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11/01/2011

Radian Reports Third Quarter 2011 Financial Results

- Diluted net income per share of $1.37 includes significant impact of fair value gains -
- Mortgage Insurance Segment reports pre-tax loss of $78.2 million -
- New mortgage insurance written grows to $4.1 billion in the quarter -
- Risk-to-capital ratio of 21.4:1; approximately $600 million of available holding company liquidity -

PHILADELPHIA, Nov 01, 2011 (BUSINESS WIRE) --

Radian Group Inc. (NYSE: RDN) today reported net income for the quarter ended September 30, 2011, of $183.6 million, or $1.37 per diluted share, which included combined net gains from the change in fair value of derivatives and other financial instruments of $206.6 million. This compares to net income of $112.2 million, or $0.84 per diluted share, for the prior-year quarter, which included combined net gains from the change in fair value of derivatives and other financial instruments of $234.7 million. Book value per share at September 30, 2011, was $9.67.

"Our top priorities at Radian are to grow our mortgage insurance business and to effectively manage our legacy risk," said Chief Executive Officer S.A. Ibrahim. "We are encouraged by our ability to significantly increase Radian's volume of profitable new business while maintaining our sharp focus on loss mitigation."

Ibrahim added, "We will continue to leverage our competitive strength, customer relationships and financial flexibility to best manage through this prolonged uncertainty."

THIRD QUARTER HIGHLIGHTS

  • Net income for the third quarter of $183.6 million was driven by the pre-tax gain recognized on derivatives and other financial instruments of $206.6 million. This unrealized gain resulted mainly from a widening of Radian's credit spread that significantly reduced the fair value of the company's derivative liabilities.
  • The mortgage insurance provision for losses was $276.6 million in the third quarter, compared to $270.0 million in the second quarter of 2011 and $347.8 million in the prior-year period. Mortgage insurance loss reserves were approximately $3.2 billion as of September 30, 2011, a decrease from $3.3 billion in the second quarter of 2011, and $3.5 billion a year ago. First-lien reserves were $25,346 per primary default as of September 30, 2011, compared to $25,334 as of June 30, 2011, and $22,780 a year ago.
  • The total number of primary delinquent loans decreased slightly from the second quarter of 2011, which was the seventh consecutive quarterly decline in delinquent loans.
  • The risk-to-capital ratio for Radian Guaranty Inc., the company's primary mortgage insurance subsidiary, was 21.4:1 at September 30, 2011, compared to a ratio of 19.8:1 at June 30, 2011, and 17.2:1 at September 30, 2010.
  • New mortgage insurance written (NIW) increased to $4.1 billion in the third quarter, compared to $2.3 billion in the second quarter of 2011 and $3.2 billion a year ago, and continued to consist of loans with excellent risk characteristics. The company anticipates NIW for the fourth quarter of 2011 of more than $5 billion.
  • Total mortgage insurance claims paid were $329.9 million for the third quarter, compared to $512.6 million ($459.0 million excluding termination impact) in the second quarter of 2011, and $494.2 million a year ago. The company expects mortgage insurance claims paid of approximately $400 million in the fourth quarter of 2011 and approximately $1.6 billion for the full-year 2011. For 2012, Radian expects mortgage insurance claims paid of approximately $1.3 billion.
  • 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.

-- Excluding gains and losses on derivatives and other financial instruments, the financial guaranty segment was again profitable on an operating basis in the third quarter of 2011.
--

As of September 30, 2011, Radian Asset had approximately $1.0 billion in statutory surplus and an additional $1.1 billion in claims-paying resources.

-- Net par outstanding for Radian Asset was $71.9 billion as of September 30, 2011, compared to $74.7 billion as of June 30, 2011, and $79.9 billion as of September 30, 2010.
-- Radian Asset is expected to pay an ordinary dividend of approximately $50 million to Radian Guaranty in 2012.

CONFERENCE CALL

Radian will discuss each of these items in its conference call today, Tuesday, November 1, 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 800-288-8960 inside the U.S., or 612-332-0107 for international callers, using passcode 221288 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 221288.

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 September 30, 2011
Exhibit D: Segment Information Quarter Ended September 30, 2010
Exhibit E: Segment Information Nine Months Ended September 30, 2011
Exhibit F: Segment Information Nine Months Ended September 30, 2010
Exhibit G: Financial Guaranty Supplemental Information
Exhibit H: Financial Guaranty Supplemental Information
Exhibit I: Mortgage Insurance Supplemental Information
New Insurance Written
Exhibit J: Mortgage Insurance Supplemental Information
Insurance in Force and Risk in Force
Exhibit K: Mortgage Insurance Supplemental Information
Risk in Force by LTV and Policy Year and Other Risk in Force
Exhibit L: Mortgage Insurance Supplemental Information
Claims, Reserves and Reserve Per Default
Exhibit M: Mortgage Insurance Supplemental Information
Default Statistics
Exhibit N: Mortgage Insurance Supplemental Information
Net Premiums Written and Earned, Captives and Persistency
Exhibit O: Mortgage Insurance Supplemental Information
Modified Pool

