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05/05/2011

Radian Reports First Quarter 2011 Financial Results

- Diluted net income per share of $0.77 includes impact of significant fair value gains -
- Mortgage insurance delinquencies declined for fifth consecutive quarter -

PHILADELPHIA, May 05, 2011 (BUSINESS WIRE) --

Radian Group Inc. (NYSE: RDN) today reported net income for the quarter ended March 31, 2011, of $103.0 million, or $0.77 per diluted share, which included combined gains from the change in fair value of derivatives and other financial instruments of $319.1 million. This compares to a net loss of $310.4 million, or $3.77 per diluted share, for the prior-year quarter. Book value per share at March 31, 2011, was $7.31, compared to $6.46 at December 31, 2010.

"We are pleased with the continued decline in mortgage insurance delinquencies through April and our ability to maintain a strong share of today's high-quality mortgage insurance business," said Chief Executive Officer S.A. Ibrahim. "However, our first quarter results clearly reflect the continued impact of a stagnant housing market and the uncertain outcome of our late-stage delinquent loans."

Ibrahim continued, "We are encouraged by the moderate improvement in our economy early this year, and believe we have the financial flexibility to navigate the uncertainty during 2011 and continue Radian's position as a strong, viable franchise."

FIRST QUARTER HIGHLIGHTS

  • The mortgage insurance provision for losses was $414.0 million in the first quarter of 2011, compared to $529.1 million in the prior-year period. Mortgage insurance loss reserves were approximately $3.5 billion as of March 31, 2011, which was flat to the fourth quarter of 2010, and down slightly from a year ago. First-lien reserves increased to $25,714 per primary default and $25,230 per pool default as of March 31, 2011, compared to $22,378 and $20,305 respectively as of March 31, 2010.
  • The total number of primary delinquent loans decreased by 7 percent in the first quarter from the fourth quarter of 2010, which represented the fifth consecutive quarterly decline.
  • Radian Guaranty Inc.'s risk-to-capital ratio was 20.3:1 at March 31, 2011, compared to a ratio of 16.8:1 at December 31, 2010, and 16.9:1 at March 31, 2010. Radian Group maintains sufficient liquidity to contribute capital to its mortgage insurance subsidiaries in 2011 if needed.
  • New mortgage insurance written (NIW) increased to $2.6 billion compared to $1.9 billion a year ago. NIW continued to consist of loans with excellent risk characteristics, and the company maintained an estimated market share of 21 percent.
  • Total mortgage insurance claims paid were $365.2 million, compared to $357.3 million in the first quarter of 2010. The company continues to expect mortgage insurance claims paid of approximately $1.7 billion for the full-year 2011.
  • 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 March 31, 2011, Radian Asset had approximately $1.0 billion in statutory surplus with an additional $1.2 billion in claims-paying resources.

-- Radian Asset is expected to pay an ordinary dividend of $53.4 million to Radian Guaranty in June 2011.
-- The company's net par outstanding was reduced by more than $1 billion, which included the termination of a TruPs CDO transaction with $85 million of exposure with no associated payment.
-- Excluding gains and losses on derivatives and other financial instruments, the financial guaranty segment was break-even in the first quarter.

RECENT EVENTS

  • The total number of primary delinquent loans continued to decrease in April
  • On April 1, 2011, the company terminated nearly $45 million of structured pool mortgage insurance exposure that eliminated more than 2,200 loans from its delinquent inventory and reduced pool risk in force by approximately 2 percent. The payment of $39 million to terminate the contracts was slightly less than the company's loss reserve for the terminated loans.
  • Radian continued to reduce its financial guaranty net par outstanding in April by more than $2 billion, which included the early termination of $1.7 billion of corporate CDOs and $231 million of below investment grade reinsurance exposure, which had a slight positive impact on statutory surplus.

CONFERENCE CALL

Radian will discuss these items in its conference call today, Thursday, May 5, 2011, 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 800-230-1951 inside the U.S., or 612-288-0340 for international callers, using passcode 200990 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 200990.

