News

05/01/2013

Radian Reports First Quarter 2013 Financial Results

– Writes $10.9 billion of new MI business in the first quarter –

– Improves risk-to-capital ratio to 18.6:1; More than $800 million of currently available holding company liquidity –

– Total number of primary delinquent loans declines by 17% from first quarter of 2012 –

PHILADELPHIA--(BUSINESS WIRE)--May. 1, 2013-- Radian Group Inc. (NYSE: RDN) today reported a net loss for the quarter ended March 31, 2013, of $187.5 million, or $1.30 per diluted share, which included combined losses from the change in fair value of derivatives and other financial instruments of $173.3 million. This compares to a net loss for the quarter ended March 31, 2012, of $169.2 million, or $1.28 per diluted share, which included combined losses from the change in fair value of derivatives and other financial instruments of $90.6 million. Book value per share at March 31, 2013, was $5.39.

“We took the opportunity this quarter to significantly improve our capital and liquidity positions, providing a competitive advantage for Radian in an extremely attractive business environment,” said Chief Executive Officer S.A. Ibrahim. “Building on our momentum with a strong risk-to-capital ratio, financial flexibility at the holding company, and the number one mortgage insurance market share position in the fourth quarter of last year, we kicked off 2013 with a 69% jump in new mortgage insurance business written year-over-year.”

Ibrahim continued, “As our strong new business volume continues, our delinquency inventory decreases and the mix of profitable new business begins to outweigh our legacy mortgage insurance book, we are positioning Radian for a return to operating profitability.”

CAPITAL AND LIQUIDITY UPDATE

In March, Radian improved its capital and liquidity position through a successful capital raise, resulting in net proceeds of approximately $689 million. As previously reported, Radian Group contributed $115 million of capital to Radian Guaranty in the first quarter, in order to support the company’s strong risk-to-capital position. Radian Guaranty’s risk-to-capital ratio was 18.6:1 as of March 31, 2013. After the above-mentioned contribution of $115 million to Radian Guaranty, Radian Group maintains approximately $815 million of currently available liquidity.

• Radian expects to maintain a risk-to-capital ratio of 20:1 or below at Radian Guaranty for the foreseeable future.
• The improvement in the risk-to-capital ratio from December 31, 2012, was primarily driven by the $115 million capital contribution from Radian Group and a release of Radian Asset’s contingency reserves of $68 million, partially offset by an increase to the company’s net risk in force resulting from strong, new mortgage insurance business volume.
• In order to proactively manage its risk-to-capital position, Radian Guaranty entered into two quota share reinsurance agreements in 2012 with the same third-party reinsurance provider. As of March 31, 2013, a total of $2.4 billion of risk in force was ceded under those agreements. Beginning April 1, the company reduced the amount of new business that will be ceded to the reinsurer on a prospective basis from 20 percent to 5 percent. On December 31, 2014, and on December 31, 2015, Radian has the ability, at its option, to recapture a portion of the business that was reinsured.
• As of March 31, 2013, Radian Guaranty’s statutory capital was $1.1 billion compared to $926 million at year-end 2012, and $920 million a year ago.

FIRST QUARTER HIGHLIGHTS

• New mortgage insurance written (NIW) was $10.9 billion for the quarter, compared to $11.7 billion in the fourth quarter of 2012 and $6.5 billion in the prior-year quarter. Radian wrote an additional $4.1 billion in NIW in April 2013, compared to $2.5 billion in April 2012.
  
  
  • The Home Affordable Refinance Program (HARP) accounted for $2.5 billion of insurance not included in Radian Guaranty’s NIW total for the quarter. This compares to $2.9 billion in the fourth quarter of 2012 and $929.9 million in the prior-year quarter. As of March 31, 2013, more than 10 percent of the company’s total primary mortgage insurance risk in force had successfully completed a HARP refinance.
  • Of the $10.9 billion in new business written in the first quarter of 2013, 64 percent was written with monthly premiums and 36 percent with single premiums.
  • NIW continued to consist of loans with excellent risk characteristics, with 75 percent consisting of loans with FICO scores of 740 or greater.

