defeased bond issues where our financial guaranty policy has not been extinguished but cash or securities have been deposited in an escrow account for the benefit of bondholders. The accounting standard for financial guarantee insurance contracts requires that these contracts continue to be accounted for as outstanding contracts despite the elimination of substantially all risk. |
| Radian Group Inc. | |||||||||||||||||||||||||||||||
| Mortgage Insurance Supplemental Information | |||||||||||||||||||||||||||||||
| For the Quarter and Six Months Ended and as of June 30, 2010 | |||||||||||||||||||||||||||||||
| Exhibit I | |||||||||||||||||||||||||||||||
| Quarter Ended | Six Months Ended | ||||||||||||||||||||||||||||||
| ($ in millions) | June 30 | June 30 | |||||||||||||||||||||||||||||
| 2010 | % | 2009 | % | 2010 | % | 2009 | % | ||||||||||||||||||||||||
|
Primary new insurance written |
|||||||||||||||||||||||||||||||
| Flow | $ | 2,654 | 100.0 | % | $ | 5,499 | 100.0 | % | $ | 4,551 | 100.0 | % | $ | 11,109 | 100.0 | % | |||||||||||||||
| Total Primary | $ | 2,654 | 100.0 | % | $ | 5,499 | 100.0 | % | $ | 4,551 | 100.0 | % | $ | 11,109 | 100.0 | % | |||||||||||||||
|
Total |
|||||||||||||||||||||||||||||||
| Prime | $ | 2,653 | 100.0 | % | $ | 5,492 | 99.9 | % | $ | 4,549 | 100.0 | % | $ | 11,089 | 99.8 | % | |||||||||||||||
| Alt-A | - | - | 1 | - | - | - | 10 | 0.1 | % | ||||||||||||||||||||||
| A minus and below | 1 | - | 6 | 0.1 | % | 2 | - | 10 | 0.1 | % | |||||||||||||||||||||
| Total Flow | $ | 2,654 | 100.0 | % | $ | 5,499 | 100.0 | % | $ | 4,551 | 100.0 | % | $ | 11,109 | 100.0 | % | |||||||||||||||
|
Total primary new insurance written by FICO score |
|||||||||||||||||||||||||||||||
|
Total |
|||||||||||||||||||||||||||||||
| >=740 | $ | 2,100 | 79.1 | % | $ | 4,009 | 72.9 | % | $ | 3,561 | 78.2 | % | $ | 7,894 | 71.1 | % | |||||||||||||||
|
680-739 |
552 | 20.8 | % | 1,402 | 25.5 | % | 987 | 21.7 | % | 2,991 | 26.9 | % | |||||||||||||||||||
|
620-679 |
2 | 0.1 | % | 87 | 1.6 | % | 3 | 0.1 | % | 223 | 2.0 | % | |||||||||||||||||||
| <=619 | - | - | 1 | - | - | - | 1 | - | |||||||||||||||||||||||
| Total Flow | $ | 2,654 | 100.0 | % | $ | 5,499 | 100.0 | % | $ | 4,551 | 100.0 | % | $ | 11,109 | 100.0 | % | |||||||||||||||
|
Percentage of primary new insurance written |
|||||||||||||||||||||||||||||||
| Refinances | 22 | % | 46 | % | 27 | % | 47 | % | |||||||||||||||||||||||
| 95.01% LTV and above | 0.2 | % | - | 0.4 | % | 0.1 | % | ||||||||||||||||||||||||
| ARMs | |||||||||||||||||||||||||||||||
| Less than 5 years | 0.2 | % | 0.1 | % | 0.1 | % | 0.1 | % | |||||||||||||||||||||||
| 5 years and longer | 7.0 | % | 0.4 | % | 6.2 | % | 0.4 | % | |||||||||||||||||||||||
|
Primary risk written |
|||||||||||||||||||||||||||||||
| Flow | $ | 641 | 100.0 | % | $ | 1,178 | 100.0 | % | $ | 1,070 | 100.0 | % | $ | 2,374 | 100.0 | % | |||||||||||||||
| Total Primary | $ | 641 | 100.0 | % | $ | 1,178 | 100.0 | % | $ | 1,070 | 100.0 | % | $ | 2,374 | 100.0 | % | |||||||||||||||
| Radian Group Inc. | |||||||||||||||
| Mortgage Insurance Supplemental Information | |||||||||||||||
| For the Quarter and Six Months Ended and as of June 30, 2010 | |||||||||||||||
| Exhibit J | |||||||||||||||
| ($ in millions) | June 30 | June 30 | |||||||||||||
| 2010 | % | 2009 | % | ||||||||||||
|
Primary insurance in force |
|||||||||||||||
| Flow | $ | 118,486 | 86.3 | % | $ | 123,412 | 79.5 | % | |||||||
| Structured | 18,799 | 13.7 | % | 31,845 | 20.5 | % | |||||||||
| Total Primary | $ | 137,285 | 100.0 | % | $ | 155,257 | 100.0 | % | |||||||
| Prime | $ | 108,488 | 79.0 | % | $ | 113,749 | 73.3 | % | |||||||
| Alt-A | 19,580 | 14.3 | % | 30,918 | 19.9 | % | |||||||||
| A minus and below | 9,217 | 6.7 | % | 10,590 | 6.8 | % | |||||||||
| Total Primary | $ | 137,285 | 100.0 | % | $ | 155,257 | 100.0 | % | |||||||
|
Primary risk in force |
|||||||||||||||