Radian Group Inc. and Subsidiaries

Condensed Consolidated Statements of Income
Exhibit A
Quarter Ended Nine Months Ended
September 30 September 30
2011 2010 2011 2010
(In thousands, except per-share data)
Revenues:
Net premiums written - insurance $ 178,287 $ 174,807 $ 513,814 $ 490,209
Net premiums earned - insurance $ 179,655 $ 203,937 $ 571,612 $ 605,651
Net investment income 38,763 46,554 124,826 140,531
Net gains on investments 81,640 94,258 163,311 209,468
Net impairment losses recognized in earnings (20 ) (34 ) (31 ) (90 )
Change in fair value of derivative instruments 126,008 229,783 558,626 (372,777 )
Net gains (losses) on other financial instruments 80,602 4,882 160,900 (159,882 )
Gain on sale of affiliate - - - 34,815
Other income 1,404 1,951 4,048 5,654
Total revenues 508,052 581,331 1,583,292 463,370
Expenses:
Provision for losses 249,598 344,389 940,537 1,323,435
Change in reserve for premium deficiency (1,942 ) 8,628 (6,427 ) 43
Policy acquisition costs 11,449 11,054 39,967 42,719
Other operating expenses 45,240 43,052 137,413 143,273
Interest expense 14,094 9,502 47,197 28,551
Total expenses 318,439 416,625 1,158,687 1,538,021
Equity in net income of affiliates - - 65 14,668
Pretax income (loss) 189,613 164,706 424,670 (1,059,983 )
Income tax provision (benefit) 6,045 52,521 981 (386,733 )
Net income (loss) $ 183,568 $ 112,185 $ 423,689 $ (673,250 )
Diluted net income (loss) per share (1) $ 1.37 $ 0.84 $ 3.16 $ (6.20 )

(1) Weighted average shares outstanding (In thousands)
Weighted average common shares outstanding 132,364 132,324 132,366 108,608
Increase in weighted average shares-common stock equivalents-diluted basis 1,149 1,196 1,501 -
Weighted average shares outstanding 133,513 133,520 133,867 108,608

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
September 30 December 31 September 30
(In thousands, except per-share data) 2011 2010 2010
Assets:
Cash and investments $ 5,936,586 $ 6,680,630 $ 6,438,904
Deferred policy acquisition costs 138,962 148,326 146,475
Deferred income taxes, net 19,244 27,531 728,230
Reinsurance recoverables 166,483 244,894 586,370
Derivative assets 20,315 26,212 26,995
Receivable for securities sold 504,584 160 134,539
Other assets 460,111 493,134 490,084
Total assets $ 7,246,285 $ 7,620,887 $ 8,551,597
Liabilities and stockholders' equity:
Unearned premiums $ 628,400 $ 686,364 $ 707,265
Reserve for losses and loss adjustment expenses 3,260,556 3,596,735 3,592,973
Reserve for premium deficiency 4,309 10,736 25,399
Long-term debt 814,901 964,788 664,901
VIE debt 273,379 520,114 496,293
Derivative liabilities 188,921 723,579 530,688
Payable for securities purchased 532,451 9,112 282,477
Other liabilities 254,932 249,679 319,981
Total liabilities 5,957,849 6,761,107 6,619,977
Common stock 151 150 150
Additional paid-in capital 1,074,201 1,071,080 1,004,079
Retained earnings (deficit) 218,095 (204,926 ) 928,025
Accumulated other comprehensive loss (4,011 ) (6,524 ) (634 )
Total common stockholders' equity 1,288,436 859,780 1,931,620
Total liabilities and stockholders' equity $ 7,246,285 $ 7,620,887 $ 8,551,597
Book value per share $ 9.67 $ 6.46 $ 14.53

Radian Group Inc. and Subsidiaries

Segment Information

Quarter Ended September 30, 2011
Exhibit C
Mortgage Financial
(In thousands) Insurance Guaranty Total
Revenues:
Net premiums written - insurance $ 178,215 $ 72 $ 178,287
Net premiums earned - insurance $ 163,436 $ 16,219 $ 179,655
Net investment income 21,642 17,121 38,763
Net gains on investments 53,263 28,377 81,640
Net impairment losses recognized in earnings (20 ) - (20 )
Change in fair value of derivative instruments 200 125,808 126,008
Net gains on other financial instruments 2,486 78,116 80,602
Other income 1,357 47 1,404
Total revenues 242,364 265,688 508,052
Expenses:
Provision for losses 276,599 (27,001 ) 249,598
Change in reserve for premium deficiency (1,942 ) - (1,942 )
Policy acquisition costs 7,834 3,615 11,449
Other operating expenses 36,082 9,158 45,240
Interest expense 2,015 12,079 14,094
Total expenses 320,588 (2,149 ) 318,439
Equity in net income of affiliates - - -
Pretax income (loss) (78,224 ) 267,837 189,613
Income tax provision (benefit) (36,033 ) 42,078 6,045
Net income (loss) $ (42,191 ) $ 225,759 $ 183,568
Cash and investments $ 3,176,860 $ 2,759,726 $ 5,936,586
Deferred policy acquisition costs 47,863 91,099 138,962
Total assets 3,731,978 3,514,307 7,246,285
Unearned premiums 206,477 421,923 628,400
Reserve for losses and loss adjustment expenses 3,214,854 45,702 3,260,556
VIE debt 31,164 242,215 273,379
Derivative liabilities - 188,921 188,921

Radian Group Inc. and Subsidiaries

Segment Information

Quarter Ended September 30, 2010
Exhibit D
Mortgage Financial
(In thousands) Insurance Guaranty Total
Revenues:
Net premiums written - insurance $ 174,419 $ 388 $ 174,807
Net premiums earned - insurance $ 181,731 $ 22,206 $ 203,937
Net investment income 26,658 19,896 46,554
Net gains on investments 62,326 31,932 94,258
Net impairment losses recognized in earnings (34 ) - (34 )
Change in fair value of derivative instruments 6,772 223,011 229,783
Net gains (losses) on other financial instruments (6,591 ) 11,473 4,882
Gain on sale of affiliate - - -
Other income 1,870 81 1,951
Total revenues 272,732 308,599 581,331
Expenses:
Provision for losses 347,800 (3,411 ) 344,389
Change in reserve for premium deficiency 8,628 - 8,628
Policy acquisition costs 6,444 4,610 11,054
Other operating expenses 31,690 11,362 43,052
Interest expense 3,251 6,251 9,502
Total expenses 397,813 18,812 416,625
Pretax income (loss) (125,081 ) 289,787 164,706
Income tax provision (benefit) (50,090 ) 102,611 52,521
Net income (loss) $ (74,991 ) $ 187,176 $ 112,185
Cash and investments $ 3,722,189 $ 2,716,715 $ 6,438,904
Deferred policy acquisition costs 37,144 109,331 146,475
Total assets 5,293,768 3,257,829 8,551,597
Unearned premiums 199,764 507,501 707,265
Reserve for losses and loss adjustment expenses 3,504,181 88,792 3,592,973
VIE debt 156,811 339,482 496,293
Derivative liabilities 178 530,510 530,688