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 at 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 March 31, 2011
Exhibit D: Segment Information Quarter Ended March 31, 2010
Exhibit E: Financial Guaranty Supplemental Information
Exhibit F: Financial Guaranty Supplemental Information
Exhibit G: Mortgage Insurance Supplemental Information

New Insurance Written

Exhibit H: Mortgage Insurance Supplemental Information
Insurance in Force and Risk in Force
Exhibit I: Mortgage Insurance Supplemental Information

Risk in Force by LTV and Policy Year and Other Risk in Force

Exhibit J: Mortgage Insurance Supplemental Information

Claims, Reserves and Reserve Per Default

Exhibit K: Mortgage Insurance Supplemental Information
Default Statistics
Exhibit L: Mortgage Insurance Supplemental Information
Net Premiums Written and Earned, Smart Home, Captives and Persistency
Exhibit M: Mortgage Insurance Supplemental Information
Modified Pool

Radian Group Inc. and Subsidiaries

Condensed Consolidated Statements of Income
Exhibit A
Quarter Ended
March 31
2011 2010
(In thousands, except per-share data)
Revenues:
Net premiums written - insurance $ 182,749 $ 155,501
Net premiums earned - insurance $ 203,023 $ 198,268
Net investment income 42,240 45,358
Net gains on investments 37,435 57,948
Net impairment losses recognized in earnings - (18 )
Change in fair value of derivative instruments 243,892 (77,954 )
Net gains (losses) on other financial instruments 75,251 (101,564 )
Other income 1,448 5,775
Total revenues 603,289 127,813
Expenses:
Provision for losses 427,373 543,880
Change in reserve for premium deficiency (1,383 ) (1,231 )
Policy acquisition costs 14,131 14,868
Other operating expenses 46,219 65,056
Interest expense 17,024 10,804
Total expenses 503,364 633,377
Equity in net income of affiliates 65 8,098
Pretax income (loss) 99,990 (497,466 )
Income tax benefit (3,016 ) (187,111 )
Net income (loss) $ 103,006 $ (310,355 )
Diluted net income (loss) per share (1) $ 0.77 $ (3.77 )
(1) Weighted average shares outstanding (In thousands)
Weighted average common shares outstanding 132,427 82,341
Increase in weighted average shares-common stock
equivalents-diluted basis 1,276 -
Weighted average shares outstanding 133,703 82,341
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

March 31

 December 31
(In thousands, except per-share data)

2011

 2010
Assets:
Cash and investments $ 6,442,264 $ 6,680,630
Deferred policy acquisition costs 145,721 148,326
Deferred income taxes, net 27,531 27,531
Reinsurance recoverables 218,963 244,894
Derivative assets 24,554 26,212
Other assets 492,530 493,294
Total assets $ 7,351,563 $ 7,620,887
Liabilities and stockholders' equity:
Unearned premiums $ 666,019 $ 686,364
Reserve for losses and loss adjustment expenses 3,627,695 3,596,735
Reserve for premium deficiency 9,353 10,736
Long-term debt 968,199 964,788
VIE debt 373,007 520,114
Derivative liabilities 487,345 723,579
Other liabilities 247,048 258,791
Total liabilities 6,378,666 6,761,107
Common stock 150 150
Additional paid-in capital 1,071,346 1,071,080
Retained deficit (101,920 ) (204,926 )
Accumulated other comprehensive income (loss) 3,321 (6,524 )
Total common stockholders' equity 972,897 859,780
Total liabilities and stockholders' equity $ 7,351,563 $ 7,620,887
Book value per share $ 7.31 $ 6.46

Radian Group Inc. and Subsidiaries

Segment Information

Quarter Ended March 31, 2011
Exhibit C
Mortgage Financial
(In thousands) Insurance Guaranty Total
Revenues:
Net premiums written - insurance $ 180,846 $ 1,903 $ 182,749
Net premiums earned - insurance $ 186,134 $ 16,889 $ 203,023
Net investment income 26,833 15,407 42,240
Net gains on investments 17,762 19,673 37,435
Change in fair value of derivative instruments (394 ) 244,286 243,892
Net gains on other financial instruments 2,466 72,785 75,251
Other income 1,400 48 1,448
Total revenues 234,201 369,088 603,289
Expenses:
Provision for losses 413,973 13,400 427,373
Change in reserve for premium deficiency (1,383 ) - (1,383 )
Policy acquisition costs 10,216 3,915 14,131
Other operating expenses 34,137 12,082 46,219
Interest expense 9,789 7,235 17,024
Total expenses 466,732 36,632 503,364
Equity in net income of affiliates - 65 65
Pretax (loss) income (232,531 ) 332,521 99,990
Income tax provision (benefit) 3,501 (6,517 ) (3,016 )
Net (loss) income $ (236,032 ) $ 339,038 $ 103,006
Cash and investments $ 3,977,445 $ 2,464,819 $ 6,442,264
Deferred policy acquisition costs 42,322 103,399 145,721
Total assets 4,471,425 2,880,138 7,351,563
Unearned premiums 191,910 474,109 666,019
Reserve for losses and loss adjustment expenses 3,542,797 84,898 3,627,695
VIE debt 72,369 300,638 373,007
Derivative liabilities - 487,345 487,345