| Flow | $ | 29,188 | 89.4 | % | $ | 30,574 | 87.7 | % | |||||||
| Structured | 3,477 | 10.6 | % | 4,272 | 12.3 | % | |||||||||
| Total Primary | $ | 32,665 | 100.0 | % | $ | 34,846 | 100.0 | % | |||||||
| Flow | |||||||||||||||
| Prime | $ | 24,615 | 84.3 | % | $ | 25,269 | 82.7 | % | |||||||
| Alt-A | 2,873 | 9.9 | % | 3,372 | 11.0 | % | |||||||||
| A minus and below | 1,700 | 5.8 | % | 1,933 | 6.3 | % | |||||||||
| Total Flow | $ | 29,188 | 100.0 | % | $ | 30,574 | 100.0 | % | |||||||
| Structured | |||||||||||||||
| Prime | $ | 1,926 | 55.4 | % | $ | 2,231 | 52.2 | % | |||||||
| Alt-A | 945 | 27.2 | % | 1,340 | 31.4 | % | |||||||||
| A minus and below | 606 | 17.4 | % | 701 | 16.4 | % | |||||||||
| Total Structured | $ | 3,477 | 100.0 | % | $ | 4,272 | 100.0 | % | |||||||
| Total | |||||||||||||||
| Prime | $ | 26,541 | 81.2 | % | $ | 27,500 | 78.9 | % | |||||||
| Alt-A | 3,818 | 11.7 | % | 4,712 | 13.5 | % | |||||||||
| A minus and below | 2,306 | 7.1 | % | 2,634 | 7.6 | % | |||||||||
| Total Primary | $ | 32,665 | 100.0 | % | $ | 34,846 | 100.0 | % | |||||||
|
Total primary risk in force by FICO score |
|||||||||||||||
| Flow | |||||||||||||||
| >=740 | $ | 10,712 | 36.7 | % | $ | 10,225 | 33.4 | % | |||||||
|
680-739 |
10,354 | 35.5 | % | 11,152 | 36.5 | % | |||||||||
|
620-679 |
6,878 | 23.6 | % | 7,780 | 25.5 | % | |||||||||
| <=619 | 1,244 | 4.2 | % | 1,417 | 4.6 | % | |||||||||
| Total Flow | $ | 29,188 | 100.0 | % | $ | 30,574 | 100.0 | % | |||||||
| Structured | |||||||||||||||
| >=740 | $ | 956 | 27.5 | % | $ | 1,153 | 27.0 | % | |||||||
|
680-739 |
1,061 | 30.5 | % | 1,349 | 31.6 | % | |||||||||
|
620-679 |
901 | 25.9 | % | 1,125 | 26.3 | % | |||||||||
| <=619 | 559 | 16.1 | % | 645 | 15.1 | % | |||||||||
| Total Structured | $ | 3,477 | 100.0 | % | $ | 4,272 | 100.0 | % | |||||||
| Total | |||||||||||||||
| >=740 | $ | 11,668 | 35.7 | % | $ | 11,378 | 32.7 | % | |||||||
|
680-739 |
11,415 | 35.0 | % | 12,501 | 35.9 | % | |||||||||
|
620-679 |
7,779 | 23.8 | % | 8,905 | 25.6 | % | |||||||||
| <=619 | 1,803 | 5.5 | % | 2,062 | 5.8 | % | |||||||||
| Total Primary | $ | 32,665 | 100.0 | % | $ | 34,846 | 100.0 | % | |||||||
|
Percentage of primary risk in force |
|||||||||||||||
| Refinances | 31 | % | 31 | % | |||||||||||
| 95.01% LTV and above | 20 | % | 21 | % | |||||||||||
| ARMs | |||||||||||||||
| Less than 5 years | 7 | % | 8 | % | |||||||||||
| 5 years and longer | 8 | % | 9 | % | |||||||||||
| Pool risk in force | |||||||||||||||
| Prime | $ | 1,867 | 73.5 | % | $ | 1,997 | 70.3 | % | |||||||
| Alt-A | 179 | 7.0 | % | 287 | 10.1 | % | |||||||||
| A minus and below | 495 | 19.5 | % | 557 | 19.6 | % | |||||||||
| Total | $ | 2,541 | 100.0 | % | $ | 2,841 | 100.0 | % | |||||||
| Radian Group Inc. | |||||||||||||
| Mortgage Insurance Supplemental Information | |||||||||||||
| For the Quarter and Six Months Ended and as of June 30, 2010 | |||||||||||||
| Exhibit K | |||||||||||||
| ($ in millions) | June 30 | June 30 | |||||||||||
| 2010 | % | 2009 | % | ||||||||||
|
Total primary risk in force by LTV |
|||||||||||||
| 85.00% and below | $ | 3,051 | 9.3 | % | $ | 3,608 | 10.4 | % | |||||
| 85.01% to 90.00% | 12,355 | 37.8 | % | 12,709 | 36.5 | % | |||||||
| 90.01% to 95.00% | 10,737 | 32.9 | % | 11,195 | 32.1 | % | |||||||
| 95.01% and above | 6,522 | 20.0 | % | 7,334 | 21.0 | % | |||||||
| Total | $ | 32,665 | 100.0 | % | $ | 34,846 | 100.0 | % | |||||
|
Total primary risk in force by policy year |
|||||||||||||
| 2005 and prior | $ | 8,936 | 27.4 | % | $ | 10,576 | 30.3 | % | |||||
|
2006 |
4,055 | 12.4 | % | 4,807 | 13.8 | % | |||||||
|
2007 |
8,867 | 27.1 | % | 10,091 | 29.0 | % | |||||||
|
2008 |
6,398 | 19.6 | % | 7,054 | 20.2 | % | |||||||
|
2009 |
3,363 | 10.3 | % | 2,318 | 6.7 | % | |||||||
|
2010 |
1,046 | 3.2 | % | - | - | ||||||||
| Total | $ | 32,665 | 100.0 | % | $ | 34,846 | 100.0 | % | |||||
|
Total pool risk in force by policy year |