• The mortgage insurance provision for losses was $132.0 million in the first quarter of 2013, compared to $306.9 million in the fourth quarter of 2012, and $234.7 million in the prior-year period. The loss ratio in the first quarter for Radian Guaranty was 72.1 percent, compared to 171.0 in the fourth quarter of 2012 and 135.3 percent in the first quarter of 2012. Mortgage insurance loss reserves were approximately $2.9 billion as of March 31, 2013, which decreased from $3.1 billion as of December 31, 2012, and from $3.2 billion as of March 31, 2012. First-lien reserves per primary default increased to $30,426 as of March 31, 2013, compared to $29,510 as of December 31, 2012, and $27,833 as of March 31, 2012.
• The total number of primary delinquent loans decreased by 9 percent in the first quarter from the fourth quarter of 2012, and by 17 percent from the first quarter of 2012. The primary mortgage insurance delinquency rate decreased to 10.9 percent in the first quarter of 2013, compared to 12.1 percent in the fourth quarter of 2012, and 14.1 percent in the first quarter of 2012. The company’s primary risk in force on defaulted loans was $4.0 billion in the first quarter, compared to $4.3 billion in the fourth quarter of 2012, and $4.9 billion in the first quarter of 2012.
• Total mortgage insurance claims paid were $309.9 million in the first quarter, compared to $263.4 million in the fourth quarter, and $218.2 million in the first quarter of 2012.

• $38.0 million of other operating expenses in the first quarter represented compensation expenses related to an increase in the estimated future value of performance awards that are impacted by changes in the company’s stock price. This increased compensation expense primarily reflects Radian’s higher stock price in the first quarter. In 2012, such compensation expenses were $13.5 million in the fourth quarter and $8.0 million in the first quarter.
• 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 dividends over time.
  
  
  • As of March 31, 2013, Radian Asset had approximately $1.2 billion in statutory surplus with an additional $0.5 billion in claims-paying resources.
  • In January, Radian Asset completed the commutation of its remaining reinsurance risk from Financial Guaranty Insurance Corporation (FGIC) of $822 million, which resulted in a $7 million contingency reserve release in the first quarter.
  • In February, Radian Asset received regulatory approval to release an additional $61 million of contingency reserves, which benefited Radian Guaranty's statutory capital position in the first quarter. The reserve release was based on a reduction in Radian Asset’s net par outstanding, resulting from the maturing of exposures and other terminations of coverage.
  • Radian Asset has paid a total of $384 million in dividends to Radian Guaranty since 2008, and expects to pay another dividend of approximately $37 million in 2013.
  • Since June 30, 2008, Radian Asset has successfully reduced its total net par exposure by 76 percent to $28.2 billion as of March 31, 2013, including large declines in many of the riskier segments of the portfolio.

CONFERENCE CALL

Radian will discuss these items in its conference call today, Wednesday, May 1, 2013, at 11:00 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 800-230-1096 inside the U.S., or 612-288-0329 for international callers, using passcode 290876 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 290876.

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 March 31, 2013
Exhibit D:			Segment Information Quarter Ended March 31, 2012
Exhibit E:			Financial Guaranty Supplemental Information
Exhibit F:			Mortgage Insurance Supplemental Information
			New Insurance Written
Exhibit G:			Mortgage Insurance Supplemental
			Information Insurance in Force and Risk in Force by Product
Exhibit H:			Mortgage Insurance Supplemental Information
			Risk in Force by FICO, LTV and Policy Year
Exhibit I:			Mortgage Insurance Supplemental Information
			Pool and Other Risk in Force, Risk-to-Capital
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
			Captives, QSR and Persistency