Radian Group Inc. and Subsidiaries

Segment Information

Quarter Ended March 31, 2010
Exhibit D
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
Revenues:

Net premiums written - insurance

 $ 157,032 $ (1,531 ) $ - $ 155,501
Net premiums earned - insurance $ 177,339 $ 20,929 $ - $ 198,268
Net investment income 26,359 18,999 - 45,358
Net gains on investments 28,781 29,167 - 57,948
Net impairment losses recognized in earnings (18 ) - - (18 )
Change in fair value of derivative instruments 277 (78,231 ) - (77,954 )
Net losses on other financial instruments (30,200 ) (71,364 ) - (101,564 )
Other income 1,799 3,913 63 5,775
Total revenues 204,337 (76,587 ) 63 127,813
Expenses:
Provision for losses 529,091 14,789 - 543,880
Change in reserve for premium deficiency (1,231 ) - - (1,231 )
Policy acquisition costs 10,504 4,364 - 14,868
Other operating expenses 46,233 18,673 150 65,056
Interest expense 2,120 8,684 - 10,804
Total expenses 586,717 46,510 150 633,377
Equity in net income of affiliates - 78 8,020 8,098
Pretax (loss) income (382,380 ) (123,019 ) 7,933 (497,466 )
Income tax (benefit) provision (145,847 ) (44,041 ) 2,777 (187,111 )
Net (loss) income $ (236,533 ) $ (78,978 ) $ 5,156 $ (310,355 )
Cash and investments $ 3,546,637 $ 2,523,751 $ - $ 6,070,388
Deferred policy acquisition costs 36,762 120,169 - 156,931
Total assets 4,919,093

(1)

3,161,663 127,402 8,208,158

(1)

Unearned premiums 219,753 560,808 - 780,561
Reserve for losses and loss adjustment expenses 3,597,035 138,789 - 3,735,824
VIE debt 268,443 327,618 - 596,061
Derivative liabilities - 234,504 - 234,504
(1) Revised to conform to December 31, 2010 presentation of certain items.

Radian Group Inc.

Financial Guaranty Supplemental Information
Exhibit E
Quarter Ended
(In thousands) March 31
2011 2010
Net Premiums Earned:
Public finance direct $ 7,836 $ 12,336
Public finance reinsurance 7,804 6,913
Structured direct 441 717
Structured reinsurance 809 915
Trade credit reinsurance (1 ) 48

Total Net Premiums Earned - insurance

 $ 16,889 $ 20,929
Refundings included in earned premium $ 4,831 $ 9,533
Net premiums earned - derivatives (1) $ 10,883 $ 12,023
Claims paid:
Trade credit reinsurance $ (24 ) $ 1,086
Financial Guaranty 290 3,357
Total $ 266

(2)

 $ 4,443
(1) Included in change in fair value of derivative instruments.
(2) Includes the recovery of $3.2 million related to previous public finance claim payments.

Radian Group Inc.

Financial Guaranty Supplemental Information
Exhibit F
($ in thousands, except ratios) March 31 December 31 March 31
2011 2010 2010
Statutory Information:
Capital and surplus $ 1,050,208 $

1,049,664

$ 1,048,763
Contingency reserve 397,930 392,589 383,435
Qualified statutory capital 1,448,138

1,442,253

1,432,198
Unearned premium reserve 506,566 517,516 576,412
Loss and loss expense reserve 81,743 70,129 109,370
Total statutory policyholders' reserves 2,036,447

2,029,898

2,117,980
Present value of installment premiums 193,424 202,386 243,721
Soft capital facilities - - 150,000
Total statutory claims paying resources $ 2,229,871 $

2,232,284

$ 2,511,701
Net debt service outstanding $ 98,976,819 $ 101,168,759 $ 107,465,994
Capital leverage ratio (1) 68