|||||||||||||
| 2005 and prior | $ | 2,075 | 81.6 | % | $ | 2,304 | 81.1 | % | |||||
|
2006 |
210 | 8.3 | % | 246 | 8.6 | % | |||||||
|
2007 |
206 | 8.1 | % | 232 | 8.2 | % | |||||||
|
2008 |
50 | 2.0 | % | 59 | 2.1 | % | |||||||
| Total pool risk in force | $ | 2,541 | 100.0 | % | $ | 2,841 | 100.0 | % | |||||
|
Other risk in force |
|||||||||||||
| Second-lien | |||||||||||||
| 1st loss | $ | 129 | $ | 223 | |||||||||
| 2nd loss | 86 | 131 | |||||||||||
| NIMs | 268 | 418 | |||||||||||
| International | |||||||||||||
| 1st loss-Hong Kong primary mortgage insurance | 185 | 358 | |||||||||||
| Reinsurance | - | 171 | |||||||||||
| Credit default swaps | 109 | 3,247 | |||||||||||
| Total other risk in force | $ | 777 | $ | 4,548 | |||||||||
| Risk to capital ratio-Radian Guaranty only | 17.9:1 | 15.9:1 | |||||||||||
| Radian Group Inc. | ||||||||||||||||||||||||
| Mortgage Insurance Supplemental Information | ||||||||||||||||||||||||
| For the Quarter and Six Months Ended and as of June 30, 2010 | ||||||||||||||||||||||||
| Exhibit L | ||||||||||||||||||||||||
| ($ in thousands) | Quarter Ended June 30 |
Six Months Ended June 30 |
||||||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||
| Direct claims paid | ||||||||||||||||||||||||
| Prime |
$ |
178,417 |
$ |
72,752 |
$ |
317,916 |
$ |
142,211 |
||||||||||||||||
| Alt-A | 89,622 | 41,441 | 160,134 | 87,711 | ||||||||||||||||||||
| A minus and below | 64,742 | 35,154 | 113,519 | 71,884 | ||||||||||||||||||||
| Second-lien and other | 4,494 | 18,338 | 12,473 | 40,945 | ||||||||||||||||||||
| Subtotal | 337,275 | 167,685 | 604,042 | 342,751 | ||||||||||||||||||||
| Impact of first-lien terminations | 239 | - | 80,349 | - | ||||||||||||||||||||
| Impact of captive terminations | (191 | ) | - | (627 | ) | - | ||||||||||||||||||
| Impact of second-lien terminations | - | - | 10,834 | 65,000 | ||||||||||||||||||||
| Total | $ | 337,323 | $ | 167,685 | $ | 694,598 | $ | 407,751 | ||||||||||||||||
| Average claim paid (1) | ||||||||||||||||||||||||
| Prime | $ | 45.0 | $ | 41.3 | $ | 45.5 | $ | 41.6 | ||||||||||||||||
| Alt-A | 59.3 | 52.6 | 59.9 | 53.1 | ||||||||||||||||||||
| A minus and below | 43.1 | 38.6 | 44.3 | 38.4 | ||||||||||||||||||||
| Second-lien and other | 32.3 | 43.4 | 32.7 | 42.2 | ||||||||||||||||||||
| Total | $ | 47.4 | $ | 43.2 | $ | 47.9 | $ | 43.3 | ||||||||||||||||
| Loss ratio - GAAP Basis | 237.6 | % | 83.7 | % | 267.7 | % | 132.9 | % | ||||||||||||||||
| Expense ratio - GAAP Basis | 21.0 | % | 25.5 | % | 26.4 | % | 24.3 | % | ||||||||||||||||
| 258.6 | % | 109.2 | % | 294.1 | % | 157.2 | % | |||||||||||||||||
| Reserve for losses by category | ||||||||||||||||||||||||
| Prime | $ | 1,386,271 | $ | 965,690 | ||||||||||||||||||||
| Alt-A | 815,055 | 887,068 | ||||||||||||||||||||||
| A minus and below | 400,679 | 448,527 | ||||||||||||||||||||||
| Pool insurance | 457,129 | 152,824 | ||||||||||||||||||||||
| Second-lien | 31,795 | 99,003 | ||||||||||||||||||||||
| Other | 80 | 1,781 | ||||||||||||||||||||||
| Reserve for losses, net | 3,091,009 | 2,554,893 | ||||||||||||||||||||||
| Reinsurance recoverable | 565,737 |
(2) |
567,551 | |||||||||||||||||||||
| Total | $ | 3,656,746 | $ | 3,122,444 | ||||||||||||||||||||
| (1) Calculated without giving effect to the impact of first-lien, second-lien and captive terminations. |
| (2) Reinsurance recoverable on ceded losses related to captives ($481 million) and Smart Home ($85 million). |
| Radian Group Inc. | |||||||||
| Mortgage Insurance Supplemental Information | |||||||||
| For the Quarter and Six Months Ended and as of June 30, 2010 | |||||||||
| Exhibit M | |||||||||
| June 30 2010 |
December 31 2009 |
June 30 2009 |
|||||||
|
Default Statistics |
|||||||||
| Primary insurance: | |||||||||
| Flow | |||||||||
|
Prime |
|||||||||
| Number of insured loans | 599,909 | 614,590 | 625,528 | ||||||