Radian Group Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Exhibit A
			Quarter Ended
			March 31,
(In thousands, except per-share data)			2013					2012
Revenues:
Net premiums written - insurance			$	207,185				$	77,678
Net premiums earned - insurance			$	192,588				$	167,365
Net investment income			26,873					34,713
Net (losses) gains on investments			(5,505		)			67,459
Change in fair value of derivative instruments			(167,670		)			(72,757		)
Net losses on other financial instruments			(5,675		)			(17,852		)
Other income			1,771					1,440
Total revenues			42,382					180,368
Expenses:
Provision for losses			132,059					266,154
Change in reserve for premium deficiency			(629		)			(20		)
Policy acquisition costs			17,195					28,046
Other operating expenses			80,100					50,154
Interest expense			15,881					14,148
Total expenses			244,606					358,482
Equity in net income (loss) of affiliates			1					(11		)
Pretax loss			(202,223		)			(178,125		)
Income tax benefit			(14,723		)			(8,893		)
Net loss			$	(187,500	)			$	(169,232	)
Diluted net loss per share (1)			$	(1.30	)			$	(1.28	)

(1) Weighted average shares outstanding (in thousands)
Weighted average common shares outstanding			132,625				132,465
Increase in weighted average shares - common stock offering			11,730				—
Weighted average shares outstanding			144,355				132,465

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)			2013					2012
Assets:
Cash and investments			$	5,672,888				$	5,208,199
Deferred policy acquisition costs			74,601					88,202
Deferred income taxes, net			17,902					—
Reinsurance recoverables			78,770					89,204
Derivative assets			6,429					13,609
Other assets			520,359					503,986
Total assets			$	6,370,949				$	5,903,200
Liabilities and stockholders’ equity:
Unearned premiums			$	673,849				$	648,682
Reserve for losses and loss adjustment expenses			2,919,073					3,149,936
Reserve for premium deficiency			3,056					3,685
Long-term debt			906,105					663,571
VIE debt			107,401					108,858
Derivative liabilities			430,898					266,873
Payable for securities purchased			37,491					697
Other liabilities			362,030					324,573
Total liabilities			5,439,903					5,166,875
Common stock			190					151
Additional paid-in capital			1,450,057					1,075,320
Retained deficit			(542,741		)			(355,241		)
Accumulated other comprehensive income			23,540					16,095
Total common stockholders’ equity			931,046					736,325
Total liabilities and stockholders’ equity			$	6,370,949				$	5,903,200
Book value per share			$	5.39				$	5.51

Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended March 31, 2013
Exhibit C
			Mortgage					Financial
(In thousands)			Insurance					Guaranty						Total
Revenues:
Net premiums written - insurance			$	217,286				$	(10,101	)	(1)			$	207,185
Net premiums earned - insurance			$	182,992				$	9,596		(1)			$	192,588
Net investment income			15,102					11,771						26,873
Net losses on investments			(3,237		)			(2,268		)				(5,505		)
Net impairment losses recognized in earnings			—					—						—
Change in fair value of derivative instruments			—					(167,670		)				(167,670		)
Net losses on other financial instruments			(1,877		)			(3,798		)				(5,675		)
Other income			1,712					59						1,771
Total revenues			194,692					(152,310		)				42,382
Expenses:
Provision for losses			131,956					103						132,059
Change in reserve for premium deficiency			(629		)			—						(629		)
Policy acquisition costs			11,732					5,463						17,195
Other operating expenses			65,780					14,320						80,100
Interest expense			2,669					13,212						15,881
Total expenses			211,508					33,098						244,606
Equity in net income of affiliates			—					1						1
Pretax loss			$	(16,816	)			$	(185,407	)				$	(202,223	)
Income tax benefit														(14,723		)
Net loss														$	(187,500	)
Cash and investments			$	3,186,871				$	2,486,017					$	5,672,888
Deferred policy acquisition costs			29,920					44,681						74,601
Total assets			3,663,552					2,707,397						6,370,949
Unearned premiums			428,574					245,275						673,849
Reserve for losses and loss adjustment expenses			2,894,500					24,573						2,919,073
VIE debt			11,062					96,339						107,401
Derivative liabilities			—					430,898						430,898

(1)		Reflects the impact of the commutation of reinsurance business.