70

75
Claims paying leverage ratio (2) 44 45 43
Net par outstanding by product:
Public finance direct $ 15,324,283 $ 15,727,252 $ 17,213,124
Public finance reinsurance 21,349,837 21,907,290 23,542,687
Structured direct 39,078,572 39,315,801 42,347,436
Structured reinsurance 1,760,573 1,805,295 2,063,475
Total (3) $ 77,513,265 $ 78,755,638 $ 85,166,722
(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, $1.9 billion and $2.0 billion at March 31, 2011, December 31,
2010 and March 31, 2010, 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
Exhibit G

Quarter Ended
March 31
($ in millions) 2011 2010
$

%

 $ %

Primary new insurance written
Prime $ 2,583 99.9 % $ 1,896 99.9 %
Alt-A 1 0.0 % - -
A minus and below 2 0.1 % 1 0.1 %
Total $ 2,586 100.0 % $ 1,897 100.0 %

Total primary new insurance written by FICO score
>=740 $ 2,081 80.5 % $ 1,461 77.0 %

680-739

 502 19.4 % 435 22.9 %

620-679

 3 0.1 % 1 0.1 %
Total $ 2,586 100.0 % $ 1,897 100.0 %

Percentage of primary new insurance written
Refinances 51 % 35 %
95.01% LTV and above 1.2 % 0.5 %
ARMs
Less than 5 years 0.1 % 0.1 %
5 years and longer 4.9 % 5.1 %

Radian Group Inc.

Mortgage Insurance Supplemental Information
Exhibit H
March 31 March 31
($ in millions) 2011 2010
$ % $ %

Primary insurance in force
Flow $ 113,853 89.0 % $ 119,943 86.1 %
Structured 14,100 11.0 % 19,419 13.9 %
Total Primary $ 127,953 100.0 % $ 139,362 100.0 %
Prime $ 105,645 82.6 % $ 109,404 78.5 %
Alt-A 14,023 10.9 % 20,396 14.6 %
A minus and below 8,285 6.5 % 9,562 6.9 %
Total Primary $ 127,953 100.0 % $ 139,362 100.0 %

Primary risk in force
Flow
Prime $ 23,963 85.6 % $ 24,783 83.9 %
Alt-A 2,510 9.0 % 2,996 10.1 %
A minus and below 1,508 5.4 % 1,763 6.0 %
Total Flow $ 27,981 100.0 % $ 29,542 100.0 %
Structured
Prime $ 1,753 58.3 % $ 1,977 55.1 %
Alt-A 692 23.0 % 981 27.4 %
A minus and below 563 18.7 % 628 17.5 %
Total Structured $ 3,008 100.0 % $ 3,586 100.0 %
Total
Prime $ 25,716 83.0 % $ 26,760 80.8 %
Alt-A 3,202 10.3 % 3,977 12.0 %
A minus and below 2,071 6.7 % 2,391 7.2 %
Total Primary $ 30,989 100.0 % $ 33,128 100.0 %

Total primary risk in force by FICO score
Flow

>=740

 $ 11,128 39.8 % $ 10,561 35.7 %

680-739

 9,611 34.3 % 10,572 35.8 %

620-679

 6,131 21.9 % 7,119 24.1 %
<=619 1,111 4.0 % 1,290 4.4 %
Total Flow $ 27,981 100.0 % $ 29,542 100.0 %
Structured
>=740 $ 803 26.7 % $ 982 27.4 %

680-739

 874 29.1 % 1,091 30.4 %

620-679

 807 26.8 % 934 26.1 %
<=619 524 17.4 % 579 16.1 %
Total Structured $ 3,008 100.0 % $ 3,586 100.0 %
Total
>=740 $ 11,931 38.5 % $ 11,543 34.9 %

680-739

 10,485 33.8 % 11,663 35.2 %

620-679

 6,938 22.4 % 8,053 24.3 %
<=619 1,635 5.3 % 1,869 5.6 %
Total Primary $ 30,989 100.0 % $ 33,128 100.0 %

Percentage of primary risk in force
Refinances 32 % 31 %
95.01% LTV and above 19 % 20 %
ARMs
Less than 5 years 6 % 7 %
5 years and longer 7 % 8 %

Pool risk in force
Prime $ 1,753 75.3 % $ 1,882 72.7 %
Alt-A 139 6.0 % 192 7.4 %
A minus and below 437 18.7 % 515 19.9 %
Total $ 2,329 100.0 % $ 2,589 100.0 %

Radian Group Inc.