| Number of loans in default | 74,800 | 78,130 | 58,012 | ||||||
| Percentage of loans in default | 12.47% | 12.71% | 9.27% | ||||||
|
Alt-A |
|||||||||
| Number of insured loans | 56,323 | 60,616 | 64,977 | ||||||
| Number of loans in default | 20,289 | 22,177 | 19,969 | ||||||
| Percentage of loans in default | 36.02% | 36.59% | 30.73% | ||||||
|
A minus and below |
|||||||||
| Number of insured loans | 50,719 | 53,932 | 57,311 | ||||||
| Number of loans in default | 18,100 | 20,911 | 17,988 | ||||||
| Percentage of loans in default | 35.69% | 38.77% | 31.39% | ||||||
|
Total Flow |
|||||||||
| Number of insured loans | 706,951 | 729,138 | 747,816 | ||||||
| Number of loans in default | 113,189 | 121,218 | 95,969 | ||||||
| Percentage of loans in default | 16.01% | 16.62% | 12.83% | ||||||
| Structured | |||||||||
|
Prime |
|||||||||
| Number of insured loans | 45,201 | 52,629 | 62,986 | ||||||
| Number of loans in default | 6,548 | 7,520 | 7,911 | ||||||
| Percentage of loans in default | 14.49% | 14.29% | 12.56% | ||||||
|
Alt-A |
|||||||||
| Number of insured loans | 31,852 | 43,615 | 76,814 | ||||||
| Number of loans in default | 11,485 | 15,295 | 23,225 | ||||||
| Percentage of loans in default | 36.06% | 35.07% | 30.24% | ||||||
|
A minus and below |
|||||||||
| Number of insured loans | 17,593 | 19,287 | 20,611 | ||||||
| Number of loans in default | 6,793 | 7,965 | 7,680 | ||||||
| Percentage of loans in default | 38.61% | 41.30% | 37.26% | ||||||
| Total Structured | |||||||||
| Number of insured loans | 94,646 | 115,531 | 160,411 | ||||||
| Number of loans in default | 24,826 | 30,780 | 38,816 | ||||||
| Percentage of loans in default | 26.23% | 26.64% | 24.20% | ||||||
| Total Primary Insurance | |||||||||
|
Prime |
|||||||||
| Number of insured loans | 645,110 | 667,219 | 688,514 | ||||||
| Number of loans in default | 81,348 | 85,650 | 65,923 | ||||||
| Percentage of loans in default | 12.61% | 12.84% | 9.57% | ||||||
|
Alt-A |
|||||||||
| Number of insured loans | 88,175 | 104,231 | 141,791 | ||||||
| Number of loans in default | 31,774 | 37,472 | 43,194 | ||||||
| Percentage of loans in default | 36.04% | 35.95% | 30.46% | ||||||
|
A minus and below |
|||||||||
| Number of insured loans | 68,312 | 73,219 | 77,922 | ||||||
| Number of loans in default | 24,893 | 28,876 | 25,668 | ||||||
| Percentage of loans in default | 36.44% | 39.44% | 32.94% | ||||||
|
Total Primary Insurance |
|||||||||
| Number of insured loans | 801,597 | 844,669 | 908,227 | ||||||
| Number of loans in default (1) | 138,015 | 151,998 | 134,785 | ||||||
| Percentage of loans in default | 17.22% | 17.99% | 14.84% | ||||||
| Pool insurance: | |||||||||
| Number of loans in default (2) | 32,486 | 36,397 | 34,513 | ||||||
|
(1) |
Includes an estimated 1,159, 3,302 and 6,782 defaults at June 30, 2010, December 31, 2009 and June 30, 2009, respectively,for which reserves have not been established because they were associated with transactions where no claim payment was anticipated primarily due to deductibles or where a partial reserve has been recorded that is less than the gross calculated reserve due to the presence of a deductible. |
|
(2) |
Includes an estimated 12,836, 18,033 and 22,417 defaults at June 30, 2010, December 31, 2009 and June 30, 2009, respectively, for which reserves have not been established because they were associated with transactions where no claim payment was anticipated primarily due to deductibles or where a partial reserve has been recorded that is less than the gross calculated reserve due to the presence of a deductible. |
| Radian Group Inc. | |||||||||||||||||||
| Mortgage Insurance Supplemental Information | |||||||||||||||||||
| For the Quarter and Six Months Ended and as of June 30, 2010 | |||||||||||||||||||
| Exhibit N | |||||||||||||||||||
| Quarter Ended June 30 |
Six Months Ended June 30 |
||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
|