Radian Group Inc. and Subsidiaries

Segment Information

Nine Months Ended September 30, 2011
Exhibit E
Mortgage Financial
(In thousands) Insurance Guaranty Total
Revenues:
Net premiums written - insurance $ 523,255 $ (9,441 ) $ 513,814
Net premiums earned - insurance $ 513,895 $ 57,717 $ 571,612
Net investment income 73,328 51,498 124,826
Net gains on investments 98,450 64,861 163,311
Net impairment losses recognized in earnings (31 ) - (31 )
Change in fair value of derivative instruments 64 558,562 558,626
Net gains on other financial instruments 4,321 156,579 160,900
Other income 3,881 167 4,048
Total revenues 693,908 889,384 1,583,292
Expenses:
Provision for losses 960,564 (20,027 ) 940,537
Change in reserve for premium deficiency (6,427 ) - (6,427 )
Policy acquisition costs 26,651 13,316 39,967
Other operating expenses 104,132 33,281 137,413
Interest expense 11,950 35,247 47,197
Total expenses 1,096,870 61,817 1,158,687
Equity in net income of affiliates - 65 65
Pretax income (loss) (402,962 ) 827,632 424,670
Income tax provision (benefit) (27,158 ) 28,139 981
Net income (loss) $ (375,804 ) $ 799,493 $ 423,689

Radian Group Inc. and Subsidiaries

Segment Information

Nine Months Ended September 30, 2010
Exhibit F
Mortgage Financial Financial
(In thousands) Insurance Guaranty Services Total
Revenues:
Net premiums written - insurance $ 499,360 $ (9,151 ) $ - $ 490,209
Net premiums earned - insurance $ 539,062 66,589 $ - $ 605,651
Net investment income 81,561 58,970 - 140,531
Net gains on investments 125,548 83,920 - 209,468
Net impairment losses recognized in earnings (90 ) - - (90 )
Change in fair value of derivative instruments 5,739 (378,516 ) - (372,777 )
Net losses on other financial instruments (44,764 ) (115,118 ) - (159,882 )
Gain on sale of affiliate - - 34,815 34,815
Other income 5,292 299 63 5,654
Total revenues 712,348 (283,856 ) 34,878 463,370
Expenses:
Provision for losses 1,304,513 18,922 - 1,323,435
Change in reserve for premium deficiency 43 - - 43
Policy acquisition costs 29,061 13,658 - 42,719
Other operating expenses 103,562 39,511 200 143,273
Interest expense 6,920 21,631 - 28,551
Total expenses 1,444,099 93,722 200 1,538,021
Equity in net income of affiliates - 78 14,590 14,668
Pretax (loss) income (731,751 ) (377,500 ) 49,268 (1,059,983 )
Income tax (benefit) provision (267,700 ) (136,278 ) 17,245 (386,733 )
Net (loss) income $ (464,051 ) $ (241,222 ) $ 32,023 $ (673,250 )

Radian Group Inc.

Financial Guaranty Supplemental Information
Exhibit G

Quarter Ended Nine Months Ended
(In thousands) September 30 September 30
2011 2010 2011 2010
Net Premiums Earned:
Public finance direct $ 9,708 $ 12,603 $ 29,124 $ 40,836
Public finance reinsurance 5,238 7,826 21,304 20,935
Structured direct 399 895 1,781 2,055
Structured reinsurance 875 882 2,639 2,729
Trade credit reinsurance (1 ) - 40 51
Net Premiums Earned - insurance 16,219 22,206 54,888 66,606
Impact of commutations - - 2,829 (17 )
Total Net Premiums Earned - insurance $ 16,219 $ 22,206 $ 57,717 $ 66,589
Refundings included in earned premium $ 4,597 $ 8,602 $ 18,728 $ 28,340
Net premiums earned - derivatives (1) $ 10,343 $ 11,335 $ 31,699 $ 35,172
Claims paid:
Trade credit reinsurance $ 82 $ (6 ) $ 343 $ 1,078
Financial Guaranty 2,257 32,298 5,692 57,496
Total $ 2,339 $ 32,292 $ 6,035 $ 58,574
(1) Included in change in fair value of derivative instruments.

Radian Group Inc.

Financial Guaranty Supplemental Information
Exhibit H
($ in thousands, except ratios) September 30 December 31 September 30
2011 2010 2010
Statutory Information:
Capital and surplus $ 1,038,290 $ 1,049,664 $ 1,056,140
Contingency reserve 431,715 392,589 374,944
Qualified statutory capital 1,470,005 1,442,253 1,431,084
Unearned premium reserve 469,956 517,516 534,356
Loss and loss expense reserve 13,026 70,129 76,936
Total statutory policyholders' reserves 1,952,987 2,029,898 2,042,376
Present value of installment premiums 162,766 202,386 217,341
Soft capital facilities - - 150,000
Total statutory claims paying resources $ 2,115,753 $ 2,232,284 $ 2,409,717
Net debt service outstanding $ 91,717,192 $ 101,168,759 $ 100,702,721
Capital leverage ratio (1) 62 70 70
Claims paying leverage ratio (2) 43 45 42
Net par outstanding by product:
Public finance direct $ 14,530,364 $ 15,727,252 $ 16,312,594
Public finance reinsurance 19,789,862 21,907,290 22,030,001
Structured direct 35,939,194 39,315,801 39,680,382
Structured reinsurance 1,630,317 1,805,295 1,854,456
Total (3) $ 71,889,737 $ 78,755,638 $ 79,877,433
(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 $1.6 billion, $1.9 billion and $1.8 billion at September 30, 2011, December 31, 2010 and September 30, 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.