Radian Group Inc. and Subsidiaries
Segment Information
Quarter Ended March 31, 2012
Exhibit D
			Mortgage					Financial
(In thousands)			Insurance					Guaranty						Total
Revenues:
Net premiums written - insurance			$	196,853				$	(119,175	)	(1)			$	77,678
Net premiums earned - insurance			$	173,451				$	(6,086	)	(1)			$	167,365
Net investment income			18,011					16,702						34,713
Net gains on investments			32,178					35,281						67,459
Change in fair value of derivative instruments			21					(72,778		)				(72,757		)
Net losses on other financial instruments			(709		)			(17,143		)				(17,852		)
Other income			1,344					96						1,440
Total revenues			224,296					(43,928		)				180,368
Expenses:
Provision for losses			234,729					31,425						266,154
Change in reserve for premium deficiency			(20		)			—						(20		)
Policy acquisition costs			8,646					19,400						28,046
Other operating expenses			36,265					13,889						50,154
Interest expense			1,722					12,426						14,148
Total expenses			281,342					77,140						358,482
Equity in net loss of affiliates			—					(11		)				(11		)
Pretax loss			(57,046		)			(121,079		)				(178,125		)
Income tax (benefit) provision			(11,799		)			2,906						(8,893		)
Net loss			$	(45,247	)			$	(123,985	)				$	(169,232	)
Cash and investments			$	3,259,204				$	2,392,620					$	5,651,824
Deferred policy acquisition costs			49,786					58,155						107,941
Total assets			3,476,732					2,971,789						6,448,521
Unearned premiums			256,809					315,756						572,565
Reserve for losses and loss adjustment expenses			3,230,938					85,426						3,316,364
VIE debt			8,625					246,609						255,234
Derivative liabilities			—					202,100						202,100

(1)		Reflects the impact of the commutation of reinsurance business.

Radian Group Inc. and Subsidiaries
Financial Guaranty Supplemental Information
Exhibit E
			Quarter Ended March 31,
(In thousands)			2013						2012
Net Premiums Earned:
Total Premiums Earned - insurance			$	12,043					$	16,178
Impact of commutations and reinsurance			(2,447		)				(22,264		)
Net Premiums Earned - insurance			$	9,596					$	(6,086	)
Refundings included in earned premium			$	4,753					$	8,224
Net premiums earned - derivatives (1)			$	4,992					$	8,648
Claims paid			$	41,858		(2)			$	9,000
			March 31						December 31
($ in thousands, except ratios)			2013						2012
Statutory Information:
Capital and surplus			$	1,206,578					$	1,144,112
Contingency reserve			240,303						300,138
Qualified statutory capital			1,446,881						1,444,250
Unearned premium reserve			233,192						256,920
Loss and loss expense reserve			(93,276		)				(53,441		)
Total statutory policyholders’ reserves			1,586,797						1,647,729
Present value of installment premiums			104,913						114,292
Total statutory claims paying resources			$	1,691,710					$	1,762,021
Net debt service outstanding			$	36,412,556					$	42,526,289
Capital leverage ratio (3)			25						29
Claims paying leverage ratio (4)			22						24
Net par outstanding by product:
Public finance direct			$	9,531,501					$	9,796,131
Public finance reinsurance			4,646,397						5,542,217
Structured direct			13,405,544						17,615,383
Structured reinsurance			635,210						787,758
Total (5)			$	28,218,652					$	33,741,489