Mortgage Insurance Supplemental Information
Exhibit I
March 31 March 31
($ in millions) 2011 2010
$ % $ %
Total primary risk in force by LTV
85.00% and below $ 2,819 9.1 % $ 3,117 9.4 %
85.01% to 90.00% 11,942 38.6 % 12,440 37.6 %
90.01% to 95.00% 10,391 33.5 % 10,829 32.7 %
95.01% and above 5,837 18.8 % 6,742 20.3 %
Total $ 30,989 100.0 % $ 33,128 100.0 %
Total primary risk in force by policy year
2005 and prior $ 7,874 25.4 % $ 9,325 28.1 %

2006

 3,549 11.5 % 4,209 12.7 %
2007 7,772 25.1 % 9,160 27.7 %
2008 5,740 18.4 % 6,576 19.8 %
2009 3,004 9.7 % 3,436 10.4 %
2010 2,469 8.0 % 422 1.3 %
2011 581 1.9 % - -
Total $ 30,989 100.0 % $ 33,128 100.0 %
Total pool risk in force by policy year
2005 and prior $ 1,943 83.4 % $ 2,096 81.0 %
2006 165 7.1 % 227 8.7 %
2007 179 7.7 % 214 8.3 %
2008 42 1.8 % 52 2.0 %
Total pool risk in force $ 2,329 100.0 % $ 2,589 100.0 %
Other risk in force
Second-lien
1st loss $ 108 $ 138
2nd loss 76 89
NIMs 69 292
International
1st loss-Hong Kong primary mortgage insurance 104 222
Credit default swaps - 120
Total other risk in force $ 357 $ 861
Risk to capital ratio-Radian Guaranty only

20.3:1

(1)

 16.9:1

(1) Preliminary

Radian Group Inc.

Mortgage Insurance Supplemental Information

For the Quarter Ended and as of March 31, 2011
Exhibit J
Quarter Ended
($ in thousands) March 31
2011 2010
Net claims paid (1)
Prime $ 208,195 $ 125,964
Alt-A 75,130 65,031
A minus and below 44,585 36,384
Total primary claims paid 327,910 227,379
Pool 34,358 31,409
Second-lien and other 2,883 7,979
Subtotal 365,151 266,767
Impact of first-lien terminations - 80,110
Impact of captive terminations - (436 )
Impact of second-lien terminations - 10,834
Total net claims paid $ 365,151 $ 357,275

Average net claim paid (1) (2)
Prime $ 47.8 $ 45.8
Alt-A 59.6 59.6
A minus and below 37.1 39.9
Total average net primary claim paid 48.1 47.8
Pool 69.0 64.9
Second-lien and other 30.7 34.8
Total average net claim paid $ 49.3 $ 48.8
Average direct primary claim paid (2) (3) $ 54.3 $ 53.9
Average total direct claim paid (2) (3) $ 55.0 $ 54.1
Loss ratio - GAAP Basis 222.4 % 298.4 %
Expense ratio - GAAP Basis 23.8 % 32.0 %
246.2 % 330.4 %
Reserve for losses by category
Prime $ 1,684,039 $ 1,347,003
Alt-A 704,751 821,551
A minus and below 403,248 421,748
Reinsurance recoverable (4) 192,258 596,325
Total primary reserves 2,984,296 3,186,627
Pool 531,903 379,794
Total 1st lien reserves 3,516,199 3,566,421
Second-lien 26,470 30,490
Other 128 124
Total reserves $ 3,542,797 $ 3,597,035
1st lien reserve per default (5)
Primary reserve per primary default $ 25,714 $ 22,378
Pool reserve per pool default 25,230 20,305
Total 1st lien reserve per default 25,640 22,138
(1) Calculated net of reinsurance recoveries.
(2) Calculated without giving effect to the impact of terminations of captive reinsurance transactions
and first- and second-lien transactions.
(3) Before reinsurance recoveries.
(4) Represents ceded losses on captive transactions and Smart Home.
(5) Excludes defaults for which no reserve was established because we do not expect to make a claim
payment, primarily due to deductibles.

Radian Group Inc.