Net Premiums Written (In thousands) |
|||||||||||||||||||
| Primary and Pool Insurance | $ | 167,250 | $ | 153,278 | $ | 324,663 | $ | 314,692 | |||||||||||
| Second-lien | 734 | 829 | 279 | 743 | |||||||||||||||
| International | (75 | ) | 812 | (1 | ) | 1,443 | |||||||||||||
| Total Net Premiums Written - Insurance | $ | 167,909 | $ | 154,919 | $ | 324,941 | $ | 316,878 | |||||||||||
|
Net Premiums Earned (In thousands) |
|||||||||||||||||||
| Primary and Pool Insurance | $ | 176,622 | $ | 164,641 | $ | 350,734 | $ | 335,188 | |||||||||||
| Second-lien | 734 | 2,149 | 1,245 | 3,385 | |||||||||||||||
| International | 2,636 | 3,257 | 5,352 | 9,357 | |||||||||||||||
| Total Net Premiums Earned - Insurance | $ | 179,992 | $ | 170,047 | $ | 357,331 | $ | 347,930 | |||||||||||
|
SMART HOME (In millions) |
|||||||||||||||||||
| Ceded Premiums Written | $ | 2.6 | $ | 2.9 | $ | 4.9 | $ | 5.6 | |||||||||||
| Ceded Premiums Earned | $ | 2.6 | $ | 2.9 | $ | 4.9 | $ | 5.6 | |||||||||||
|
1st Lien Captives |
|||||||||||||||||||
| Premiums ceded to captives (In thousands) | $ | 24,684 | $ | 37,534 | $ | 50,158 | $ | 72,034 | |||||||||||
| % of total premiums | 12.1 | % | 18.3 | % | 12.4 | % | 17.5 | % | |||||||||||
| NIW subject to captives (In thousands) | $ | (204 | ) | $ | 430,618 | $ | 129 | $ | 1,471,351 | ||||||||||
| % of primary NIW | (< 1%) | 7.8 | % | < 1% | 13.2 | % | |||||||||||||
| IIF included in captives (1) | 28.8 | % | 34.8 | % | |||||||||||||||
| RIF included in captives (1) | 30.5 | % | 39.0 | % | |||||||||||||||
| Persistency (twelve months ended June 30) | 81.7 | % | (2 | ) | 87.0 | % | |||||||||||||
| June 30 2010 |
June 30 2009 |
||||||||||||||||||
| SMART HOME | |||||||||||||||||||
| % of Primary RIF included in Smart Home Transactions (1) | 3.3 | % | 3.5 | % | |||||||||||||||
|
(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. |
|
(2) |
Impacted by the termination of transactions in 2009 and 2010. |
| Radian Group Inc. | |||||||||||||||||||||||||||||||||||||||
| Mortgage Insurance Supplemental Information | |||||||||||||||||||||||||||||||||||||||
| For the Quarter Ended and as of June 30, 2010 | |||||||||||||||||||||||||||||||||||||||
| Exhibit O | |||||||||||||||||||||||||||||||||||||||
| Reinsurance Progression Toward Attachment - Summary by Book Year (1) | |||||||||||||||||||||||||||||||||||||||
| June 30 | December 31 | ||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2010 | 2009 | |||||||||||||||||||||||||||||||||||||
|
Book Year (2): |
Original Book RIF | Progression to Attachment Point | Gross Current RIF | Ceded Current RIF(3) | Net Current RIF | Ever-to-Date Incurred Losses | Reinsurance Benefit (4) | Gross Current RIF | Ceded Current RIF(3) | Net Current RIF | Ever-to-Date Incurred Losses | Reinsurance Benefit (4) | |||||||||||||||||||||||||||
| Pre-2006 | 0-50% | $ | 316 | $ | 53 | $ | 263 | $ | 138 | $ | 375 | $ | 62 | $ | 313 | $ | 142 | ||||||||||||||||||||||
| Pre-2006 | 50-75% | 277 | 159 | 118 | 81 | 325 | 185 | 140 | 86 | ||||||||||||||||||||||||||||||
| Pre-2006 | 75-99% | 468 | 226 | 242 | 122 | 557 | 231 | 326 | 127 | ||||||||||||||||||||||||||||||
| Pre-2006 | Attached | 1,631 | 451 | 1,180 | 428 | $ | 157 | 1,673 | 452 | 1,221 | 381 | $ | 139 | ||||||||||||||||||||||||||
| Pre-2006 Total | $ | 20,426 | $ | 2,692 | $ | 889 | $ | 1,803 | $ | 769 | $ | 157 | $ | 2,930 | $ | 930 | $ | 2,000 | $ | 736 | $ | 139 | |||||||||||||||||
| 2006 | 0-50% | $ | 1 | $ | - | $ | 1 | $ | - | $ | 1 | $ | - | $ | 1 | $ | - | ||||||||||||||||||||||
| 2006 | 50-75% | 1 | - | 1 | - | 16 | 1 | 15 | 1 | ||||||||||||||||||||||||||||||
| 2006 | 75-99% | 12 | 1 | 11 | 1 | 13 | 1 | 12 | 1 | ||||||||||||||||||||||||||||||
| 2006 | Attached | 1,600 | 208 | 1,392 | 416 | $ | 164 | 1,695 | 242 | 1,453 | 355 | $ | 163 | ||||||||||||||||||||||||||
| 2006 Total | $ | 2,760 | $ | 1,614 | $ | 209 | $ | 1,405 | $ | 417 | $ | 164 | $ | 1,725 | $ | 244 | $ | 1,481 | $ | 357 | $ | 163 | |||||||||||||||||