Radian Group Inc.

Mortgage Insurance Supplemental Information
Exhibit I
Quarter Ended Nine Months Ended
($ in millions) September 30 September 30
2011 % 2010 % 2011 % 2010 %

Primary new insurance written
Prime $ 4,104 99.9 % $ 3,225 100.0 % $ 8,967 99.9 % $ 7,774 100.0 %
A minus and below 3 0.1 % 1 - 6 0.1 % 3 -
Total Flow $ 4,107 100.0 % $ 3,226 100.0 % $ 8,973 100.0 % $ 7,777 100.0 %

Total primary new insurance written by FICO score
>=740 $ 3,164 77.0 % $ 2,621 81.2 % $ 7,091 79.0 % $ 6,182 79.5 %

680-739

 892 21.7 % 605 18.8 % 1,828 20.4 % 1,592 20.5 %

620-679

 51 1.3 % - - 54 0.6 % 3 -
Total Flow $ 4,107 100.0 % $ 3,226 100.0 % $ 8,973 100.0 % $ 7,777 100.0 %

Percentage of primary new insurance written
Refinances 28 % 44 % 34 % 34 %
LTV
95.01% and above 2.2 % 0.2 % 1.7 % 0.3 %
90.01% to 95.00% 38.0 % 29.6 % 35.3 % 29.4 %
ARMs
Less than 5 years 0.1 % 0.1 % 0.1 % 0.1 %
5 years and longer 6.0 % 5.3 % 5.9 % 5.8 %

Radian Group Inc.

Mortgage Insurance Supplemental Information
Exhibit J
($ in millions) September 30 September 30
2011 % 2010 %

Primary insurance in force
Flow $ 111,493 89.5 % $ 116,971 88.9 %
Structured 13,143 10.5 % 14,587 11.1 %
Total Primary $ 124,636 100.0 % $ 131,558 100.0 %
Prime $ 104,185 83.6 % $ 107,469 81.7 %
Alt-A 12,775 10.2 % 15,204 11.6 %
A minus and below 7,676 6.2 % 8,885 6.7 %
Total Primary $ 124,636 100.0 % $ 131,558 100.0 %

Primary risk in force
Flow
Prime $ 23,813 86.7 % $ 24,413 84.8 %
Alt-A 2,275 8.3 % 2,743 9.5 %
A minus and below 1,385 5.0 % 1,634 5.7 %
Total Flow $ 27,473 100.0 % $ 28,790 100.0 %
Structured
Prime $ 1,651 58.4 % $ 1,865 58.7 %
Alt-A 641 22.7 % 727 22.9 %
A minus and below 533 18.9 % 587 18.4 %
Total Structured $ 2,825 100.0 % $ 3,179 100.0 %
Total
Prime $ 25,464 84.1 % $ 26,278 82.2 %
Alt-A 2,916 9.6 % 3,470 10.9 %
A minus and below 1,918 6.3 % 2,221 6.9 %
Total Primary $ 30,298 100.0 % $ 31,969 100.0 %

Total primary risk in force by FICO score
Flow
>=740 $ 11,566 42.1 % $ 10,865 37.7 %

680-739

 9,213 33.5 % 10,109 35.1 %

620-679

 5,671 20.7 % 6,620 23.0 %
<=619 1,023 3.7 % 1,196 4.2 %
Total Flow $ 27,473 100.0 % $ 28,790 100.0 %
Structured
>=740 $ 752 26.6 % $ 869 27.3 %

680-739

 822 29.1 % 927 29.2 %

620-679

 756 26.8 % 840 26.4 %
<=619 495 17.5 % 543 17.1 %
Total Structured $ 2,825 100.0 % $ 3,179 100.0 %
Total
>=740 $ 12,318 40.7 % $ 11,734 36.7 %

680-739

 10,035 33.1 % 11,036 34.6 %

620-679

 6,427 21.2 % 7,460 23.3 %
<=619 1,518 5.0 % 1,739 5.4 %
Total Primary $ 30,298 100.0 % $ 31,969 100.0 %

Percentage of primary risk in force
Refinances 31 % 31 %
LTV
95.01% and above 18 % 20 %
90.01% to 95.00% 34 % 33 %
ARMs
Less than 5 years 5 % 6 %
5 years and longer 7 % 8 %

Pool risk in force
Prime $ 1,652 76.6 % $ 1,848 74.2 %
Alt-A 126 5.9 % 170 6.8 %
A minus and below 378 17.5 % 472 19.0 %
Total $ 2,156 100.0 % $ 2,490 100.0 %

Radian Group Inc.