Mortgage Insurance Supplemental Information
Exhibit K
March 31 December 31 March 31
2011 2010 2010

Default Statistics
Primary insurance:
Flow

Prime
Number of insured loans 576,388 584,213 607,552
Number of loans in default 66,615 71,196 77,423
Percentage of loans in default 11.56 % 12.19 % 12.74 %

Alt-A
Number of insured loans 49,866 51,765 58,588
Number of loans in default 16,720 17,934 21,533

Percentage of loans in default

 33.53 % 34.65 % 36.75 %

A minus and below
Number of insured loans 45,522 47,044 52,547
Number of loans in default 14,713 16,401 19,264
Percentage of loans in default 32.32 % 34.86 % 36.66 %
Total Flow
Number of insured loans 671,776 683,022 718,687
Number of loans in default 98,048 105,531 118,220
Percentage of loans in default 14.60 % 15.45 % 16.45 %
Structured

Prime
Number of insured loans 44,700 42,131 46,234
Number of loans in default 6,519 6,735 6,565
Percentage of loans in default 14.58 % 15.99 % 14.20 %

Alt-A
Number of insured loans 20,315 20,234 32,960
Number of loans in default 6,380 6,635 11,949
Percentage of loans in default 31.41 % 32.79 % 36.25 %

A minus and below
Number of insured loans 16,589 16,716 18,161
Number of loans in default 5,949 6,569 7,180
Percentage of loans in default 35.86 % 39.30 % 39.54 %
Total Structured
Number of insured loans 81,604 79,081 97,355
Number of loans in default 18,848 19,939 25,694
Percentage of loans in default 23.10 % 25.21 % 26.39 %
Total Primary Insurance

Prime
Number of insured loans 621,088 626,344 653,786
Number of loans in default 73,134 77,931 83,988
Percentage of loans in default 11.78 % 12.44 % 12.85 %

Alt-A
Number of insured loans 70,181 71,999 91,548
Number of loans in default 23,100 24,569 33,482
Percentage of loans in default 32.91 % 34.12 % 36.57 %

A minus and below
Number of insured loans 62,111 63,760 70,708
Number of loans in default 20,662 22,970 26,444
Percentage of loans in default 33.27 % 36.03 % 37.40 %
Total Primary Insurance
Number of insured loans 753,380 762,103 816,042
Number of loans in default (1) 116,896 125,470 143,914
Percentage of loans in default 15.52 % 16.46 % 17.64 %
Pool insurance:
Number of loans in default (2) 29,044 32,456 33,934
(1) Includes an estimated 841, 525 and 1,517 defaults at March 31, 2011, December 31, 2010 and March 31, 2010,
respectively, for which no reserve was established because we do not expect to make a claim payment,

primarily due to deductibles.
(2) Includes an estimated 7,962, 9,712 and 15,230 defaults at March 31, 2011, December 31, 2010 and March 31, 2010,
respectively, for which no reserve was established because we do not expect to make a claim payment,
primarily due to deductibles.

Radian Group Inc.

Mortgage Insurance Supplemental Information

For the Quarter Ended and as of March 31, 2011
Exhibit L
Quarter Ended
March 31
2011 2010

Net Premiums Written (In thousands)
Primary and Pool Insurance $ 180,257 $ 157,413
Second-lien 620

(455)

(1)

International (31 ) 74
Total Net Premiums Written - Insurance $ 180,846 $ 157,032

Net Premiums Earned (In thousands)
Primary and Pool Insurance $ 183,469 $ 174,112
Second-lien 620 511
International 2,045 2,716
Total Net Premiums Earned - Insurance $ 186,134 $ 177,339

SMART HOME (In millions)
Ceded Premiums Written and Earned $ 2.2 $ 2.3
Net premiums earned - derivatives (In thousands) (2) $ - $ 139

1st Lien Captives
Premiums ceded to captives (In thousands) $ 7,587 $ 25,474
% of total premiums 3.9 % 12.6 %
NIW subject to captives (In thousands) $ - $ 333
% of primary NIW -

< 1

%

IIF included in captives (3) 10.2 % 29.5 %
RIF included in captives (3) 10.1 % 31.1 %
Persistency (twelve months ended March 31) 83.0 % 81.0 %
March 31 March 31
2011 2010
SMART HOME
% of Primary RIF included in Smart Home Transactions (3) 2.9 % 3.3 %
(1) Reflects the impact of second-lien terminations.
(2) Included in change in 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

Modified Pool (1)
Exhibit M
March 31 March 31
($ in millions) 2011 2010
$ % $ %

Modified pool risk in force by policy year
2005 and prior $ 203 68.1 % $ 201 42.6 %
2006 37 12.4 % 49 10.4 %
2007 51 17.1 % 214 45.3 %
2008 7 2.4 % 8 1.7 %
Total $ 298 100.0 % $ 472 100.0 %