(1)		Included in change in fair value of derivative instruments.
(2)		Primarily related to commutation of reinsurance business.
(3)		The capital leverage ratio is derived by dividing net debt service outstanding by qualified statutory capital.
(4)		The claims paying leverage ratio is derived by dividing net debt service outstanding by total statutory claims paying resources.
(5)		Included in public finance net par outstanding is $0.9 billion and $1.0 billion at March 31, 2013 and December 31, 2012, 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. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit F
			Quarter Ended March 31,
			2013								2012
($ in millions)			$				%				$				%
Primary new insurance written
Prime			$	10,905			100.0	%			$	6,460			99.9	%
Alt-A and A minus and below			1				—				5				0.1
Total Flow			$	10,906			100.0	%			$	6,465			100.0	%
Total primary new insurance written by FICO score
>=740			$	8,210			75.3	%			$	4,920			76.1	%
680-739			2,398				22.0				1,400				21.7
620-679			298				2.7				145				2.2
Total Flow			$	10,906			100.0	%			$	6,465			100.0	%
Percentage of primary new insurance written
Monthly premiums			64		%						64		%
Single premiums			36		%						36		%
Refinances			48		%						47		%
LTV
95.01% and above			1.7		%						1.8		%
90.01% to 95.00%			39.8		%						38.7		%
85.01% to 90.00%			39.3		%						41.6		%
85.00% and below			19.2		%						17.9		%

Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit G
			March 31									March 31
			2013									2012
($ in millions)			$					%				$					%
Primary insurance in force
Flow			$	133,693				92.4	%			$	115,127				90.3	%
Structured			10,950					7.6				12,399					9.7
Total Primary			$	144,643				100.0	%			$	127,526				100.0	%
Prime			$	128,361				88.8	%			$	108,507				85.1	%
Alt-A			10,027					6.9				11,828					9.3
A minus and below			6,255					4.3				7,191					5.6
Total Primary			$	144,643				100.0	%			$	127,526				100.0	%
Primary risk in force
Flow			$	33,027				93.2	%			$	28,348				91.3	%
Structured			2,419					6.8				2,691					8.7
Total Primary			$	35,446				100.0	%			$	31,039				100.0	%
Flow
Prime			$	30,146				91.3	%			$	24,962				88.1	%
Alt-A			1,780					5.4				2,104					7.4
A minus and below			1,101					3.3				1,282					4.5
Total Flow			$	33,027				100.0	%			$	28,348				100.0	%
Structured
Prime			$	1,419				58.7	%			$	1,570				58.3	%
Alt-A			535					22.1				608					22.6
A minus and below			465					19.2				513					19.1
Total Structured			$	2,419				100.0	%			$	2,691				100.0	%
Total
Prime			$	31,565				89.1	%			$	26,532				85.5	%
Alt-A			2,315					6.5				2,712					8.7
A minus and below			1,566					4.4				1,795					5.8
Total Primary			$	35,446				100.0	%			$	31,039				100.0	%

Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit H
			March 31									March 31
			2013									2012
($ in millions)			$					%				$					%
Total primary risk in force by FICO score
Flow
>=740			$	17,556				53.2	%			$	12,889				45.5	%
680-739			9,865					29.9				9,184					32.4
620-679			4,801					14.5				5,328					18.8
<=619			805					2.4				947					3.3
Total Flow			$	33,027				100.0	%			$	28,348				100.0	%
Structured
>=740			$	647				26.7	%			$	712				26.5	%
680-739			698					28.9				781					29.0
620-679			642					26.5				721					26.8
<=619			432					17.9				477					17.7
Total Structured			$	2,419				100.0	%			$	2,691				100.0	%
Total
>=740			$	18,203				51.3	%			$	13,601				43.8	%
680-739			10,563					29.8				9,965					32.1
620-679			5,443					15.4				6,049					19.5
<=619			1,237					3.5				1,424					4.6
Total Primary			$	35,446				100.0	%			$	31,039				100.0	%
Total primary risk in force by LTV
95.01% and above			$	4,494				12.7	%			$	5,165				16.6	%
90.01% to 95.00%			13,988					39.5				11,072					35.7
85.01% to 90.00%			13,473					38.0				11,983					38.6
85.00% and below			3,491					9.8				2,819					9.1
Total			$	35,446				100.0	%			$	31,039				100.0	%
Total primary risk in force by policy year
2005 and prior			$	5,362				15.1	%			$	6,574				21.2	%
2006			2,635					7.4				3,057					9.8
2007			5,876					16.6				6,722					21.7
2008			4,436					12.5				5,042					16.2
2009			1,855					5.2				2,511					8.1
2010			1,573					4.5				2,147					6.9
2011			2,735					7.7				3,463					11.2
2012			8,397					23.7				1,523					4.9
2013			2,577					7.3				—					—
Total			$	35,446				100.0	%			$	31,039				100.0	%
Primary risk in force on defaulted loans			$	3,953								$	4,866

Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit I
			March 31									March 31
			2013									2012
($ in millions)			$					%				$					%
Pool risk in force
Prime			$	1,393				77.3	%			$	1,505				76.8	%
Alt-A			99					5.5				117					6.0
A minus and below			309					17.2				338					17.2
Total			$	1,801				100.0	%			$	1,960				100.0	%
Total pool risk in force by policy year
2005 and prior			$	1,646				91.4	%			$	1,757				89.6	%
2006			68					3.8				87					4.4
2007			80					4.4				99					5.1
2008			7					0.4				17					0.9
Total pool risk in force			$	1,801				100.0	%			$	1,960				100.0	%
Other risk in force
Second-lien
1st loss			$	75								$	96
2nd loss			12									27
NIMS			14									15
1st loss-Hong Kong primary mortgage insurance			33									55
Total other risk in force			$	134								$	193
Risk to capital ratio-Radian Guaranty only			18.6:1			(1)						20.6:1
Risk to capital ratio-Mortgage Insurance combined			25.7:1			(1)						29.0:1
(1) Preliminary

Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit J
			Quarter Ended March 31,
($ in thousands)			2013					2012
Net claims paid
Prime			$	200,517				$	127,101
Alt-A			49,091					36,651
A minus and below			27,486					26,080
Total primary claims paid			277,094					189,832
Pool			30,949					24,926
Second-lien and other			1,884					3,583
Subtotal			309,927					218,341
Impact of first-lien terminations			—					—
Impact of captive terminations			—					(148		)
Impact of second-lien terminations			—					—
Total			$	309,927				$	218,193
Average claim paid (1)
Prime			$	49.0				$	48.6
Alt-A			60.1					59.4
A minus and below			37.6					40.6
Total primary average claims paid			49.1					49.0
Pool			73.5					67.7
Second-lien and other			22.2					26.9
Total			$	50.4				$	49.9
Average primary claim paid (2) (3)			$	51.4				$	52.0
Average total claim paid (2) (3)			$	52.6				$	52.5
Loss ratio - GAAP basis			72.1		%			135.3		%
Expense ratio - GAAP basis			42.4		%			25.9		%
			114.5		%			161.2		%
Reserve for losses by category
Prime			$	1,640,504				$	1,776,426
Alt-A			539,321					603,998
A minus and below			337,584					369,006
Reinsurance recoverable (4)			72,101					118,071
Total primary reserves			2,589,510					2,867,501
Pool insurance			295,283					354,133
Total 1st lien reserves			2,884,793					3,221,634
Second lien and other			9,707					10,747
Total reserves			$	2,894,500				$	3,232,381
1st lien reserve per default (5)
Primary reserve per primary default			$	30,426				$	27,833
Primary reserve per default excluding IBNR			27,517					26,038
Pool reserve per pool default (6)			17,629					17,580
Total 1st lien reserve per default			28,321					26,156

(1)		Calculated net of reinsurance recoveries and without giving effect to the impact of first-lien, second-lien and captive terminations.
(2)		Calculated without giving effect to the impact of terminations of captive reinsurance and first- and second-lien transactions.
(3)		Before reinsurance recoveries.
(4)		Represents ceded losses on captive transactions, Smart Home and quota share reinsurance transactions.
(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 March 31, 2013 and 2012, would be $28,402 and $27,299, respectively.

Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit K
			March 31				December 31				March 31
			2013				2012				2012
Default Statistics
Primary Insurance:
Flow
Prime
Number of insured loans			646,497				630,094				575,769
Number of loans in default			50,496				55,483				60,785
Percentage of loans in default			7.81	%			8.81	%			10.56	%
Alt-A
Number of insured loans			36,236				37,754				42,591
Number of loans in default			10,910				11,798				13,642
Percentage of loans in default			30.11	%			31.25	%			32.03	%
A minus and below
Number of insured loans			33,811				35,150				39,461
Number of loans in default			10,044				11,211				12,241
Percentage of loans in default			29.71	%			31.89	%			31.02	%
Total Flow
Number of insured loans			716,544				702,998				657,821
Number of loans in default			71,450				78,492				86,668
Percentage of loans in default			9.97	%			11.17	%			13.18	%
Structured
Prime
Number of insured loans			36,730				37,528				40,367
Number of loans in default			4,994				5,371				5,856
Percentage of loans in default			13.60	%			14.31	%			14.51	%
Alt-A
Number of insured loans			15,745				16,315				17,977
Number of loans in default			3,923				4,207				5,251
Percentage of loans in default			24.92	%			25.79	%			29.21	%
A minus and below
Number of insured loans			13,845				14,157				15,171
Number of loans in default			4,742				5,099				5,252
Percentage of loans in default			34.25	%			36.02	%			34.62	%
Total Structured
Number of insured loans			66,320				68,000				73,515
Number of loans in default			13,659				14,677				16,359
Percentage of loans in default			20.60	%			21.58	%			22.25	%
Total Primary Insurance
Prime
Number of insured loans			683,227				667,622				616,136
Number of loans in default			55,490				60,854				66,641
Percentage of loans in default			8.12	%			9.12	%			10.82	%
Alt-A
Number of insured loans			51,981				54,069				60,568
Number of loans in default			14,833				16,005				18,893
Percentage of loans in default			28.54	%			29.60	%			31.19	%
A minus and below
Number of insured loans			47,656				49,307				54,632
Number of loans in default			14,786				16,310				17,493
Percentage of loans in default			31.03	%			33.08	%			32.02	%
Total Primary
Number of insured loans			782,864				770,998				731,336
Number of loans in default			85,109				93,169				103,027
Percentage of loans in default			10.87	%			12.08	%			14.09	%
Pool insurance
Number of loans in default			16,750				18,147				20,144

Radian Group Inc. and Subsidiaries
Mortgage Insurance Supplemental Information
Exhibit L
			Quarter Ended March 31,
($ in thousands)			2013					2012
1st Lien Captives
Premiums ceded to captives			$	5,152				$	6,429
% of total premiums			2.6		%			3.6		%
IIF included in captives (1)			5.8		%			8.4		%
RIF included in captives (1)			5.7		%			8.2		%
Initial Quota Share Reinsurance ("QSR") Transaction
QSR ceded premiums written			$	6,122
% of premiums written			2.5		%
QSR ceded premiums earned			$	7,833
% of premiums earned			4.0		%
Ceding commissions			$	1,530
RIF included in QSR (2)			$	1,471,580
Second QSR Transaction
QSR ceded premiums written			$	16,440
% of premiums written			6.7		%
QSR ceded premiums earned			$	2,838
% of premiums earned			1.4		%
Ceding commissions			$	5,754
RIF included in QSR (2)			$	900,378
Persistency (twelve months ended March 31)			80.9		%			84.5		%

(1)		Radian reinsures the middle layer risk positions, while retaining a significant portion of the total risk comprising the first loss and most remote risk positions.
(2)		Included in primary risk in force.