Mortgage Insurance Supplemental Information
Exhibit K
($ in millions) September 30 September 30
2011 % 2010 %

Total primary risk in force by LTV
85.00% and below $ 2,731 9.0 % $ 2,831 8.9 %
85.01% to 90.00% 11,717 38.7 % 12,239 38.3 %
90.01% to 95.00% 10,390 34.3 % 10,619 33.2 %
95.01% and above 5,460 18.0 % 6,280 19.6 %
Total $ 30,298 100.0 % $ 31,969 100.0 %

Total primary risk in force by policy year

2005 and prior

 $ 7,207 23.8 % $ 8,539 26.6 %

2006

 3,276 10.8 % 3,852 12.0 %

2007

 7,175 23.7 % 8,395 26.3 %

2008

 5,376 17.7 % 6,189 19.4 %

2009

 2,812 9.3 % 3,249 10.2 %

2010

 2,354 7.8 % 1,745 5.5 %

2011

 2,098 6.9 % - -
Total $ 30,298 100.0 % $ 31,969 100.0 %

Total pool risk in force by policy year
2005 and prior $ 1,877 87.1 % $ 2,053 82.4 %

2006

 113 5.2 % 191 7.7 %

2007

 134 6.2 % 198 8.0 %

2008

 32 1.5 % 48 1.9 %
Total pool risk in force $ 2,156 100.0 % $ 2,490 100.0 %

Other risk in force
Second-lien
1st loss $ 107 $ 133
2nd loss 31 71
NIMs 38 157
International
1st loss-Hong Kong primary mortgage insurance 72 153
Credit default swaps - 121
Total other risk in force $ 248 $ 635
Risk to capital ratio-Radian Guaranty only

21.4:1

 (1) 17.2:1
(1) Preliminary

Radian Group Inc.

Mortgage Insurance Supplemental Information

For the Quarter and Nine Months Ended and as of September 30, 2011
Exhibit L
Quarter Ended Nine Months Ended
($ in thousands) September 30 September 30
2011 2010 2011 2010
Net claims paid
Prime $ 180,523 $ 175,809 $ 644,738 $ 465,816
Alt-A 57,244 80,371 220,514 226,432
A minus and below 37,015 44,456 134,394 129,485
Total primary claims paid 274,782 300,636 999,646 821,733
Pool 52,771 46,313 145,470 116,785
Second-lien and other 2,342 4,513 8,961 16,986
Subtotal 329,895 351,462 1,154,077 955,504
Impact of first-lien terminations - 142,750 38,198 223,099
Impact of captive terminations - (22 ) (1,166 ) (649 )
Impact of second-lien terminations - - 16,550 10,834
Total net claims paid $ 329,895 $ 494,190 $ 1,207,659 $ 1,188,788
Average net claim paid (1)
Prime $ 51.3 $ 41.5 $ 49.6 $ 43.6
Alt-A 61.8 54.3 61.1 56.7
A minus and below 43.1 35.0 40.1 37.0
Total average net primary claim paid 51.8 43.0 50.1 45.2
Pool 79.8 77.3 77.1 72.6
Second-lien and other 25.7 43.0 28.0 35.9
Total average net claim paid $ 54.4 $ 45.7 $ 52.1 $ 47.1
Average direct primary claim paid (2) (3) $ 55.8 $ 51.8 $ 55.1 $ 52.9
Average total direct claim paid (2) (3) $ 57.9 $ 53.7 $ 56.5 $ 54.0
Loss ratio - GAAP Basis 169.2 % 191.4 % 186.9 % 242.0 %
Expense ratio - GAAP Basis 26.9 % 21.0 % 25.4 % 24.6 %
196.1 % 212.4 % 212.3 % 266.6 %
Reserve for losses by category
Prime $ 1,655,992 $ 1,394,997
Alt-A 622,568 615,279
A minus and below 368,034 391,945
Reinsurance recoverable (4) 160,233 559,562
Total primary reserves 2,806,827 2,961,783
Pool insurance 397,919 523,833
Total 1st lien reserves 3,204,746 3,485,616
Second-lien 10,074 18,468
Other 34 97
Total reserves $ 3,214,854 $ 3,504,181
1st lien reserve per default (5)
Primary reserve per primary default $ 25,346 $ 22,780
Pool reserve per pool default (6) 15,325 16,456
Total 1st lien reserve per default 23,443 21,536

(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)

Calculated as total reserves divided by total defaults.

(6)

If calculated before giving effect to deductibles and stop losses in pool transactions, the pool reserve per default at September 30, 2011 and September 30, 2010 would be $26,513 and $26,627 respectively.

Radian Group Inc.

Mortgage Insurance Supplemental Information
Exhibit M
September 30 December 31 September 30
2011 2010 2010

Default Statistics
Primary insurance:
Flow

Prime
Number of insured loans 563,226 584,213 592,120
Number of loans in default 64,426 71,196 73,523
Percentage of loans in default 11.44 % 12.19 % 12.42 %

Alt-A
Number of insured loans 45,818 51,765 54,089
Number of loans in default 14,832 17,934 19,116
Percentage of loans in default 32.37 % 34.65 % 35.34 %

A minus and below
Number of insured loans 42,246 47,044 48,929
Number of loans in default 13,749 16,401 17,248
Percentage of loans in default 32.55 % 34.86 % 35.25 %
Total Flow
Number of insured loans 651,290 683,022 695,138
Number of loans in default 93,007 105,531 109,887
Percentage of loans in default 14.28 % 15.45 % 15.81 %
Structured

Prime
Number of insured loans 42,249 42,131 43,856
Number of loans in default 6,229 6,735 6,627
Percentage of loans in default 14.74 % 15.99 % 15.11 %

Alt-A
Number of insured loans 18,990 20,234 20,879
Number of loans in default 5,745 6,635 6,905
Percentage of loans in default 30.25 % 32.79 % 33.07 %

A minus and below
Number of insured loans 15,807 16,716 17,146
Number of loans in default 5,759 6,569 6,630
Percentage of loans in default 36.43 % 39.30 % 38.67 %
Total Structured
Number of insured loans 77,046 79,081 81,881
Number of loans in default 17,733 19,939 20,162
Percentage of loans in default 23.02 % 25.21 % 24.62 %
Total Primary Insurance

Prime
Number of insured loans 605,475 626,344 635,976
Number of loans in default 70,655 77,931 80,150
Percentage of loans in default 11.67 % 12.44 % 12.60 %

Alt-A
Number of insured loans 64,808 71,999 74,968
Number of loans in default 20,577 24,569 26,021
Percentage of loans in default 31.75 % 34.12 % 34.71 %

A minus and below
Number of insured loans 58,053 63,760 66,075
Number of loans in default 19,508 22,970 23,878
Percentage of loans in default 33.60 % 36.03 % 36.14 %
Total Primary Insurance
Number of insured loans 728,336 762,103 777,019
Number of loans in default 110,740 125,470 130,049
Percentage of loans in default 15.20 % 16.46 % 16.74 %
Pool insurance:
Number of loans in default 25,966 32,456 31,832

Radian Group Inc.