| 2007 | 0-50% | $ | - | $ | - | $ | - | $ | - | $ | 1 | $ | - | $ | 1 | $ | - | ||||||||||||||||||||||
| 2007 | 50-75% | 1 | - | 1 | - | 12 | 1 | 11 | - | ||||||||||||||||||||||||||||||
| 2007 | 75-99% | 17 | 1 | 16 | 1 | 15 | 1 | 14 | 1 | ||||||||||||||||||||||||||||||
| 2007 | Attached | 3,285 | 383 | 2,902 | 542 | $ | 222 | 3,446 | 391 | 3,055 | 437 | $ | 191 | ||||||||||||||||||||||||||
| 2007 Total | $ | 4,306 | $ | 3,303 | $ | 384 | $ | 2,919 | $ | 543 | $ | 222 | $ | 3,474 | $ | 393 | $ | 3,081 | $ | 438 | $ | 191 | |||||||||||||||||
| 2008 | 0-50% | $ | 172 | $ | 10 | $ | 162 | $ | 4 | $ | 298 | $ | 22 | $ | 276 | $ | 6 | ||||||||||||||||||||||
| 2008 | 50-75% | 105 | 12 | 93 | 4 | 149 | 8 | 141 | 6 | ||||||||||||||||||||||||||||||
| 2008 | 75-99% | 257 | 22 | 235 | 15 | 1,454 | 166 | 1,288 | 56 | ||||||||||||||||||||||||||||||
| 2008 | Attached | 1,426 | 164 | 1,262 | 95 | $ | 21 | 159 | 14 | 145 | 19 | $ | 11 | ||||||||||||||||||||||||||
| 2008 Total | $ | 2,381 | $ | 1,960 | $ | 208 | $ | 1,752 | $ | 118 | $ | 21 | $ | 2,060 | $ | 210 | $ | 1,850 | $ | 87 | $ | 11 | |||||||||||||||||
| 2009 | 0-50% | $ | 263 | $ | 12 | $ | 251 | $ | 1 | $ | 284 | $ | 12 | $ | 272 | $ | - | ||||||||||||||||||||||
| 2009 | 50-75% | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| 2009 | 75-99% | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| 2009 | Attached | - | - | - | - | $ | - | - | - | - | - | $ | - | ||||||||||||||||||||||||||
| 2009 Total | $ | 288 | $ | 263 | $ | 12 | $ | 251 | $ | 1 | $ | - | $ | 284 | $ | 12 | $ | 272 | $ | - | $ | - | |||||||||||||||||
| Quota Share | 0-50% | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||||||
| Quota Share | 50-75% | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Quota Share | 75-99% | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Quota Share | Attached | 97 | 31 | 66 | 23 | $ | 9 | 102 | 33 | 69 | 37 | $ | 17 | ||||||||||||||||||||||||||
| Quota Share Total | $ | 313 | $ | 97 | $ | 31 | $ | 66 | $ | 23 | $ | 9 | $ | 102 | $ | 33 | $ | 69 | $ | 37 | $ | 17 | |||||||||||||||||
| Total Captive (Including Quota Share) | $ | 30,474 | $ | 9,929 | $ | 1,733 | $ | 8,196 | $ | 1,871 | $ | 573 | $ | 10,575 | $ | 1,822 | $ | 8,753 | $ | 1,655 | $ | 521 | |||||||||||||||||
| SmartHome | 0-50% | $ | 30 | $ | 13 | $ | 17 | $ | 13 | $ | 32 | $ | 14 | $ | 18 | $ | 12 | ||||||||||||||||||||||
| SmartHome | 50-75% | - | - | - | - | 71 | 29 | 42 | 23 | ||||||||||||||||||||||||||||||
| SmartHome | 75-99% | 67 | 29 | 38 | 26 | - | - | - | - | ||||||||||||||||||||||||||||||
| SmartHome | Attached | 966 | 469 | 497 | 445 | $ | 113 | 1,029 | 492 | 537 | 435 | $ | 143 | ||||||||||||||||||||||||||
| Total SmartHome | $ | 3,900 | $ | 1,063 | $ | 511 | $ | 552 | $ | 484 | $ | 113 | $ | 1,132 | $ | 535 | $ | 597 | $ | 470 | $ | 143 | |||||||||||||||||
| (1) Data is presented in aggregate for all trusts for captives with risk in force at each period end only. Actual trust attachment points and exit points vary by individual contract. The attachment point 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) Risk ceded to reinsurers based on individual contract terms. | |||||||||||||||||||||||||||||||||||||||
| (4) Captive Benefit is defined as ceded reserves at period end plus ever-to-date claims paid by the trust for captives with risk in force at period end only. Reinsurance benefit at June 30, 2010 and December 31, 2009 excludes $0.6 million and $71 million of recoveries recognized from the terminations of certain captive reinsurance agreements during the first half of 2010 and for the year ended December 31, 2009, respectively. | |||||||||||||||||||||||||||||||||||||||
| Radian Group Inc. | ||||||||||||||
| Mortgage Insurance Supplemental Information | ||||||||||||||
| For the Quarter Ended and as of June 30, 2010 | ||||||||||||||
| Modified Pool | ||||||||||||||