Modified pool risk in force by product
Prime $ 87 29.2 % $ 76 16.1 %
Alt-A 192 64.4 % 377 79.9 %
A minus and below 19 6.4 % 19 4.0 %
Total $ 298 100.0 % $ 472 100.0 %

Modified pool insurance in force by product
Prime $ 1,065 31.5 % $ 705 10.8 %
Alt-A 2,163 63.9 % 5,681 86.7 %
A minus and below 157 4.6 % 164 2.5 %
Total $ 3,385 100.0 % $ 6,550 100.0 %
Reserve for losses - modified pool (in thousands) $ 79,571 $ 245,522

Default Statistics:

Modified pool
Number of insured loans 19,424 26,122
Number of loans in default 3,963 8,111
Percentage of loans in default 20.40 % 31.05 %
(1) Included in primary insurance amounts.

FORWARD-LOOKING STATEMENTS

All statements in this press 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 United States ("U.S.") 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 may include, without limitation, projections regarding our future performance and financial condition, are made on the basis of management's current views and assumptions with respect to future events. Any forward-looking statement is not a guarantee of future performance and actual results could differ materially from those contained in the forward-looking information. The forward-looking statements, as well as our prospects as a whole, are subject to risks and uncertainties, including the following:

  • changes in general financial and political conditions, such as the failure of the U.S. economy to fully recover from the most recent recession or the U.S. economy reentering a recessionary period, 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 customers, investors or regulators perceive the strength of private mortgage insurers or financial guaranty providers, or 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 exposure 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 our mortgage insurance business and the long-term liquidity needs of our holding company;
  • a further reduction in, or prolonged period of depressed levels of, home mortgage originations due to reduced liquidity in the lending market, tighter underwriting standards, the risk retention requirements established under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") 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 further deterioration in our financial guaranty portfolio which, in the absence of new capital, could 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;
  • a more rapid than expected decrease in the level of insurance rescissions and claim denials from the current elevated levels (including as a result of successful challenges to previously rescinded policies or claim denials), which rescissions and denials have materially mitigated our paid losses and resulted in a significant reduction in our loss reserves;
  • the negative impact our insurance rescissions and claim denials may have on our relationships with customers and potential customers, including the potential loss of business and the heightened risk of disputes and litigation; the need, in the event that we are unsuccessful in defending our rescissions or denials, 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;
  • the 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 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 the availability of mortgage refinancing to only the most qualified borrowers in the current mortgage and 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 rating assigned to Radian Guaranty Inc.);
  • heightened competition for our mortgage insurance business from others such as the Federal Housing Administration (the "FHA"), the Veterans' Administration and private mortgage insurers (in particular, the FHA and those private mortgage insurers that have been assigned higher ratings from the major rating agencies or new entrants to the industry that are not burdened by legacy obligations);
  • changes in the charters or business practices of, or rules or regulations applicable to, 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 products are significantly limited in scope;
  • the effect of the Dodd-Frank Act on the financial services industry in general, and on our mortgage insurance and financial guaranty businesses in particular, including whether and to what extent loans with mortgage insurance are considered "qualified residential mortgages" for purposes of the Dodd-Frank Act securitization provisions or "qualified mortgages" for purposes of the ability to repay provisions and potential obligations to post collateral on our existing insured derivatives portfolio;
  • 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 increasing 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;
  • our ability to realize the tax benefits associated with our deferred tax assets, which will depend on our ability to generate sufficient sustainable taxable income in future periods;
  • our ability to obtain the necessary regulatory approval to consummate our purchase of Municipal and Infrastructure Assurance Corporation (the "FG Insurance Shell") and to successfully develop and implement a strategy to utilize the FG Insurance Shell in the public finance financial guaranty market, which strategy may depend on, among other items, our ability to obtain further necessary regulatory or other approvals, to attract third-party capital and to obtain ratings sufficient to support such a strategy;
  • 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 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, 2010. We caution you not to place undue reliance on these forward-looking statements, which are current only as of the date on which we filed this press release. We do not intend to, and we disclaim any duty or obligation to, update or revise any forward-looking statements made in this press release to reflect new information or future events or for any other reason.

SOURCE: Radian Group Inc. 

Radian
Emily Riley, 215-231-1035
emily.riley@radian.com