Mortgage Insurance Supplemental Information

For the Quarter and Nine Months Ended and as of September 30, 2011
Exhibit N
Quarter Ended Nine Months Ended
September 30 September 30
2011 2010 2011 2010

Net Premiums Written (In thousands)
Primary and Pool Insurance $ 177,642 $ 173,805 $ 521,455 $ 498,468
Second-lien (1) 565 609 1,777 888
International 8 5 23 4
Total Net Premiums Written - Insurance $ 178,215 $ 174,419 $ 523,255 $ 499,360

Net Premiums Earned (In thousands)
Primary and Pool Insurance $ 161,779 $ 178,554 $ 507,636 $ 529,288
Second-lien 565 610 1,777 1,855
International 1,092 2,567 4,482 7,919
Total Net Premiums Earned - Insurance $ 163,436 $ 181,731 $ 513,895 $ 539,062
Net premiums earned - derivatives (In thousands) (2) $ - $ 137 $ - $ 416

1st Lien Captives
Premiums ceded to captives (In thousands) $ 7,068 $ 24,392 $ 21,921 $ 74,550
% of total premiums 4.1 % 11.9 % 4.1 % 12.2 %
NIW subject to captives (In thousands) $ - $ - $ - $ 129
% of primary NIW - - - <1%
IIF included in captives (3) 9.5 % 28.9 %
RIF included in captives (3) 9.3 % 30.0 %
Persistency (twelve months ended September 30) 85.0 % 78.9 %

(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 O
($ in millions) September 30 September 30
2011 % 2010 %

Modified pool risk in force by policy year
2005 and prior $ 197 71.1 % $ 190 63.8 %

2006

 32 11.6 % 43 14.4 %

2007

 41 14.8 % 58 19.5 %

2008

 7 2.5 % 7 2.3 %
Total $ 277 100.0 % $ 298 100.0 %

Modified pool risk in force by product
Prime $ 82 29.6 % $ 75 25.2 %
Alt-A 177 63.9 % 205 68.8 %
A minus and below 18 6.5 % 18 6.0 %
Total $ 277 100.0 % $ 298 100.0 %

Modified pool insurance in force by product
Prime $ 964 31.2 % $ 696 22.1 %
Alt-A 1,973 64.0 % 2,310 73.3 %
A minus and below 147 4.8 % 147 4.6 %
Total $ 3,084 100.0 % $ 3,153 100.0 %
Reserve for losses - modified pool (in thousands) $ 67,601 $ 89,336

Default Statistics:
Modified pool:

Total modified pool
Number of insured loans 18,034 15,988
Number of loans in default 3,595 4,081
Percentage of loans in default 19.93 % 25.53 %
(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 that could cause actual results to differ materially from those set forth in the forward-looking statements, including:

  • Losses in our mortgage insurance business have reduced Radian Guaranty's statutory surplus and increased Radian Guaranty's risk-to-capital ratio; additional losses in our mortgage insurance portfolio or financial guaranty portfolio without a corresponding increase in capital or decrease in risk could further negatively impact these ratios, which could limit Radian Guaranty's ability to write new insurance and increase restrictions and requirements placed on Radian Guaranty.

    We and our insurance subsidiaries are subject to comprehensive, detailed regulation, principally designed for the protection of our insured policyholders rather than for the benefit of investors, by the insurance departments in the various states where our insurance subsidiaries are licensed to transact business. Insurance laws vary from state to state, but generally grant broad supervisory powers to state agencies or officials to examine insurance companies and enforce rules or exercise discretion affecting almost every significant aspect of the insurance business, including the power to revoke or restrict an insurance company's ability to write new business.

    The GSEs and state insurance regulators impose various capital requirements as well as capital and risk-based measurements on our insurance subsidiaries. These include risk-to-capital ratios, risk-based capital measures and surplus requirements that limit the amount of insurance that each of our insurance subsidiaries may write. Failure to maintain adequate levels of capital could lead to intervention by the various insurance regulatory authorities, which could materially and adversely affect our business, business prospects and financial condition.

    Under state insurance regulations, mortgage insurers are required to maintain minimum surplus levels and, in certain states, a minimum amount of statutory capital relative to the level of risk in force, or "risk-to-capital." Sixteen states (the risk-based capital or "RBC States") currently have a statutory or regulatory risk-based capital requirement (a "Statutory RBC Requirement"), the most common of which (imposed by 11 of the RBC States) is a requirement that a mortgage insurer's risk-to-capital ratio may not exceed 25 to 1. Radian Guaranty's domiciliary state, Pennsylvania, is not one of the RBC States. In the first nine months of 2011, the RBC States accounted for approximately 53.5% of Radian Guaranty's total primary new insurance written. If Radian Guaranty is not in compliance with the applicable Statutory RBC Requirement in any RBC State, it would be prohibited from writing new business in that state until it is back in compliance or it receives a waiver of the requirement from the applicable state insurance regulator, as discussed in more detail below. In those states that do not have a Statutory RBC Requirement, it is not clear what actions the applicable state regulators would take if a mortgage insurer fails to meet the Statutory RBC Requirement established by another state. Accordingly, if Radian Guaranty fails to meet the Statutory RBC Requirement in one or more states, it could be required to suspend writing business in some or all of the states in which it does business. In addition, the GSEs and our mortgage lending customers may decide not to conduct new business with Radian Guaranty (or reduce current business levels) or impose restrictions on Radian Guaranty while its risk-to-capital ratio remained at elevated levels. The franchise value of our mortgage insurance business would likely be significantly diminished if Radian Guaranty was prohibited from writing new business or restricted in the amount of new business it could write in one or more states.