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 statement. These statements speak only as of the date they were made, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We operate in a changing environment. New risks emerge from time to time and it is not possible for us to predict all risks that may affect us. 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:

• changes in general economic and political conditions, including high unemployment rates and weakness in the U.S. housing and mortgage credit markets, a significant downturn in the U.S. or global economies, a lack of meaningful liquidity in the capital or 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, legislative activity or inactivity or actual or threatened downgrades of U.S. credit ratings;
• 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 developments in the private mortgage insurance and financial guaranty industries in which certain of our former competitors have ceased writing new insurance business and have been placed under supervision or receivership by insurance regulators;
• catastrophic events or economic changes in certain geographic regions, including those affecting governments and municipalities, where our mortgage insurance exposure is more concentrated or where we have financial guaranty exposure;
• our ability to maintain sufficient holding company liquidity to meet our short- and long-term liquidity needs;
• a reduction in, or prolonged period of depressed levels of, home mortgage originations due to reduced liquidity in the lending market, tighter underwriting standards, and general reduced housing demand in the U.S., which may be exacerbated by regulations impacting home mortgage originations, including requirements established under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”);
• the potential adverse impact on the mortgage origination market and on private mortgage insurers due to increased capital requirements for mortgage loans under proposed interagency rules to implement the third Basel Capital Accord, including in particular, the possibility that loans insured by the Federal Housing Administration (“FHA”) will receive more favorable regulatory capital treatment than loans with private mortgage insurance;

• our ability to maintain an adequate risk-to-capital position, minimum policyholder position and other surplus requirements for Radian Guaranty Inc. (“Radian Guaranty”), our principal mortgage insurance subsidiary;
• our ability to continue to effectively mitigate our mortgage insurance and financial guaranty losses;
• a more rapid than expected decrease in the current elevated levels of mortgage insurance rescissions and claim denials, which have reduced our paid losses and resulted in a significant reduction in our loss reserves, including a decrease in net rescissions or denials resulting from an increase in the number of successful challenges to previously rescinded policies or claim denials, or caused by the government-sponsored entities intervening in mortgage insurers’ loss mitigation practices, including settlements of disputes regarding loss mitigation activities;
• the negative impact that our loss mitigation activities 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, denials or claim curtailments, to increase our loss reserves for, and reassume risk on, rescinded loans or denied claims, and to pay additional claims, including amounts previously curtailed;
• any disruption in the servicing of mortgages covered by our insurance policies, as well as poor servicer performance;
• adverse changes in the severity or frequency of losses associated with certain products that we formerly offered (and which remain in our insured portfolio) that are riskier than traditional mortgage insurance or financial guaranty insurance policies;
• a decrease in the persistency rates of our mortgage insurance policies, which has the effect of reducing our premium income on our monthly premium policies and could decrease the profitability of our mortgage insurance business;
• heightened competition for our mortgage insurance business from others such as the FHA, the U.S. Department of Veterans Affairs and other private mortgage insurers, including in particular, those that have been assigned higher ratings than we have, that may have access to greater amounts of capital than we do, or that are new entrants to the industry and are therefore not burdened by legacy obligations;
• changes in the charters or business practices of, or rules or regulations applicable to, 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 effect or 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 private mortgage insurance may be considered “qualified residential mortgages” for purposes of the Dodd-Frank Act securitization provisions;
• the application of existing federal or state laws and regulations, or changes in these laws and regulations or the way they are interpreted, including, without limitation: (i) the resolution of existing, or the possibility of additional, lawsuits or investigations (including in particular investigations and litigation relating to captive reinsurance arrangements under the Real Estate Settlement Practices Act of 1974); and (ii) legislative and regulatory changes (a) impacting the demand for private mortgage insurance, (b) limiting or restricting the products we may offer or increasing the amount of capital we are required to hold, (c) affecting the form in which we execute credit protection, or (d) otherwise impacting our existing businesses;

• the amount and timing of potential payments or adjustments associated with federal or other tax examinations;
• 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 to estimate accurately the fair value amounts of derivative instruments in determining gains and losses on these instruments;
• 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 the impact of variable accounting for certain of our performance-based long-term compensation awards;
• our ability to realize some or all of 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;
• changes in accounting principles generally accepted in the United States of America or statutory accounting principles, rules and guidance, or their interpretation; 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, 2012, and those risks detailed in subsequent reports and registration statements filed from time to time with the U.S. Securities and Exchange Commission. 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