| Exhibit P | ||||||||||||||
| ($ in millions) | June 30 | June 30 | ||||||||||||
| 2010 | % | 2009 | % | |||||||||||
|
Primary risk in force by policy year |
||||||||||||||
| 2005 and prior | $ | 195 | 42.7 | % | $ | 288 | 34.5 | % | ||||||
|
2006 |
45 | 9.8 | % | 208 | 24.9 | % | ||||||||
|
2007 |
210 | 46.0 | % | 331 | 39.6 | % | ||||||||
|
2008 |
7 | 1.5 | % | 8 | 1.0 | % | ||||||||
| Total | $ | 457 | 100.0 | % | $ | 835 | 100.0 | % | ||||||
|
Primary risk in force by product |
||||||||||||||
| Prime | $ | 77 | 16.8 | % | $ | 152 | 18.2 | % | ||||||
| Alt-A | 362 | 79.2 | % | 659 | 78.9 | % | ||||||||
| A minus and below | 18 | 4.0 | % | 24 | 2.9 | % | ||||||||
| Total | $ | 457 | 100.0 | % | $ | 835 | 100.0 | % | ||||||
|
Primary insurance in force by product |
||||||||||||||
| Prime | $ | 722 | 11.4 | % | $ | 2,972 | 16.8 | % | ||||||
| Alt-A | 5,441 | 86.2 | % | 14,409 | 81.6 | % | ||||||||
| A minus and below | 152 | 2.4 | % | 279 | 1.6 | % | ||||||||
| Total | $ | 6,315 | 100.0 | % | $ | 17,660 | 100.0 | % | ||||||
|
Default Statistics: |
||||||||||||||
| Primary Insurance: | ||||||||||||||
|
Total modified pool |
||||||||||||||
| Number of insured loans | 25,325 | (1) | 82,751 | |||||||||||
| Number of loans in default | 7,759 | 21,593 | ||||||||||||
| Percentage of loans in default | 30.64 | % | 26.09 | % | ||||||||||
| (1) Impacted by the termination of transactions in 2009 and 2010. | ||||||||||||||
| Radian Group Inc. | |||||||||||||
| Mortgage Insurance Supplemental Information | |||||||||||||
| For the Quarter and Six Months Ended and as of June 30, 2010 | |||||||||||||
| ALT-A | |||||||||||||
| Exhibit Q | |||||||||||||
| ($ in millions) | June 30 | ||||||||||||
| 2010 | % | 2009 | % | ||||||||||
| Primary risk in force by FICO score | |||||||||||||
| >=740 | $ | 941 | 24.7 | % | $ | 1,156 | 24.5 | % | |||||
|
680-739 |
1,842 |
48.2 | % | 2,271 | 48.2 | % | |||||||
|
660-679 |
554 | 14.5 | % | 691 | 14.7 | % | |||||||
|
620-659 |
455 | 11.9 | % | 562 | 11.9 | % | |||||||
| <=619 | 26 | 0.7 | % | 32 | 0.7 | % | |||||||
| Total | $ | 3,818 | 100.0 | % | $ | 4,712 | 100.0 | % | |||||
| Primary risk in force by LTV | |||||||||||||
| 85.00% and below | $ | 851 | 22.3 | % | $ | 1,222 | 25.9 | % | |||||
| 85.01% to 90.00% | 1,663 | 43.5 | % | 1,951 | 41.4 | % | |||||||
| 90.01% to 95.00% | 1,037 | 27.2 | % | 1,215 | 25.8 | % | |||||||
| 95.01% and above | 267 | 7.0 | % | 324 | 6.9 | % | |||||||
| Total | $ | 3,818 | 100.0 | % | $ | 4,712 | 100.0 | % | |||||
| Primary risk in force by policy year | |||||||||||||
| 2005 and prior | $ | 1,235 | 32.4 | % | $ | 1,483 | 31.5 | % | |||||
|
2006 |
791 | 20.7 | % | 1,041 | 22.1 | % | |||||||
|
2007 |
1,576 | 41.3 | % | 1,944 | 41.3 | % | |||||||
|
2008 |
215 | 5.6 | % | 242 | 5.1 | % | |||||||
|
2009 |
1 | - | 2 | - | |||||||||
| Total | $ | 3,818 | 100.0 | % | $ | 4,712 | 100.0 | % | |||||
Forward-Looking Statements
All statements in this report 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 United States Private Securities Litigation Reform Act of 1995. In most cases, forward-looking statements may be identified by words such as "anticipate," "may," "will," "could," "should," "would," "expect," "intend," "plan," "goal," "contemplate," "believe," "estimate," "predict," "project," "potential," "continue," or the negative or other variations on these words and other similar expressions. 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. These statements speak only as of the date of this news release, 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. 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 the failure or significant delay of the U.S. economy to recover from the most recent recession or the U.S. economy reentering a recessionary period following a brief period of stabilization or even growth, the lack of meaningful liquidity in the capital markets or in the credit markets, a prolonged period of high unemployment rates and limited home price appreciation or further depreciation (which has resulted in some borrowers voluntarily defaulting on their mortgages when their mortgage balances exceed the value of their homes), 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 is more concentrated;