    As a result of the significant losses we experienced in our mortgage insurance business during the last four years and despite significant capital contributions to this business, Radian Guaranty's risk-to-capital ratio has increased from 8.1 to 1 at December 31, 2006 to an estimated 21.4 to 1 at September 30, 2011. Based on our current projections, which are based on various assumptions that are subject to inherent uncertainty and require judgment by management, Radian Guaranty's risk-to-capital ratio is expected to continue to increase and, absent any future capital contributions from our holding company, exceed 25 to 1 in the near term. The ultimate amount of losses and the timing of these losses will depend in part on general economic conditions and other factors, including the health of credit markets, home prices and unemployment rates, all of which are difficult to predict and beyond our control. In addition, establishing loss reserves in our businesses requires significant judgment by management with respect to the likelihood, magnitude and timing of anticipated losses. This judgment has been made more difficult in the current period of prolonged economic uncertainly, and the models and estimates we use to establish loss reserves may prove to be inaccurate. If the actual losses we ultimately realize are in excess of the loss estimates we use in establishing loss reserves, we may be required to take unexpected charges to income, which could hurt our capital position and increase Radian Guaranty's risk-to-capital position.

    Radian Guaranty's risk-to-capital position also is dependent on the performance of our financial guaranty portfolio. During the third quarter of 2008, we contributed our ownership interest in Radian Asset Assurance to Radian Guaranty. While this reorganization provided Radian Guaranty with substantial regulatory capital and dividends, it also makes the capital adequacy of our mortgage insurance business dependent, to a significant degree, on the performance of our financial guaranty business. If the performance of our financial guaranty portfolio deteriorates materially, including if we are required to establish one or more significant statutory reserves as a result of defaults on obligations that we insure, or if we make net commutation payments to terminate insured obligations in excess of the then posted statutory reserves for such obligations, the regulatory capital of Radian Guaranty also would be negatively impacted. Any decrease in the capital support derived from our financial guaranty business could, therefore, increase the risk-to-capital ratio of Radian Guaranty and negatively impact its ability to remain in compliance with the Statutory RBC Requirements.

    We actively manage Radian Guaranty's risk-to-capital position in various ways, including: (1) through reinsurance arrangements with our subsidiaries, (2) by seeking opportunities to reduce our risk exposure through commutations or other negotiated transactions, and (3) by contributing additional capital from our holding company to our mortgage insurance operations. Our holding company currently has unrestricted cash and liquid investments of approximately $600 million, which may be used to further support Radian Guaranty's risk-to-capital position. Depending on the extent of our future losses, the amount of capital contributions required for Radian Guaranty to remain in compliance with the Statutory RBC Requirements could be substantial and could exceed amounts maintained at our holding company.

    Our ability to continue to manage Radian Guaranty's risk-to-capital through reinsurance may be limited. Our existing inter-company reinsurance arrangements are conducted through affiliated insurance subsidiaries, and therefore, remain subject to regulation by state insurance regulators who could decide to limit, or require the termination of, such arrangements. In addition, certain of these affiliated reinsurance companies currently are operating at or near minimal capital levels and have required, and may continue to require, additional capital contributions from our holding company in the future. One of these affiliated insurance companies, which provides reinsurance to Radian Guaranty for coverage on loans in excess of 25%, is a sister company of Radian Guaranty, and therefore, most of any contributions to this insurer would not be consolidated with Radian Guaranty's capital for purposes of calculating Radian Guaranty's risk-to-capital position. In the recent past, Fannie Mae has proposed amendments to its mortgage insurance eligibility guidelines which, if implemented without revision or a waiver for existing arrangements, may prohibit the use of certain of our inter-company reinsurance arrangements. If we are limited in, or prohibited from, using inter-company reinsurance arrangements to manage Radian Guaranty's risk-to-capital level, it would adversely impact Radian Guaranty's risk-to-capital position.

    In order to maximize our financial flexibility, we have applied for waivers or similar relief for Radian Guaranty in each of the RBC States. For the past several years, we, along with others in our industry, have pursued regulatory changes or relief in the RBC States, primarily through new legislation or other means by which the insurance regulator in these states is granted discretionary authority to waive the Statutory RBC Requirement. As a result of these efforts, we now believe that all of the RBC States other than New York have the flexibility to permit a waiver of their Statutory RBC Requirements. To date, Radian Guaranty has been granted future relief from two states - Illinois has granted a waiver that expires December 31, 2012 and Kentucky has informed us that it would not take action in the event Radian Guaranty's risk-to-capital ratio exceeded 25 to 1. The state of Kansas has not granted waivers to any mortgage insurance companies at this time, including Radian Guaranty. We are actively pursuing waivers in the remaining 12 RBC States. There can be no assurance: (1) that Radian Guaranty will be granted a waiver in any of the remaining RBC States; (2) that if a waiver is granted, such regulator will not revoke or terminate the waiver, which the regulator generally has the authority to do at any time; or (3) regarding what, if any, requirements may be imposed as a condition to such waivers, and whether we would be able to comply with any such conditions.

