News
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02/13/2009
Radian Reaffirms Capital Position; Comments on Moody's Rating Action
Liquidity and Cash Reserves to Pay All Expected Future Claims in the MI Business for the Next 3 Years
Noting
Radian provided the following business highlights:
-- The Company remains adequately capitalized with a strong market
position and believes that it can write MI business throughout 2009
while maintaining a risk to capital level below the 25 to 1 statutory
limit.
-- Radian Asset, the principal financial guaranty subsidiary, continues
to serve as an important source of capital support for Radian
Guaranty, the principal mortgage insurance subsidiary, and is expected
to continue to provide this core business with cash infusions over
time.
-- The Company continues to believe that it has adequate liquidity in its
mortgage insurance business to pay all future claims for the next 3
years without including any of the Financial Guaranty capital.
-- In December, Radian further enhanced its strong holding company
liquidity position by amending its credit agreement to provide the
Company with greater financial flexibility by limiting the scope of
certain covenants. Radian has no ratings, risk to capital, or debt to
capitalization covenants.
Radian remains focused on efficiently managing its operations, preserving capital through a variety of loss management strategies, and maximizing opportunities to write profitable, new business that will best position the Company for the long term.
About Radian
Forward Looking Statements
All statements in this news 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 U.S. Private Securities Litigation Reform Act of 1995. These statements, which include, without limitation, projections regarding our future performance and financial condition are made on the basis of management's current views and assumptions with respect to future events. Any forward-looking statement is not a guarantee of future performance and actual results could differ materially from those contained in the forward-looking information. The forward-looking statements, as well as our prospects as a whole, are subject to risks and uncertainties, including the following:
-- changes in general financial and political conditions, such as a
deepening of the existing national economic recession, further
decreases in housing demand, mortgage originations or housing values
(in particular, further deterioration in the housing, mortgage and
related credit markets, which would harm our future consolidated
results of operations and could cause losses for our businesses to be
worse than expected), a further reduction in the liquidity in the
capital markets and further contraction of credit markets, further
increases in unemployment rates, changes or volatility in interest
rates or consumer confidence, changes in credit spreads, changes in
the way investors perceive the strength of private mortgage insurers
or financial guaranty providers, investor concern over the credit
quality and specific risks faced by the particular businesses,
municipalities or pools of assets covered by our insurance;
-- Further economic changes or catastrophic events in geographic regions
where our mortgage insurance or financial guaranty insurance in force
is more concentrated;
-- our ability to successfully execute upon our internally sourced
capital plan, and if necessary, to obtain additional capital to
support new business writings in our mortgage insurance business and
our long-term liquidity needs and to protect our credit ratings and
the financial strength ratings of Radian Guaranty Inc. , our primary
mortgage insurance subsidiary, from further downgrades;
-- a further decrease in the volume of home mortgage originations due to
reduced liquidity in the lending market, tighter underwriting
standards and the on-going deterioration in housing markets throughout
the U.S.;
-- our ability to maintain adequate risk-to-capital ratios, leverage
ratios and surplus requirements in our mortgage insurance business in
light of on-going losses in this business;
-- the concentration of our mortgage insurance business among a
relatively small number of large customers;
-- disruption in the servicing of mortgages covered by our insurance
policies;
-- the aging of our mortgage insurance portfolio and changes in severity
or frequency of losses associated with certain of our products that
are riskier than traditional mortgage insurance or financial guaranty
insurance policies;
-- the performance of our insured portfolio of higher risk loans, such as
Alternative-A ("Alt-A") and subprime loans, and adjustable rate
products, such as adjustable rate mortgages and interest-only
mortgages, which have resulted in increased losses in 2007 and 2008
and are expected to result in further losses;
-- reduced opportunities for loss mitigation in markets where housing
values fail to appreciate or continue to decline;
-- changes in persistency rates of our mortgage insurance policies caused
by changes in refinancing activity, in the rate of appreciation or
depreciation of home values and changes in the mortgage insurance
cancellation requirements of mortgage lenders and investors;
-- further downgrades or threatened downgrades of, or other ratings
actions with respect to, our credit ratings or the ratings assigned by
the major rating agencies to any of our rated insurance subsidiaries
at any time (in particular, the credit rating of Radian Group Inc. and
the financial strength ratings assigned to Radian Guaranty Inc. );
-- heightened competition for our mortgage insurance business from others
such as the Federal Housing Administration and the Veterans'
Administration or other private mortgage insurers (in particular those
that have been assigned higher ratings from the major rating
agencies);
-- changes in the charters or business practices of Federal National
Mortgage Association ("Fannie Mae ") and Freddie Mac , the largest
purchasers of mortgage loans that we insure, and our ability to remain
an eligible provider to both Freddie Mac and Fannie Mae ;
-- the application of existing federal or state consumer, lending,
insurance, securities and other applicable laws and regulations, or
changes in these laws and regulations or the way they are interpreted;
including, without limitation: (i) the outcome of existing
investigations or the possibility of private lawsuits or other formal
investigations by state insurance departments and state attorneys
general alleging that services offered by the mortgage insurance
industry, such as captive reinsurance, pool insurance and contract
underwriting, are violative of the Real Estate Settlement Procedures
Act and/or similar state regulations, (ii) legislative and regulatory
changes affecting demand for private mortgage insurance, or (iii)
legislation and regulatory changes limiting or restricting our use of
(or requirements for) additional capital, the products we may offer,
the form in which we may execute the credit protection we provide or
the aggregate notional amount of any product we may offer for any one
transaction or in the aggregate;
-- the possibility that we may fail to estimate accurately the
likelihood, magnitude and timing of losses in connection with
establishing loss reserves for our mortgage insurance or financial
guaranty businesses, or the premium deficiencies for our first- and
second-lien mortgage insurance business, or to estimate accurately the
fair value amounts of derivative contracts in our mortgage insurance
and financial guaranty businesses in determining gains and losses on
these contracts;
-- volatility in our earnings caused by changes in the fair value of our
derivative instruments and our need to reevaluate the premium
deficiencies in our mortgage insurance business on a quarterly basis;
-- changes in accounting guidance from the Securities and Exchange
Commission ("SEC") or the Financial Accounting Standards Board;
-- legal and other limitations on amounts we may receive from our
subsidiaries as dividends or through tax and expense sharing
arrangements with our subsidiaries; and
-- vulnerability to the performance of our investment in Sherman
Financial Group LLC .
We caution you not to place undue reliance on these forward-looking statements, which are current only as of the date on which we issued this news release. We do not intend to, and we disclaim any duty or obligation to, update or revise any forward-looking statements made in this news release to reflect new information or future events or for any other reason.
SOURCE
CONTACT: Investors
terri.williams-perry@radian.com
or
media
rick.gillespie@radian.com
both of
/Web Site: http://www.radian.com