- our ability to successfully execute upon our capital plan for our mortgage insurance business (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;
- a further decrease in the volume of home mortgage originations due to reduced liquidity in the lending market, tighter underwriting standards and the decrease in housing demand throughout the U.S.;
- our ability to maintain adequate risk-to-capital ratios and surplus requirements in our mortgage insurance business in light of ongoing losses in this business and continued deterioration in our financial guaranty portfolio which, in the absence of new capital, may depend on our ability to execute strategies for which regulatory and other approvals are required and may not be obtained;
- our ability to continue to effectively mitigate our mortgage insurance and financial guaranty losses;
- reduced opportunities for loss mitigation in markets where housing values do not appreciate or continue to decline;
- changes in the level of future rescissions and claim denials, which have materially mitigated our paid losses and resulted in a significant reduction in our loss reserves;
- the negative impact our increased levels of insurance rescissions and claim denials may have on our relationships with customers, including the heightened risk of potential disputes and litigation; and, in the event that we are unsuccessful in defending our rescissions or denials, the need to reestablish loss reserves for, and reassume risk on, rescinded loans and pay additional claims;
- 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;
- a decrease 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) or new entrants to the industry;
- 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;
- changes to the current system of housing finance, including the possibility of a new system in which private mortgage insurers are not required or their services are significantly limited in scope;
- the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act on the financial services industry in general, and our mortgage insurance and financial guaranty businesses in particular;
- the application of existing federal or state consumer, lending, insurance, tax, 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, or the possibility of additional, lawsuits or investigations, and (ii) legislative and regulatory changes (a) affecting demand for private mortgage insurance, (b) limiting or restricting our use of (or requirements for) additional capital and the products we may offer, or (c) affecting the form in which we execute credit protection or affecting our existing financial guaranty portfolio;
- 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 business, or to estimate accurately the fair value amounts of derivative instruments 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 possibility of a 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; and
- 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.
For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should review the "Risk Factors" detailed in Item 1A of Part II of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2010 and subsequent reports and registration statements filed from time to time with the Securities and Exchange Commission.
Financial and Operational Notes
The net per share impact of $3.09, on an after tax basis, resulting from the change in fair value of derivatives of $524.6 million, was derived by applying a 35% statutory tax rate.
SOURCE: Radian Group Inc.
Radian Group Inc.
Emily Riley, 215-231-1035
emily.riley@radian.com