    In addition to filing for waivers in the RBC States, we are also preparing our wholly-owned subsidiary, Radian Mortgage Assurance (a sister company of Radian Guaranty formerly named Amerin Corporation) to write new first-lien mortgage insurance business. If necessary, we may use Radian Mortgage Assurance to write mortgage insurance only in those states that do not permit Radian Guaranty to continue writing insurance while it is out of compliance with Statutory RBC Requirements. We have received approval from the Pennsylvania Department of Insurance to use Radian Mortgage Assurance as a first-lien mortgage insurance provider. In addition, we intend to submit a request to the GSEs to have Radian Mortgage Assurance approved as an eligible mortgage insurer for purposes of writing business in each of the RBC States. As part of this submission, we expect to commit to making an initial capital contribution of $50 million to supplement Radian Mortgage Assurance's existing $17 million of capital. The GSEs could require a greater level of capitalization for Radian Mortgage Assurance and/or a capital contribution to Radian Guaranty as a condition to their approval, any of which would limit our financial flexibility and could make it more difficult for us to meet our holding company obligations in the future, including future principal payments on our long-term debt.

    We cannot provide any assurance as to whether we will obtain waivers in the remaining RBC States or whether the GSEs will approve Radian Mortgage Assurance as an eligible mortgage insurer. As part of our waiver requests in the remaining RBC States and our request to the GSEs, we are required to submit financial projections for Radian Guaranty to the various insurance departments and the GSEs, including projections performed by an independent third party.

    One of our competitors, Republic Mortgage Insurance Company ("RMIC"), ceased writing new insurance commitments after the waiver it received from its domiciliary state expired on August 31, 2011; and in October 2011, RMIC went into run-off. Another competitor, PMI Mortgage Insurance Co. ("PMI") and the subsidiary it established to write new business if PMI was no longer able to do so ("PMAC"), ceased issuing new mortgage insurance commitments effective August 2011 when PMI was placed under the supervision of the insurance department of its domiciliary state. Subsequently, on October 20, 2011, the Superior Court of the State of Arizona issued an order directing the Director of the Arizona Department of Insurance (the "Director") to take possession and control of the property and business of PMI pending a hearing on various matters that include the appointment of the Director as receiver for PMI. Both Fannie Mae and Freddie Mac suspended RMIC, PMI and PMAC as approved mortgage insurers. We are uncertain how such events, including the actions taken by the GSEs, will impact the status of Radian Guaranty's waiver requests and the GSE's approval process for Radian Mortgage Assurance.

    Our existing capital resources may not be sufficient to successfully manage Radian Guaranty's risk-to-capital ratio. If permitted by the RBC States and the GSEs, our ability to use waivers and Radian Mortgage Assurance to allow Radian Guaranty to continue to write business with a risk-to-capital position in excess of the Statutory RBC Requirements will likely be subject to a maximum risk-to-capital ratio and potentially other restrictions, which we may be unable to satisfy. As a result, even if we are successful in implementing this strategy, additional capital contributions could be necessary, which we may not have the ability to provide. Further, regardless of whether the waivers or Radian Mortgage Assurance are available to us, we may choose to use our existing holding company capital to maintain compliance with the Statutory RBC Requirements. Depending on the extent of our future mortgage insurance losses along with other factors, the amount of capital contributions that may be required to maintain compliance with the Statutory RBC Requirements could be significant and could exceed all of our remaining available capital. In the event we contribute a significant amount of our holding company capital to Radian Guaranty, our financial flexibility would be significantly reduced, making it more difficult for us to meet our holding company obligations in the future, including future principal payments on our long-term debt.

Other risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements including the following:

  • changes in general economic and political conditions, including high unemployment rates and continued weakness in the U.S. housing and mortgage credit markets, the U.S. economy reentering a recessionary period, a lack of meaningful liquidity in the capital markets or in the credit markets, changes or volatility in interest rates or consumer confidence and changes in credit spreads, each of which may be accelerated or intensified by, among other things, further actual or threatened downgrades of U.S. credit ratings or as a result of Congressional action following the recent decision to increase the U.S. debt ceiling;
  • changes in the way customers, investors, regulators or legislators perceive the strength of private mortgage insurers or financial guaranty providers, in particular in light of recent developments in the private mortgage insurance industry in which certain of our former competitors have ceased writing new mortgage insurance business and, in some cases, have been placed under supervision or receivership of their insurance regulators;
  • catastrophic events or further economic changes in geographic regions, including governments and municipalities, 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 potential 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;
  • 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;
  • 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 increase our 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;
  • any disruption in the servicing of mortgages covered by our insurance policies and poor servicer performance;
  • 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 which would reduce our premium income;
  • 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;
  • changes in the criteria for assigning credit or similar ratings, 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, including the credit ratings of Radian Group Inc. and the financial strength ratings assigned to Radian Guaranty Inc. ("Radian Guaranty");
  • heightened competition for our mortgage insurance business from others such as the Federal Housing Administration (the "FHA"), the Veteran's 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 Fannie Mae and Freddie Mac;
  • 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 of the Dodd-Frank Act 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;
  • volatility in our earnings caused by changes in the fair value of our assets and liabilities carried at fair value, including 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 gross deferred tax assets, which will depend on our ability to generate sufficient sustainable taxable income in future periods;
  • our ability to successfully develop and implement a strategy to utilize the recently acquired Municipal and Infrastructure Assurance Corporation (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, and in Item 1A of Part II of our Quarterly Reports on Form 10-Q. We caution you not to place undue reliance on these forward-looking statements, which are current only as of the date on which we filed this report. We do not intend to, and we disclaim any duty or obligation to, update or revise any forward-looking statements made in this report to reflect new information or future events or for any other reason.

SOURCE: Radian Group Inc. 

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